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ACG 2021 Exam 3 Study Set with Questions and Correct Answers
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  • Course
  • ACG 2021
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  • ACG 2021

Operating activities the cash activities that create revenues or expenses in the entity's major line of business Inflows: -cash collected from customers -dividends received -interest received Outflows: -cash paid to suppliers -cash paid to employees -cash paid for interest -cash paid for income t...

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Document information

  • August 11, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • acg 2021 exam 3 study set with questions and corre
  • operating activities the cash activities that cre
  • inflows cash collected from customers dividends

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  • ACG 2021
  • ACG 2021

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ACG 2021 Exam 3 Study Set with
Questions and Correct Answers
Operating activities ✅the cash activities that create revenues or expenses in the
entity's major line of business

Inflows:
-cash collected from customers
-dividends received
-interest received

Outflows:
-cash paid to suppliers
-cash paid to employees
-cash paid for interest
-cash paid for income taxes

Operating activities indirect method ✅use formula

Operating activities direct method ✅use t-accounts

Investing activities ✅the cash activities that increase or decrease the long-term assets
available to the company

-primarily affects long-term assets

Inflows:
-cash received from the sale of long-term assets
-cash received from the sale or maturity of investments

Outflows:
-cash paid for the purchase of long term assets
-cash paid for the purchase of investments

Financing activities ✅the cash activities that obtain cash from investors and creditors
needed to launch and sustain the business

-primarily affects liabilities and stockholder's equity

Inflows:
-cash received from the sale of the company's stock
-cash received from notes payable
-cash received from issuing bonds payable

, Outflows:
-cash paid for the repurchase of the company's own stock
-repayment of principal on notes payable
-cash paid on maturity date of bonds payable
-cash paid for dividends

Direct vs indirect method ✅-companies can choose between the direct and indirect
method for the operating activities section but the direct method is always used for he
investing and financing sections

Book value equation ✅Gain/Loss = Cash Received - Book Value

Stockholder's rights ✅1. Vote- right to voting on matters that come before the
stockholders

2. Dividends- right to receive a proportionate part of any dividend

3. Liquidation- right to receive a proportionate share of any assets remaining after
corporation pays its liabilities in liquidation

4. Preemption- right to maintain one's proportionate ownership in the corporation

Authorized stock ✅maximum number of shares the company can issue under its
charter

Issued stock ✅number of shares the corporation has issued at any given time

Outstanding stock ✅number of shares that stockholders own

Treasury stock ✅Treasury stock = Issued stock - Outstanding stock

-issued stocks reacquired by the company
-recorded at cost
-contra-stockholder's equity account (debit balance)
-reduces company's stockholder's equity

Dividend declaration date ✅Retained earnings xx
Dividends payable xx

-when a company declares that a dividend will be paid

Dividend payment date ✅Dividends payable xx
Cash xx

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