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Exam 4: The Income Statement, Comprehensive Income, and the Statement of Cash Flows

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Question 91

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Managers may engage in classification shifting by:

A) reporting sales to fictitious customers to inflate reported revenues.
B) reduce estimates of accrued expenses to inflate reported net income.
C) reporting operating expenses as nonoperating expenses to inflate reported operating income.
D) increasing estimates of accrued expenses to inflate reported net income.

E) A) and B)
F) B) and D)

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Question 92

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The accounting records of Rockness Company provided the data below ($ in 000s). Net income $25,200 Depreciation and amortization expense 3,300 Decrease in accounts receivable 2,000 Increase in inventory 4,500 Increase in prepaid insurance 300 Increase in salaries payable 900 Decrease in interest payable 400 Required: Prepare a reconciliation of net income to net cash flows from operating activities.

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Cash flows from operating activities:
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Question 93

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Using the information provided for Uncle Joe's and the industry and sector, briefly summarize the operating performance of Uncle Joe's relative to its benchmark competitors.

Return on shareholders' equity is increased if a firm can maintain its return on assets but increase its leverage.

The principal benefit of separately reporting discontinued operations is to enhance:

Schneider Inc. had salaries payable of $60,000 and $90,000 at the end of 2017 and 2018, respectively. During 2018, Schneider recorded $620,000 in salaries expense in its income statement. Cash outflows for salaries in 2018 were:

Reconciliation between net income and comprehensive income would include:

In the operating activities section of the statement of cash flows, we start with net income:

Expenses in an income statement prepared under International Financial Reporting Standards (IFRS) :

The chief accountant for Julius Co. provides you with the company's most recent income statement and comparative balance sheets below. The accountant has asked for your help in preparing part of the company's 2018 statement of cash flows. Required: In the space provided below, determine the cash flow from operating activities for Julius Co., using the direct method.

The trial balance of Rollins Inc. included the following accounts as of December 31, 2018: Rollins had 100,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 40%. -Required: Prepare a 2018 single, continuous statement of comprehensive income for Rollins Inc. Use a multiple-step income statement format.

Missoula Inc. reported the following selected financial statement data: -Required: Compute the average collection period (rounded to one decimal place) for 2018.

Excerpts from Hulkster Company's December 31, 2018 and 2017, financial statements are presented below: -Hulkster's 2018 inventory turnover is (rounded) :

Excerpts from Hulkster Company's December 31, 2018 and 2017, financial statements are presented below: -Hulkster's 2018 asset turnover is (rounded) :

Rowdy's Restaurants Cash Flow ($ in millions) -Rowdy's would report net cash inflows (outflows) from investing activities in the amount of:

In a recent press release, Foot Locker Inc. reported that its fiscal first-quarter net income fell 46% due to losses related to discontinued operations, but earnings from continuing operations jumped 19% amid a modest increase in sales. The specialty athletic retailer said net income was $20 million for the quarter ended May 4, compared with net income of $37 million a year earlier. The latest results included a loss of $18 million from discontinued operations. Last year, the company had earnings of $5 million, or four cents a share, from discontinued operations. Foot Locker said earnings from continuing operations were $38 million, compared with $32 million a year earlier. Discuss how Foot Locker's press release relates to its earnings quality.

Operating cash flows would not include:

The following information (in $ millions) comes from the Annual Report of Saratoga Springs Co. for the year ending 12/31/2018: Required: Compute the following amounts for Saratoga Springs Co. -Its inventory turnover ratio for 2018. Round your answer to one decimal place.