Question 1

Which of the following would be included in cash flows from operating activities?

Accepted Answer

A)  Cash proceeds from sales. 
B)  Cash received from an issuance of bonds. 
C)  Dividends paid to stockholders. 
D)  Cash used for purchases of equipment. 
A)  Cash proceeds from sales. 
B)  Cash received from an issuance of bonds. 
C)  Dividends paid to stockholders. 
D)  Cash used for purchases of equipment.

Question 2

For each letter in the T-accounts below, calculate the missing amount and explain (in words) what each item represents.

Accepted Answer

The answer of For each letter in the T-accounts below,...

Question 3

When using the spreadsheet approach for the indirect method to calculate net cash flows from operating activities, net income would be found as:

Accepted Answer

A)  a debit to the Retained Earnings account. 
B)  the difference between revenues and expenses. 
C)  a credit to the Retained Earnings. 
D)  the difference between gains and losses. 
A)  a debit to the Retained Earnings account. 
B)  the difference between revenues and expenses. 
C)  a credit to the Retained Earnings. 
D)  the difference between gains and losses.

Question 4

Which of the following would be included in cash flows from financing activities?

Accepted Answer

A)  Cash proceeds from sales. 
B)  Cash received from a sale of land. 
C)  Dividends paid to stockholders. 
D)  Cash used to purchases of equipment. 
A)  Cash proceeds from sales. 
B)  Cash received from a sale of land. 
C)  Dividends paid to stockholders. 
D)  Cash used to purchases of equipment.

Question 5

Which of the following statements regarding the capital acquisitions ratio is true?

Accepted Answer

A)  The capital acquisitions ratio is often calculated as an average over a number of years for better comparison between companies in the same industry. 
B)  The calculation of the capital acquisit ions ratio uses the cash expenditures for property, plant and equipment that, all else equal, are reported in the financing activities section of the Statement of Cash Flows. 
C)  A ratio greater than 1.0 indicates that outside financing was needed to replace equipment in the current period. 
D)  The higher the ratio, the more likely external financing will be needed to fund future expansion. 
A)  The capital acquisitions ratio is often calculated as an average over a number of years for better comparison between companies in the same industry. 
B)  The calculation of the capital acquisit ions ratio uses the cash expenditures for property, plant and equipment that, all else equal, are reported in the financing activities section of the Statement of Cash Flows. 
C)  A ratio greater than 1.0 indicates that outside financing was needed to replace equipment in the current period. 
D)  The higher the ratio, the more likely external financing will be needed to fund future expansion.

Question 6

A change in a company's cash account is equal to the:

Accepted Answer

A)  changes in liabilities, stockholders' equity, and noncash assets. 
B)  changes in liabilities minus the changes in stockholders' equity and noncash assets. 
C)  sum of the changes in liabilities, stockholders' equity and noncash assets. 
D)  change in noncash assets minus the changes in liabilities and stockholders' equity. 
A)  changes in liabilities, stockholders' equity, and noncash assets. 
B)  changes in liabilities minus the changes in stockholders' equity and noncash assets. 
C)  sum of the changes in liabilities, stockholders' equity and noncash assets. 
D)  change in noncash assets minus the changes in liabilities and stockholders' equity.

Question 7

A company purchased money market funds with cash during the current year. Choose the TRUE statement.

Accepted Answer

A)  This transaction will result in a decrease in cash from operating activities. 
B)  This transaction will result in a decrease in cash from investing activities. 
C)  This transaction will result in a decrease in cash from financing activities. 
D)  This transaction will not cause a change in cash from operating, investing, or financing activities. 
A)  This transaction will result in a decrease in cash from operating activities. 
B)  This transaction will result in a decrease in cash from investing activities. 
C)  This transaction will result in a decrease in cash from financing activities. 
D)  This transaction will not cause a change in cash from operating, investing, or financing activities.

Question 8

If a company's sales revenue was $171,356 and cash collected from customers was $167,803, which of the following would be consistent with this difference?

Accepted Answer

A)  Accounts receivable could have decreased. 
B)  Cash payments could have been larger than the expense accounts. 
C)  Accounts receivable could have increased. 
D)  Cash payments could have been smaller than the expense accounts. 
A)  Accounts receivable could have decreased. 
B)  Cash payments could have been larger than the expense accounts. 
C)  Accounts receivable could have increased. 
D)  Cash payments could have been smaller than the expense accounts.

Question 9

Given this information, what is the amount of cash collected for rent?

