Test Bank for Financial Accounting, Fifth Edition
Problem D - I
— Multiple Choice (20 points)
Circle the one best answer.
Companies purchase investments in debt or stock securities for all of the following reasons
earn investment income.
excess cash on hand.
increase cash on hand.
The best way to study the relationship of the components of financial statements is to
common size statements.
a trend analysis.
In performing a vertical analysis, the base for prepaid expenses is
total current assets.
prepaid expenses in a previous year.
Quine Company had credit sales of $600,000. The beginning accounts receivable balance
was $80,000 and the ending accounts receivable balance was $60,000. Cash collections
from customers were
Harbor Company reported net income of $30,000 for the year ended December 31, 2006.
During the year, inventories decreased by $7,000, accounts payable decreased by $8,000,
depreciation expense was $10,000 and a gain on disposal of equipment of $4,500 was
Net cash provided by operations in 2006 using the
Sawyer Company reported cost of goods sold of $350,000 for the year ended December
During the year, inventories decreased $7,000 and accounts payable decreased
The cash payments to suppliers in 2006, using the