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22. Parker Associates purchased a patent in 2018 for $200,000. The patent will be amortized over 20 years. How would Parker adjust for the annual amortization for the patent on the balance sheet? Credit accumulated amortization $10,000 Credit prepaid assets $10,000 Credit patents $10,000 Credit patent amortization $10,000 23. During 2019, Southampton Corp. had a net financing cash outflow of $12 million; a net operating cash inflow of $20 million; and a net decrease in the cash balance of $5 million. What was their net cash flow from investing? A net inflow of $3 million A net inflow of $8 million A net outflow of $13 million A net outflow of $25 million 24. Watermill Pools enters into a 5-year agreement to lease equipment from Southampton Pool Supply. The equipment has a useful life of 6 years. Which of the following is true? The lease should be treated as an operating lease as the term of the lease is less than 100% of the economic life of the equipment The lease should be treated as an operating lease as the term of the lease is greater than 75% of the economic life of the equipment. The lease should be treated as a capital lease as the term of the lease is less than 100% of the economic life of the equipment The lease should be treated as a capital lease as the term of the lease is greater than 75% of the economic life of the equipment. 25. If the first line of the statement of cash flows is positive net income, which of the following is true? The cash flow statement has been presented using the direct method. The cash flow statement has been presented using the indirect method. The cash flow from operations must be positive. The cash flow from operations must be negative. 26. The December 31, 2019 Income Statement of Jackson Industries is shown below. Jackson Industries Income Statement for year Ending December 31, 2019 (amounts in millions) Sales Less: Cost of Goods Sold Gross Margin Less: Operating Expenses Operating Income Less: Interest Expenses Income Before Taxes Less: Tax Expense Net Income $175.0 $95.0 $80.0 $40.0 $40.0 $5.0 $35.0 $7.0 $28.0 Jackson began 2019 with a retained earnings account balance of $80 million. During 2019, it declared and paid dividends totaling $10 million. What is its December 31, 2019 retained earnings account balance? $70 million $90 million $98 million $108 million lumn to unanswered question: naallaa 27. In a period of rising prices, which of the following is true if a firm chooses FIFO versus LIFO for their inventory valuation approach? Cost of goods sold will be less using FIFO, which will result in higher net income. Cost of goods sold will be greater using FIFO, which will result in lower net income. Ending inventory will be greater with FIFO, which will result in higher cost of goods sold. Ending inventory will be less using FIFO, which will result in lower cost of goods sold. 28. Teflon Corporation expenses stock options as required by GAAP. On January 1, 2018, Teflon granted 500 options to executive management. Each option entitled the option holder to purchase one share of Teflon common stock at $10 per share. The options will vest on December 31, 2020. On the grant date, January 1, 2018, the stock was quoted on the stock exchange at $15 per share. The fair value of the options on grant date was estimated to be $6 per option. What is the amount of compensation expense Teflon should recognize with respect to the options during 2018, 2019, and 2020, respectively? $0, $0, $2500 SO, SO, $3000 $833.33, $833.33, $833.33 $1000, $1000, $1000 29. Choose the option to correctly complete the sentence. While loyal employees add to the value of a business, the to the business should not be placed on the balance sheet. concept says that the employee's value materiality consistency money measurement entity XYZ Industries T-Account December 31, 2019 Amounts in Millions Cash Balance January 1, 2019 325 Collection from Customers 100 70 Payments to suppliers Notes Payable Issued 80 50 Salaries Paid Sale of Building 300 30 Payment of rent and utilities Sale of old machine 100 10 Dividends Paid 40 Payment of Loan Principal 300 Purchase of new machine Balance December 31, 2019 405 What is XYZ's 2019 cash flow from investing activities? Anet inflow of $100 million A net inflow of $180 million A net inflow of $190 million A net inflow of $400 million 31. Sarah is opening up a lemonade stand. On June 1st she spends $300 on lemonade mix, $100 on cookie dough, $50 on cups and $50 on ice. She also pays her mom $10 for renting a table. Based on the matching concept, which of the following is true regarding the recording of costs as it relates to those items? She should record the cost of all the items when they are paid for. She should record the cost of the lemonade mix, cookie dough, cups and ice as it is paid for. She should record the cost of all the items each time she sells a cup of lemonade. She should record the cost of the lemonade mix, cookie dough, cups and ice each time she sells a cup of lemonade. 32. Common stock issued and dividends paid can be found under what section of the statement of cash flows? Operating Financing Investing Shareholder's Equity 33. Choose the option to correctly complete the following sentence. Costs that are not associated with products and services or with future period revenues but are recognized in the period in which they are incurred is known as the realization concept conservatism concept matching concept materiality concept 34. In the statement of cash flows, which of the following is not considered an operating activity? Inventory purchased Wages paid to employees Taxes pald Issuance of long-term debt 35. Bellingham's Restaurant sells $3,000 in gift certificates during the holiday season. How should the sale of the gift certificates be treated in the financial statements ? Debit cash, credit sales Debit cash: credit accounts payable Debit cash, credit deferred revenue Debit cash; credit prepaid expenses 36. On January 1, 2019, Cumberland Electric's retained earnings balance was $63,000. In 2019, Cumberland produced net income of $55,000 and their ending retained earnings balance on December 31 was $85,000. How much did Cumberland pay in dividends in 2019? $22,000 $30,000 $33,000 $77,000 37. Bay Industries receives payment from a customer for money that is owed to them from a sale a month ago. What is the correct way to journal the transaction? Debit cash: credit sales Debit accounts receivables; credit accounts payable Debit cash, credit accounts receivables Debit accounts payables, credit accounts receivables 38. According to the realization concept, which of the following would appear on the income statement? I. A $5,000 sale and delivery of merchandise that is paid for in cash immediately. II. A $5,000 sale and delivery of merchandise that is paid for with credit, due in 30 days. III. A $5,000 sale for a customized product that will take 60 days to make, and is paid for in cash. I only Il only I and II, but not 111 I, II, and

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