Accounting 315 Exam 2 (Possible TopHat Questions) || 100%
Correct answers.
Which best describes the meaning of Free Cash Flow?
A. Free cash flow measures the ability of a company to cover its current liabilities with cash
provided by operating activities.
B. Free cash flow measures the ability of a company to cover its total liabilities with cash
provided by operating activities.
C. Free cash flow measures the ability of a company to cover its capital expenditures and
dividends with cash provided by operating activities. correct answers C. Free cash flow measures
the ability of a company to cover its capital expenditures and dividends with cash provided by
operating activities.
Which of the following does NOT need to be disclosed as a significant accounting policy?
A. Depreciation methods
B. Use of estimates
C. Identity of all stockholders
D. Inventory cost flow assumptions correct answers C. Identity of all stockholders
Match the account with the classification(current asset or current liability)
1. Cash equivalents
2. Bank overdraft (different banks)
3. Bank overdraft (same bank) correct answers 1. Current Asset
2. Current Liability
3. Current Asset
Figi Water Inc. sells cases of water for $10 per case and offers Target 30% off the list price.
What amount should Figi recognize as a receivable from Target for each case?
A. $13
B. $10
C. $7 correct answers C. $7
On June 30, Bolton Co. estimates that an additional $125 of merchandise will be returned or
granted an allowance while preparing its financial statements. Which of the following is the
correct adjusting journal entry on Bolton Co. books to record this estimate?
A. Debit to Sales Returns & Allowances for $125 and Credit to Accounts Receivable for $125
B. Debit to Sales Returns & Allowances for $125 and Credit to Allowance for Sales Returns and
Allowances for $125 correct answers B. Debit to Sales Returns & Allowances for $125 and
Credit to Allowance for Sales Returns and Allowances for $125
Correct answers.
Which best describes the meaning of Free Cash Flow?
A. Free cash flow measures the ability of a company to cover its current liabilities with cash
provided by operating activities.
B. Free cash flow measures the ability of a company to cover its total liabilities with cash
provided by operating activities.
C. Free cash flow measures the ability of a company to cover its capital expenditures and
dividends with cash provided by operating activities. correct answers C. Free cash flow measures
the ability of a company to cover its capital expenditures and dividends with cash provided by
operating activities.
Which of the following does NOT need to be disclosed as a significant accounting policy?
A. Depreciation methods
B. Use of estimates
C. Identity of all stockholders
D. Inventory cost flow assumptions correct answers C. Identity of all stockholders
Match the account with the classification(current asset or current liability)
1. Cash equivalents
2. Bank overdraft (different banks)
3. Bank overdraft (same bank) correct answers 1. Current Asset
2. Current Liability
3. Current Asset
Figi Water Inc. sells cases of water for $10 per case and offers Target 30% off the list price.
What amount should Figi recognize as a receivable from Target for each case?
A. $13
B. $10
C. $7 correct answers C. $7
On June 30, Bolton Co. estimates that an additional $125 of merchandise will be returned or
granted an allowance while preparing its financial statements. Which of the following is the
correct adjusting journal entry on Bolton Co. books to record this estimate?
A. Debit to Sales Returns & Allowances for $125 and Credit to Accounts Receivable for $125
B. Debit to Sales Returns & Allowances for $125 and Credit to Allowance for Sales Returns and
Allowances for $125 correct answers B. Debit to Sales Returns & Allowances for $125 and
Credit to Allowance for Sales Returns and Allowances for $125
