Question 1

A decrease in accounts receivable should be presented in a statement of cash flows (indirect method) as

Accepted Answer

A)  an inflow and outflow of cash. 
B)  an outflow of cash. 
C)  a deduction from net income. 
D)  an addition to net income. 
A)  an inflow and outflow of cash. 
B)  an outflow of cash. 
C)  a deduction from net income. 
D)  an addition to net income.

Question 2

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011:
 
See information regarding Frye Company above. The net cash provided by (used in) investing activities is

Accepted Answer

A)  $220,000. 
B)  $140,000. 
C)  $60,000. 
D)  $(80,000). 
A)  $220,000. 
B)  $140,000. 
C)  $60,000. 
D)  $(80,000).

Question 3

Hale Inc. declared and paid cash dividends of $100,000 on common stock and $75,000 on preferred stock. How would these dividends be presented in Hale's statement of cash flows?

Accepted Answer

A)  As a $100,000 reduction in cash flows from investing activities 
B)  As a $175,000 reduction in cash flows from investing activities 
C)  As a $100,000 reduction in cash flows from financing activities 
D)  As a $175,000 reduction in cash flows from financing activities 
A)  As a $100,000 reduction in cash flows from investing activities 
B)  As a $175,000 reduction in cash flows from investing activities 
C)  As a $100,000 reduction in cash flows from financing activities 
D)  As a $175,000 reduction in cash flows from financing activities

Question 4

Cash equivalents would not include short-term investments in

Accepted Answer

A)  money market funds. 
B)  available-for-sale securities. 
C)  commercial paper. 
D)  certificates of deposit. 
A)  money market funds. 
B)  available-for-sale securities. 
C)  commercial paper. 
D)  certificates of deposit.

Question 5

A gain on the sale of a plant asset in the ordinary course of business should be presented in a statement of cash flows prepared using the indirect method as

Accepted Answer

A)  a cash inflow from investing activities. 
B)  a cash inflow from financing activities. 
C)  an addition to net income. 
D)  a deduction from net income. 
A)  a cash inflow from investing activities. 
B)  a cash inflow from financing activities. 
C)  an addition to net income. 
D)  a deduction from net income.

Question 6

A major controversy in the issuance of Statement of Financial Accounting Standards No. 95¸ "Statement of Cash Flows," centered around the possibility of the Board's requiring the direct method of reporting operating cash flows. Bankers who responded to the Exposure Draft preceding the issuance of the pronouncement on cash flows expressed a preference for the direct method. Practicing CPAs have been shown in studies to favor the indirect method. The Board has allowed both the indirect and direct methods to be used, although the Board expressed a preference for the direct method.
Evaluate the strengths and weaknesses of the direct and indirect methods and why you believe the Board decided to allow preparers of financial statements a choice between the two methods.

Accepted Answer

The direct method clearly is more diffic

Question 7

Which of the following is true?

Accepted Answer

A)  The FASB requires dividends paid to be classified as an operating activity. 
B)  The FASB requires interest paid to be classified as a financing activity. 
C)  The FASB allows dividends paid to be classified as an operating activity or as a financing activity. 
D)  The IASC allows dividends paid to be classified as an operating activity or as a financing activity. 
A)  The FASB requires dividends paid to be classified as an operating activity. 
B)  The FASB requires interest paid to be classified as a financing activity. 
C)  The FASB allows dividends paid to be classified as an operating activity or as a financing activity. 
D)  The IASC allows dividends paid to be classified as an operating activity or as a financing activity.

Question 8

The amortization of a bond premium can correctly be presented in the statement of cash flows in which of the following ways?

