Question

The following information relates to the West Company: Prepaid Insurance, December 31, 2012, $ 100,000; Prepaid Insurance, December 31, 2013, $ 120,000; Insurance Expense for 2013, $500,000, What was the amount of cash West paid for insurance premiums during 2013? $720,000 $600,000 $480,000 $520,000 The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12.500 and $10, 500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments merchandise total $49,000 $47,000 $51,000 $53,000 Activities that involve the production or purchase of merchandise and the sale of goods and Services to customers, including expenditures related to administering the business, are classified as: Financing activities Investing activities Operating activities Direct activities The relationship of $800,000 to $200,000 expressed as a ratio is: 4:1 8:1 2:1 1:4 The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as solvency and leverage solvency and profitability solvency and liquidity solvency and equity

 

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