Financial Reporting And Analysis - Financial Reporting And Analysis Section 2
11. Retiring long-term debt is a:
- Option : C
- Explanation : Cash dividend paid = net income – increased in retained earnings = 5 – 4 = 1.
13. The following information is available for Frampton Corporation Ltd.
| Cash received from customers | $12,000 |
| Cash paid to employees | $2,000 |
| Cash paid for income tax | $1,500 |
| Cash paid for purchase of equipment | $20,000 |
| Cash paid for dividends | $1,800 |
| Cash paid to retire long term debt | $15,000 |
The net cash from financing activities is closest to:
- Option : B
- Explanation : Cash paid for dividends + cash paid to retire long term debt, 1800+15000 = 16800$.
14. The following information is available for HTC Corporation.
| Income Statement Extract | 2012 | 2011 |
| Operating income | $14 million | $12 million |
| Depreciation | $5 million | $3 million |
| Net income | $9 million | $7 million |
| Balance Sheet Extract | 2012 | 2011 |
| Current Assets | $8 million | $6 million |
| Current Liabilities | $10 million | $12 million |
The total adjustment in order to compute operating cash flow is closest to:
- Option : B
- Explanation :
Add depreciation $5 million Subtract increase in current assets ($2 million) Subtract decrease in current liabilities ($2 million) Total adjustment $1 million
- Option : B
- Explanation : In step 2, all noncash items should be removed (not added) from aggregated revenues and expenses.
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