Question

Gains and losses on plant, property, and equipment are reported on the Income Statement

A. in the discontinued operations section. B. in the continuing operations section. C. in the financing section. D. as a retrospective application.

An example of a cash inflow from financing activities is

    

   A. gain on sale of land.

B. cash receipts from the issuance of bonds.

   C. selling a building.

   D. cash receipts from sale of investments.

Eagle Ridge, Inc. issued 40 shares of $20 par value stock to its accountant in full payment for her $900 fee for assisting in setting up the new company. The entry for the issuance of the stock is a

    

   A. credit to Common Stock for $800.

   B. debit to Paid-in Capital in Excess of Par–Common for $100.

   C. credit to Common Stock for $900.

   D. debit to Common Stock for $800.

Evaluating whether a business is creating value is known as

    

   A. financial analysis.

   B. valuation.

   C. comparative analysis.

   D. benchmarking.

Answer 1

Question1.

Solution: Gains or losses on sale of plant, property & equipment are reported under 'Non operating income/exp' heading of Continuing operation.

Thus, answer is option B.

Question2.solution: Any type of transaction related to raising of money in business or repayment of debt or transaction related to paid-in capital are related to financing activities.

Thus, Cash receipts from issuing of bond is the cash inflow from financing activities (option B is the answer)

Rest trasnsactions given in other options are related to investing activities.

Question 3. Solution: Journal entry would be as follows:

Accounts titles	Debit	Credit
Accountant fee payable	$900
Common stock		$800
Paid-in capital in excess of par-common		$100

Since the enty has credit to common stock for $800.

Thus, answer is option A.