CPA FAR Practice Exam 4

Orion Corp. is preparing its Statement of Cash Flows for the year ended December 31, Year 1, using the indirect method. The following information is available:<br/><br/>- Net Income: $450,000<br/>- Depreciation Expense: $60,000<br/>- Amortization of Bond Discount: $4,000<br/>- Gain on Sale of Equipment: $12,000<br/>- Equity in Earnings of Investee (Net of $10,000 dividends received): $25,000<br/>- Decrease in Accounts Receivable: $15,000<br/>- Increase in Inventory: $22,000<br/>- Decrease in Accounts Payable: $8,000<br/><br/>What is the net cash provided by operating activities?

Parent Co. acquired 80% of Sub Co. on January 1, Year 1. During Year 1, Parent sold inventory to Sub for $200,000. The cost of the inventory to Parent was $140,000. At December 31, Year 1, 30% of this inventory remained in Sub's warehouse. Both companies have a 30% tax rate. What amount of unrealized gross profit must be eliminated from the consolidated inventory balance at December 31, Year 1?

A nongovernmental not-for-profit organization received a $500,000 pledge in Year 1 to be used for a specific building project in Year 2. The donor paid the pledge in Year 2, and the building was constructed in Year 2. How should this contribution be reported in the Statement of Activities for Year 1 and Year 2?

A nongovernmental not-for-profit entity reports the following cash flows for the current year:<br/><br/>- Cash received from donors restricted for long-term endowment: $100,000<br/>- Cash received from tuition fees: $400,000<br/>- Cash paid for salaries: $250,000<br/>- Cash received from interest on investments (unrestricted): $15,000<br/>- Cash paid to acquire equipment: $60,000<br/><br/>What is the net cash provided by operating activities?

A city government levies a special property tax dedicated solely to the repayment of general obligation bonds issued to finance the construction of a new city hall. In which fund should the proceeds from this tax be recorded?