Select true or false for the following statements.

1. Inventory and accounts receivable are both carried at net realizable value. 

2.Restricted cash should be reported on the balance sheet as part of cash and cash equivalents. 

3.Investing activities include the cash effects of selling stocks and bonds to raise capital to purchase fixed assets. 

4. When adjusting accrual earnings to obtain cash flows from operations, an increase in Prepaid Rent Expense is subtracted to arrive at cash flow from operations. 5. Under the direct method for cash flow statement preparation, net cash flows from operating activities are calculated by adjusting net income for the differences between accrual-basis revenues and expenses and cash inflows and outflows during the period. 

6.Stanley is considering investing in a fast-growing toy manufacturing company—Spiele Inc. Stanley is aware of recent lawsuits involving the safety of trendy new toys manufactured by one of Spiele’s primary competitors. He reviews Spiele’s comparative balance sheet and discovers that the company did not report any estimated loss liabilities for the current and previous fiscal years. Based on this information, Stanley should feel confident that Spiele Inc. has no pending loss litigation. 

7. A common-size balance sheet presents each item as a percentage of total assets.

Answer rating: 100% (QA)

1 We often find the term net realizable value being associated with the current assets accounts receivable and inventory True The term net realizable ... View the full answer