Reading 38: Long-Term Liabilities and Leases - LOS i ～ Q1-3 black, likely, white, following, financing

mayanfang1

Q1. Which of the following is least likely to be considered off-balance-sheet financing?

A)   Take-or-pay contract.

B)   Debt through finance subsidiaries.

C)   Finance lease.

Q2. To adjust a statement of cash flows for a sale of receivables with recourse, the analyst should:

A)   increase the cash flows from financing.

B)   increase the cash flows from operations.

C)   decrease the cash flows from investing.

Q3. Which of the following best describes a take-or-pay contract? In a take-or-pay contract:

A)   the purchasing firm commits to buying up to a maximum quantity of an input over a specified time period.

B)   input prices are fixed over the life of the contract.

C)   the purchasing firm commits to buying a minimum quantity of an input over a specified time period.

 

mayanfang1

答案和详解如下：

Q1. Which of the following is least likely to be considered off-balance-sheet financing?

A)   Take-or-pay contract.

B)   Debt through finance subsidiaries.

C)   Finance lease.

Correct answer is C)         

At the inception of a finance lease, the leased asset and liability is recognized on the balance sheet. Take-or-pay contracts and assets and liabilities of minority owned subsidiaries are examples of off-balance-sheet financing.

Q2. To adjust a statement of cash flows for a sale of receivables with recourse, the analyst should:

A)   increase the cash flows from financing.

B)   increase the cash flows from operations.

C)   decrease the cash flows from investing.

Correct answer is A)

The cash flow statement needs to be adjusted by reducing the cash flow from operations and increasing the cash flows from financing by the amount of receivables sold. The total cash flows over the life of the receivables and cash flows from investing are not affected.

Q3. Which of the following best describes a take-or-pay contract? In a take-or-pay contract:

A)   the purchasing firm commits to buying up to a maximum quantity of an input over a specified time period.

B)   input prices are fixed over the life of the contract.

C)   the purchasing firm commits to buying a minimum quantity of an input over a specified time period.

Correct answer is C)

In a take-or-pay contract, the purchasing firm commits to buying a minimum quantity of an input over a specified period of time. The prices may be fixed by contract or related to market prices.

 

Inness

aba

Inness

The answer to the Q3 is uncertain.And the answer to the Q2 is totally wrong.

the take-or-pay contract it's an aggrement between a buyer and seller in which the buyer will still pay some amout even if the product or serviceis not provided.So it is not necessery at minimum amount or maximum amount according to the North american's acconting principle.

the sales receivable do increase the operating parts while not exsisting in financing parts according to both international or north american accounting principle. 

goofey

thanks

mcdullpong

 thanks

suodi

[em50]

wxvivian

 thanks

erpang8888

Good

rosemarie

thanks