Accepted Answer

A)  A positive adjustment to net income in determining cash flows from operating activities 
B)  A use of cash in determining cash flows from investing activities 
C)  A source of cash in determining cash flows from financing activities 
D)  A negative adjustment to net income in determining cash flows from operating activities 
A)  A positive adjustment to net income in determining cash flows from operating activities 
B)  A use of cash in determining cash flows from investing activities 
C)  A source of cash in determining cash flows from financing activities 
D)  A negative adjustment to net income in determining cash flows from operating activities

Question 9

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Accepted Answer

A)  brokerage activities. 
B)  financing activities. 
C)  investing activities. 
D)  operating activities. 
A)  brokerage activities. 
B)  financing activities. 
C)  investing activities. 
D)  operating activities.

Question 10

When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a(n)

Accepted Answer

A)  increase in cash flows from investing activities. 
B)  reduction in cash flows from investing activities. 
C)  increase in cash flows from operating activities. 
D)  reduction in cash flows from operating activities. 
A)  increase in cash flows from investing activities. 
B)  reduction in cash flows from investing activities. 
C)  increase in cash flows from operating activities. 
D)  reduction in cash flows from operating activities.

Question 11

Cash flows from investing activities would be decreased by which of the following?

Accepted Answer

A)  Issuance of bonds 
B)  Issuance of common stock 
C)  Purchase of long-term investments 
D)  Payment of dividends 
A)  Issuance of bonds 
B)  Issuance of common stock 
C)  Purchase of long-term investments 
D)  Payment of dividends

Question 12

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011:
 
See information regarding Frye Company above. The net cash provided by (used in) operating activities is

Accepted Answer

A)  $60,000. 
B)  $40,000. 
C)  $30,000. 
D)  $(20,000). 
A)  $60,000. 
B)  $40,000. 
C)  $30,000. 
D)  $(20,000).

Question 13

The following is a comparative balance sheet for Top Ten Clothiers Inc. for the years 2011 and 2010:
   
The income statement for the year ended December 31, 2011, follows:
   
After paying cash dividends, the decrease in retained earnings totaled $95,000. Management is alarmed by the shrinkage in the company's cash position during 2011. Prepare a statement of cash flows for 2011 using the direct method.

Accepted Answer

The answer of The following is a comparative balance sheet...

Question 14

In a statement of cash flows using the direct method, which of the following would increase reported cash flows from operating activities?

Accepted Answer

A)  Dividends received from investments 
B)  Gain on sale of equipment 
C)  Gain on sale of a business segment 
D)  Sale of treasury stock 
A)  Dividends received from investments 
B)  Gain on sale of equipment 
C)  Gain on sale of a business segment 
D)  Sale of treasury stock

Question 15

Which of the following would be subtracted from net income when using the indirect method to derive net cash flows from operating activities?

Accepted Answer

A)  Decrease in salaries and wages payable 
B)  Loss on sale of investments 
C)  Decrease in net accounts receivable 
D)  Depreciation expense 
A)  Decrease in salaries and wages payable 
B)  Loss on sale of investments 
C)  Decrease in net accounts receivable 
D)  Depreciation expense

Question 16

In preparing a statement of cash flows (indirect method), cash flows from operating activities

Accepted Answer

A)  is calculated as the difference between revenues and expenses plus the beginning cash balance. 
B)  is always equal to the sum of cash flows from investing activities and cash flows from financing activities. 
C)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that affect cash and accruals for current assets and current liabilities. 
D)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash. 
A)  is calculated as the difference between revenues and expenses plus the beginning cash balance. 
B)  is always equal to the sum of cash flows from investing activities and cash flows from financing activities. 
C)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that affect cash and accruals for current assets and current liabilities. 
D)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash.

Question 17

Rose Corporation reported net income of $420,000 for 2011. Changes occurred in several balance sheet accounts as follows:
 
Additional information:
 
In Rose's 2011 statement of cash flows, net cash provided by operating activities should be

Accepted Answer

A)  $476,000. 
B)  $485,800. 
C)  $492,800. 
D)  $499,800. 
A)  $476,000. 
B)  $485,800. 
C)  $492,800. 
D)  $499,800.

Question 18

Which of the following is true?

