IC MOCK EXAM 2 / INSURANCE COMMISSION TRADITIONAL LIFE
MOCK EXAMS_ 2025 LATEST UPDATED
5-89. Keisler Corporation reports:
Cash provided by operating activities $280,000
Cash used by investing activities 110,000
Cash provided by financing activities 140,000
Beginning cash balance 90,000
What is Keisler's ending cash balance?
a. $370,000.
b. $400,000.
c. $530,000.
d. $620,000. - (answers)b. $400,000.
5-90. During 2017 the DLD Company had a net income of $85,000. In addition, selected
accounts showed the following changes:
Accounts Receivable $3,000 increase
Accounts Payable 1,000 increase
Buildings 4,000 decrease
Depreciation Expense 1,500 increase
Bonds Payable 8,000 increase
What was the amount of cash provided by operating activities?
a. $84,500
b. $85,000
c. $86,500
d. $94,500 - (answers)a. $84,500
,5-91. Harding Corporation reports the following information:
Net income $530,000
Depreciation expense 140,000
Increase in accounts receivable 60,000
Harding should report cash provided by operating activities of
a. $330,000.
b. $450,000.
c. $610,000.
d. $730,000. - (answers)c. $610,000.
5-102. In a statement of cash flows, receipts from sales of property, plant, and equipment and
other productive assets should generally be classified as cash inflows from
a. operating activities.
b. financing activities.
c. investing activities.
d. selling activities. - (answers)c. investing activities.
5-94. Packard Corporation reports the following information:
Net cash provided by operating activities $335,000
Average current liabilities 150,000
Average long-term liabilities 100,000
Dividends paid 60,000
Capital expenditures 110,000
Payments of debt 35,000
Packard's free cash flow is
a. $130,000.
b. $165,000.
c. $225,000.
d. $275,000. - (answers)b. $165,000.
, 6-59. Paula purchased a house for $300,000. After providing a 20% down payment, she
borrowed the balance from the local savings and loan under a 30-year 6% mortgage loan
requiring equal monthly installments at the end of each month. Which time value concept would
be used to determine the monthly payment?
a. Present value of one.
b. Future value of one.
c. Present value of an ordinary annuity.
d. Future value of an ordinary annuity. - (answers)c. Present value of an ordinary annuity.
6-61. Which of the following is false?
a. The future value of a deferred annuity is the same as the future value of an annuity not
deferred.
b. A deferred annuity is an annuity in which the rents begin after a specified number of periods.
c. To compute the present value of a deferred annuity, we compute the present value of an
ordinary annuity of 1 for the entire period and subtract the present value of the rents which were
not received during the deferral period.
d. If the first rent is received at the end of the sixth period, it means the ordinary annuity is
deferred for six periods. - (answers)d. If the first rent is received at the end of the sixth period, it
means the ordinary annuity is deferred for six periods.
6-74. Mordica Company will receive $400,000 in 7 years. If the appropriate interest rate is 10%,
the present value of the $400,000 receipt is
a. $204,000.
b. $205,264.
c. $604,000.
d. $779,488. - (answers)b. $205,264.
6-76. Milner Company will invest $800,000 today. The investment will earn 6% for 5 years, with
no funds withdrawn. In 5 years, the amount in the investment fund is
a. $800,000.
b. $1,040,000.
MOCK EXAMS_ 2025 LATEST UPDATED
5-89. Keisler Corporation reports:
Cash provided by operating activities $280,000
Cash used by investing activities 110,000
Cash provided by financing activities 140,000
Beginning cash balance 90,000
What is Keisler's ending cash balance?
a. $370,000.
b. $400,000.
c. $530,000.
d. $620,000. - (answers)b. $400,000.
5-90. During 2017 the DLD Company had a net income of $85,000. In addition, selected
accounts showed the following changes:
Accounts Receivable $3,000 increase
Accounts Payable 1,000 increase
Buildings 4,000 decrease
Depreciation Expense 1,500 increase
Bonds Payable 8,000 increase
What was the amount of cash provided by operating activities?
a. $84,500
b. $85,000
c. $86,500
d. $94,500 - (answers)a. $84,500
,5-91. Harding Corporation reports the following information:
Net income $530,000
Depreciation expense 140,000
Increase in accounts receivable 60,000
Harding should report cash provided by operating activities of
a. $330,000.
b. $450,000.
c. $610,000.
d. $730,000. - (answers)c. $610,000.
5-102. In a statement of cash flows, receipts from sales of property, plant, and equipment and
other productive assets should generally be classified as cash inflows from
a. operating activities.
b. financing activities.
c. investing activities.
d. selling activities. - (answers)c. investing activities.
5-94. Packard Corporation reports the following information:
Net cash provided by operating activities $335,000
Average current liabilities 150,000
Average long-term liabilities 100,000
Dividends paid 60,000
Capital expenditures 110,000
Payments of debt 35,000
Packard's free cash flow is
a. $130,000.
b. $165,000.
c. $225,000.
d. $275,000. - (answers)b. $165,000.
, 6-59. Paula purchased a house for $300,000. After providing a 20% down payment, she
borrowed the balance from the local savings and loan under a 30-year 6% mortgage loan
requiring equal monthly installments at the end of each month. Which time value concept would
be used to determine the monthly payment?
a. Present value of one.
b. Future value of one.
c. Present value of an ordinary annuity.
d. Future value of an ordinary annuity. - (answers)c. Present value of an ordinary annuity.
6-61. Which of the following is false?
a. The future value of a deferred annuity is the same as the future value of an annuity not
deferred.
b. A deferred annuity is an annuity in which the rents begin after a specified number of periods.
c. To compute the present value of a deferred annuity, we compute the present value of an
ordinary annuity of 1 for the entire period and subtract the present value of the rents which were
not received during the deferral period.
d. If the first rent is received at the end of the sixth period, it means the ordinary annuity is
deferred for six periods. - (answers)d. If the first rent is received at the end of the sixth period, it
means the ordinary annuity is deferred for six periods.
6-74. Mordica Company will receive $400,000 in 7 years. If the appropriate interest rate is 10%,
the present value of the $400,000 receipt is
a. $204,000.
b. $205,264.
c. $604,000.
d. $779,488. - (answers)b. $205,264.
6-76. Milner Company will invest $800,000 today. The investment will earn 6% for 5 years, with
no funds withdrawn. In 5 years, the amount in the investment fund is
a. $800,000.
b. $1,040,000.