Accepted Answer

A)  $21,000 
B)  $19,000 
C)  $23,000 
D)  $14,000 
A)  $21,000 
B)  $19,000 
C)  $23,000 
D)  $14,000

Question 10

If a company's Cost of goods sold is $158,000 for the period, beginning and ending Inventory balances are $18,000 and $13,000, respectively, and the beginning and ending Accounts Payable balances are $19,000 and
$7,500, respectively, the cash paid to suppliers is:

Accepted Answer

A)  $157,000 
B)  $163,500 
C)  $164,500 
D)  $151,500 
A)  $157,000 
B)  $163,500 
C)  $164,500 
D)  $151,500

Question 11

Depreciation expense is $20,000 and the beginning and ending accumulated depreciation balances are $150,000 and $155,000, respectively. What is the cash paid for depreciation?

Accepted Answer

A)  $20,000 
B)  $5,000 
C)  $0 
D)  $25,000 
A)  $20,000 
B)  $5,000 
C)  $0 
D)  $25,000

Question 12

The Extra Surplus Company's Balance Sheet for December 31, 2010 and the Income Statement for 2011 are shown below.   Additional Data for 2011:
Sales were $13,000; $8,000 in cash was received from customers.
Bought new land for cash, $10,000.
Sold other land for its book value of $5,000.
Paid $1,000 principal on the long-term note payable and $1,000 in interest. Issued new shares of stock for $10,000 cash.
$1,000 of dividends were declared and paid. Paid $5,500 on accounts payable.
No inventory purchases were made; other expenses were incurred on account. All wages were paid in cash.
Other expenses were on account.
a. Prepare the statement of cash flows for the year ended December 31, 2011 using the indirect method. b. Prepare the statement of cash flows for the year ended December 31, 2011 using the direct method.
c. Interpret the statement of cash flows by explaining the main sources and uses of cash during the year.

Accepted Answer

a. Using the Indirect Method: @#IMG-DLM& b. Using

Question 13

B. Darin Company loaned $3,000,000 at 7% interest to S. Dee Company. S. Dee Company would report this as an investing activity on the statement of cash flows.
FALSE

Accepted Answer

A) True 
 B)False

Question 14

Assume a company uses the direct method to prepare its statement of cash flows. If the company's inventory and accounts payable both increase during the accounting period, how would these changes affect cash flow calculations?

Accepted Answer

A)  The changes in each account are both added to net income. 
B)  The change in inventory is subtracted from cost of goods sold and the change in accounts payable is added to cost of goods sold to find the cash paid to suppliers. 
C)  The changes in each account are both subtracted from net income. 
D)  The change in inventory is added to cost of goods sold and the change in accounts payable is subtracted from 
A)  The changes in each account are both added to net income. 
B)  The change in inventory is subtracted from cost of goods sold and the change in accounts payable is added to cost of goods sold to find the cash paid to suppliers. 
C)  The changes in each account are both subtracted from net income. 
D)  The change in inventory is added to cost of goods sold and the change in accounts payable is subtracted from

Question 15

The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413. Net income is $40,251. Which of the following statements is true?

Accepted Answer

A)  $5,813 would be subtracted when determining cash flows from financing activities. 
B)  $40,251 would be added when determining cash flows from financing activities. 
C)  $34,438 would be added when determining cash flows from financing activities. 
D)  $321,975 would be added when determining cash flow from operating activities. 
A)  $5,813 would be subtracted when determining cash flows from financing activities. 
B)  $40,251 would be added when determining cash flows from financing activities. 
C)  $34,438 would be added when determining cash flows from financing activities. 
D)  $321,975 would be added when determining cash flow from operating activities.

Question 16

Which of the following would be included in cash flows from investing activities?

Accepted Answer

A)  Cash proceeds from sales. 
B)  Cash received from an issuance of bonds. 
C)  Dividends paid to stockholders. 
D)  Cash used to purchases of equipment. 
A)  Cash proceeds from sales. 
B)  Cash received from an issuance of bonds. 
C)  Dividends paid to stockholders. 
D)  Cash used to purchases of equipment.

Question 17

The company would report net cash inflows (outflows) from financing activities of:

Accepted Answer

A)  $(2,500) 
B)  $2,000 
C)  $5,000 
D)  $6,000 
A)  $(2,500) 
B)  $2,000 
C)  $5,000 
D)  $6,000

Question 18

Which of the following would be reported on the statement of cash flows, using the direct method, as a cash flow from operating activities?

Accepted Answer

A)  Payment of income taxes 
B)  Payment of dividends. 
C)  Purchase of a building. 
D)  Purchase of treasury stock. 
A)  Payment of income taxes 
B)  Payment of dividends. 
C)  Purchase of a building. 
D)  Purchase of treasury stock.

Question 19

If the calculation of net cash flows from operating activities starts with net income, the company:

Accepted Answer

A)  is using the net income method. 
B)  will remove the effects of all noncash items included in the calculation of net income. 
C)  is using the direct method. 
D)  will add all noncash items not included in the calculation of net income. 
A)  is using the net income method. 
B)  will remove the effects of all noncash items included in the calculation of net income. 
C)  is using the direct method. 
D)  will add all noncash items not included in the calculation of net income.

Question 20

Cash equivalents are assets that are easily converted to cash regardless of their time to maturity.

Accepted Answer

A) True 
 B)False

Which of the following would be included in cash flows from operating activities?

For each letter in the T-accounts below, calculate the missing amount and explain (in words) what each item represents.

When using the spreadsheet approach for the indirect method to calculate net cash flows from operating activities, net income would be found as:

Which of the following would be included in cash flows from financing activities?

Which of the following statements regarding the capital acquisitions ratio is true?

A change in a company's cash account is equal to the:

A company purchased money market funds with cash during the current year. Choose the TRUE statement.

If a company's sales revenue was $171,356 and cash collected from customers was $167,803, which of the following would be consistent with this difference?

Given this information, what is the amount of cash collected for rent?

If a company's Cost of goods sold is $158,000 for the period, beginning and ending Inventory balances are $18,000 and $13,000, respectively, and the beginning and ending Accounts Payable balances are $19,000 and $7,500, respectively, the cash paid to suppliers is:

Depreciation expense is $20,000 and the beginning and ending accumulated depreciation balances are $150,000 and $155,000, respectively. What is the cash paid for depreciation?

B. Darin Company loaned $3,000,000 at 7% interest to S. Dee Company. S. Dee Company would report this as an investing activity on the statement of cash flows. FALSE

Assume a company uses the direct method to prepare its statement of cash flows. If the company's inventory and accounts payable both increase during the accounting period, how would these changes affect cash flow calculations?

The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413. Net income is $40,251. Which of the following statements is true?

Which of the following would be included in cash flows from investing activities?

The company would report net cash inflows (outflows) from financing activities of:

Which of the following would be reported on the statement of cash flows, using the direct method, as a cash flow from operating activities?

If the calculation of net cash flows from operating activities starts with net income, the company:

Cash equivalents are assets that are easily converted to cash regardless of their time to maturity.

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Measuring and Evaluating Financial Performance

Filters

Exam 12: Reporting and Interpreting the Statement of Cash Flows

Which of the following would be included in cash flows from operating activities?

For each letter in the T-accounts below, calculate the missing amount and explain (in words) what each item represents.

When using the spreadsheet approach for the indirect method to calculate net cash flows from operating activities, net income would be found as:

Which of the following would be included in cash flows from financing activities?

Which of the following statements regarding the capital acquisitions ratio is true?

A change in a company's cash account is equal to the:

A company purchased money market funds with cash during the current year. Choose the TRUE statement.

If a company's sales revenue was $171,356 and cash collected from customers was $167,803, which of the following would be consistent with this difference?

Given this information, what is the amount of cash collected for rent?

If a company's Cost of goods sold is $158,000 for the period, beginning and ending Inventory balances are $18,000 and $13,000, respectively, and the beginning and ending Accounts Payable balances are $19,000 and $7,500, respectively, the cash paid to suppliers is:

Depreciation expense is $20,000 and the beginning and ending accumulated depreciation balances are $150,000 and $155,000, respectively. What is the cash paid for depreciation?

B. Darin Company loaned $3,000,000 at 7% interest to S. Dee Company. S. Dee Company would report this as an investing activity on the statement of cash flows. FALSE

Assume a company uses the direct method to prepare its statement of cash flows. If the company's inventory and accounts payable both increase during the accounting period, how would these changes affect cash flow calculations?

The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413. Net income is $40,251. Which of the following statements is true?

Which of the following would be included in cash flows from investing activities?

The company would report net cash inflows (outflows) from financing activities of:

Which of the following would be reported on the statement of cash flows, using the direct method, as a cash flow from operating activities?

If the calculation of net cash flows from operating activities starts with net income, the company:

Cash equivalents are assets that are easily converted to cash regardless of their time to maturity.

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Measuring and Evaluating Financial Performance

Filters