Exam (elaborations)
Quiz 2 - ACC 502 (1)
Quiz 2 - ACC 502 (1)
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Quiz 2 - ACC 502RW Importers reported cost of goods sold of $850,000 for the year. During the year, inventory
increased $40,000 from a $180,000 beginning balance to a $220,000 ending balance, and
accounts payable increased by $15,000 from a $55,000 beginning balance to a $70,000 ending
balance.
How much cash was paid for merchandise purchased during the year? - ANS-$850,000 +
($220,000 - $180,000) - ($70,000 - $55,000) = $875,000
In its fiscal 2018 annual report, Easton Sports, Inc. reported cash of $3,138 million at year-end.
The statement of cash flows reports the following (in millions):
Net cash from operating activities
$3,096
Net cash from investing activities
(1,034)
Net cash from financing activities
(2,776)
What was the balance in Easton Sport's cash account at the start of fiscal 2018? - ANS-Cash at
end of year = Cash at beginning of year + Change in cash during the year
$3,138 = Cash at beginning of year + $3,096 - $1,034 - $2,776
Cash at beginning of year = $3,852 million
The statement of cash flows explains changes in a firm's: - ANS-Changes in cash and near
cash (cash equivalents) are explained on the statement of cash flows. Other accounts such as
working capital accounts and accounts receivable are also included. But the main purpose is to
explain changes in cash.
Cash and cash equivalents
Which one of the following equations explains why successive balance sheets can be used to
prepare a firm's statement of cash flows?
Assets = Liabilities - Equity
Cash - Noncash assets = Liabilities - Equity
Δ Cash = Δ Liabilities - Δ Noncash assets + Δ Stockholders' equity
Δ Cash = Δ Liabilities + Stockholders' equity
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