Accepted Answer

A)  The IASC requires eight cash flow categories. 
B)  The Accounting Standards Board of the United Kingdom requires eight cash flow categories. 
C)  The IASC does not specifically require a fixed number of cash flow categories. 
D)  The Accounting Standards Board of the United Kingdom requires three cash flow categories. 
A)  The IASC requires eight cash flow categories. 
B)  The Accounting Standards Board of the United Kingdom requires eight cash flow categories. 
C)  The IASC does not specifically require a fixed number of cash flow categories. 
D)  The Accounting Standards Board of the United Kingdom requires three cash flow categories.

Question 19

In a statement of cash flows prepared using the direct method, if wages payable increased during the year, the cash paid for wages would be

Accepted Answer

A)  the same as salary expense. 
B)  salary expense plus wages payable at the beginning of the year. 
C)  salary expense plus the increase in wages payable from the beginning to the end of the year. 
D)  salary expense less the increase in wages payable from the beginning to the end of the year. 
A)  the same as salary expense. 
B)  salary expense plus wages payable at the beginning of the year. 
C)  salary expense plus the increase in wages payable from the beginning to the end of the year. 
D)  salary expense less the increase in wages payable from the beginning to the end of the year.

A decrease in accounts receivable should be presented in a statement of cash flows (indirect method) as

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011: See information regarding Frye Company above. The net cash provided by (used in) investing activities is

Hale Inc. declared and paid cash dividends of $100,000 on common stock and $75,000 on preferred stock. How would these dividends be presented in Hale's statement of cash flows?

Cash equivalents would not include short-term investments in

A gain on the sale of a plant asset in the ordinary course of business should be presented in a statement of cash flows prepared using the indirect method as

Which of the following is true?

The amortization of a bond premium can correctly be presented in the statement of cash flows in which of the following ways?

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a(n)

Cash flows from investing activities would be decreased by which of the following?

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011: See information regarding Frye Company above. The net cash provided by (used in) operating activities is

In a statement of cash flows using the direct method, which of the following would increase reported cash flows from operating activities?

Which of the following would be subtracted from net income when using the indirect method to derive net cash flows from operating activities?

In preparing a statement of cash flows (indirect method), cash flows from operating activities

Rose Corporation reported net income of $420,000 for 2011. Changes occurred in several balance sheet accounts as follows: Additional information: In Rose's 2011 statement of cash flows, net cash provided by operating activities should be

Which of the following is true?

In a statement of cash flows prepared using the direct method, if wages payable increased during the year, the cash paid for wages would be

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 5: Statement of Cash Flows and Articulation

A decrease in accounts receivable should be presented in a statement of cash flows (indirect method) as

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011: See information regarding Frye Company above. The net cash provided by (used in) investing activities is

Hale Inc. declared and paid cash dividends of $100,000 on common stock and $75,000 on preferred stock. How would these dividends be presented in Hale's statement of cash flows?

Cash equivalents would not include short-term investments in

A gain on the sale of a plant asset in the ordinary course of business should be presented in a statement of cash flows prepared using the indirect method as

Which of the following is true?

The amortization of a bond premium can correctly be presented in the statement of cash flows in which of the following ways?

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a(n)

Cash flows from investing activities would be decreased by which of the following?

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011: See information regarding Frye Company above. The net cash provided by (used in) operating activities is

In a statement of cash flows using the direct method, which of the following would increase reported cash flows from operating activities?

Which of the following would be subtracted from net income when using the indirect method to derive net cash flows from operating activities?

In preparing a statement of cash flows (indirect method), cash flows from operating activities

Rose Corporation reported net income of $420,000 for 2011. Changes occurred in several balance sheet accounts as follows: Additional information: In Rose's 2011 statement of cash flows, net cash provided by operating activities should be

Which of the following is true?

In a statement of cash flows prepared using the direct method, if wages payable increased during the year, the cash paid for wages would be

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters