Homework #3 - Coursera32 PDF

23/02/2017 Homework#3|Coursera
Homework
BrowseComputerScienceCourses 9Coupons #3
6/10 points earned (60%)
You haven't passed yet. You need at least70% to pass.

Review the material and try again! You have 3 attempts
every 8 hours.
Back to Week 3
0/1
points
1.
Which of the following would be a cash ow from operating activities?
(check all that apply)
Depreciation on a building
This should not be selected

Depreciation on a building is a noncash transaction, so it would
not be a cash ow.
Payments for advertising
Correct
Operating cash ow.
Collections from customers
This should be selected
Payments to suppliers
Correct
https://www.coursera.org/learn/whartonaccounting/exam/EJ7aB/homework3 1/9
Operating cash ow.

9
Gain on sale of equipment

BrowseComputerScienceCourses 9Coupons
Un-selected is correct
0/1
points
2.
Which of the following would be a cash ow from investing activities?
(check all that apply)
Proceeds from issuing stock
Purchases of inventory
Payments to acquire a company
Correct
Investing cash ow.
Proceeds from selling equipment
0/1
points
23/02/2017
points
Homework#3|Coursera
9
3.
A company has the following cash ows:
Cash from operations

BrowseComputerScienceCourses (30)
9Coupons
Cash from investing activities (45)
Cash from nancing activities 90
Which growth stage best describes this pattern of cash ows?
Early growth

Would have positive (or less negative) operating cash ow
Decline
Fossilized
Mature
Start-up
1/1
points
4.
A company bought a $1,000,000 building and $500,000 of land with a
$300,000 cash down payment and used a new mortgage to pay the
balance. What is the investing cash ow in this transaction?
($1,800,000)
($1,200,000)
($300,000)
($1,500,000)
Correct
There are really two transactions here. First, the company
borrows $1,200,000 from the bank on the mortgage (this is a
nancing cash ow). Second, the company uses this $1,200,000
plus $300,000 of its own cash to buy $1,500,000 of land and

9
building. This $1,500,000 is an investing cash outow.
($1,000,000)
1/1
points
5.
Which of the following would be shown as a negative number in the
Operating section of the SCF under the indirect method? (check all that
apply)
Decrease in Accounts Receivable
Gain on sale of equipment
Correct
Gain on sale of equipment would be subtracted from Net Income
under the indirect method (it increased net income but must be
subtracted out because it is not operating, but investing).
Capital expenditures
Decrease in Accounts Payable
Correct
A decrease in Accounts Payable would be subtracted (decrease in
liability = decrease in cash on the balance sheet equation).
1/1
9
points
6.
A company has Net
BrowseComputerScienceCourses Income of $10, which included $2 of depreciation
9Coupons
expense. There were no other noncash expenses in Net Income and
there were no gains or losses. Accounts receivable was $20 at the
beginning of the year and $25 at the end of the year. Accounts Payable
was $15 at the beginning of the year and $5 at the end of the year.
Inventory was $12 at the beginning of the year and $7 at the end of the
year. All other balance sheet accounts were unchanged over the year.
What was the companys Cash Flow from Operating Activities?
$7
($2)
$12
$22
$2
Correct
Lets do the indirect method! Start with Net Income of $10. Add
back $2 of Depreciation Expense. Subtract the increase in A/R of
$5. Subtract the decrease in A/P of $10. Add the decrease in
Inventory of $5. The answer is $10 + $2 $5 $10 + $5 = $2.
1/1
points
7.
A company put together a preliminary version of its nancial statements.
Its Net Income was $300, its Depreciation Expense was $80, and its Cash
Flow from Operations was $190. The accountant found an error in
computing straight-line Depreciation Expense. It should have been $70.
What is Cash from Operations after xing this mistake? (you can ignore
taxes)
$190
Correct
Net Income would increase by $10 with the smaller expense. The
9
amount of depreciation expense added back would go down by
$10. These would cancel each other out and there would be no
eect on Cash from Operations. So, Cash from Operations would
remain at $190.9Coupons
BrowseComputerScienceCourses
$200
$180
$370
$0
1/1
points
8.
A company sold PP&E for $200 cash. Prior to the sale, the net book value
of the PP&E on the nancial statements was $240. Thus, the company
recorded a Loss on Sale of Equipment of $40 in Net Income. What is the
operating cash ow in this transaction?
$40
$0
Correct
The answer is zero! The entire $200 cash is an investing cash
ow. The loss will be added back in the operating section, but
that is merely to avoid double counting, since the loss also shows
up in Net Income (i.e., the loss reduced Net Income by $40, then
we added back $40 in the operating section to get to no eect
on operating cash ows).
$160
$240
$200
0/1

points
9
9.
During the year, a company sold $500 of inventory, paid $400 to
suppliers for inventory
BrowseComputerScienceCourses previously purchased on account, purchased $100
9Coupons
of inventory for cash, acquired $75 of inventory from another company
in an acquisition, and translated into US dollars the value of inventory
held in foreign subsidiaries, which increased inventory by $25. Which of
these Inventory transactions would show up in the operating section of
the SCF? (check all that apply)
Paid $400 to suppliers for inventory previously purchased on

account
Correct
Acquisitions and foreign currency adjustments were two reasons
given in the video for why a number on the SCF might not match
the change on the Balance Sheet. Thus, those two transactions
will not appear in the operating section. In the other cases, the
sale or purchase of Inventory, or payments to suppliers, will show
up in the operating section.
Sold $500 of inventory
Acquired $75 of inventory from another company in an

acquisition

The value of inventory held in foreign subsidiaries increased by

$25 when translated into US dollars

9
Purchased $100 of inventory for cash
1/1
points
10.
A company had Revenue of $1000, Depreciation and Amortization
Expense of $100, Interest Expense of $100, and Tax Expense of $50. All
other Expenses were $500. What was the companys EBITDA?
$300
$500
Correct
Net Income or Earnings was $1000 $100 $100 $50 $500 =
$250. Then, we would add back Depreciation and Amortization
Expense of $100, Interest Expense of $100 and Tax Expense of
$50, to get EBITDA: $250 + $100 + $100 + $50 = $500. Note that
this is also Revenue All Other Expenses.
$400
$250
$1000

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23/02/2017 Homework#3|Coursera

6/10 points earned (60%)

You haven't passed yet. You need at least70% to pass.

This should not be selected

Payments for advertising

Collections from customers

This should be selected

Operating cash ow.

Gain on sale of equipment

Proceeds from issuing stock

Payments to acquire a company

Proceeds from selling equipment

This should be selected

Cash from operations

Cash from investing activities (45)

Cash from nancing activities 90

Which growth stage best describes this pattern of cash ows?

This should not be selected

plus $300,000 of its own cash to buy $1,500,000 of land and

Decrease in Accounts Receivable

Gain on sale of equipment

Decrease in Accounts Payable

Paid $400 to suppliers for inventory previously purchased on

Sold $500 of inventory

This should be selected

Acquired $75 of inventory from another company in an

This should not be selected

The value of inventory held in foreign subsidiaries increased by

This should not be selected

This should be selected

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