Exam 12: Reporting and Interpreting the Statement of Cash Flows

At certain times of the year, many retail companies experience a rapid increase in inventory as they prepare for a period of high sales. All other things equal, this would cause:

If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid Insurance are $1,500 and $2,000, respectively, the cash paid for insurance

Which of the following statements regarding the reporting of operating cash flows using the direct method is true?

A company has net income of $43,560 with a net cash flow from operating activities of $91,476 and a net increase in cash of $84,942. The company paid $33,524 for income taxes and $25,000 for interest during the year. The company's quality of income ratio is:

Which of the following would be classified as an investing activity on the statement of cash flows?

The following information is taken from the 2011 income statement of Muir Company: Based on this information, what is the net cash flows from operating activities?

When the indirect method is used, if prepaid expenses decrease during the accounting period, the change in prepaid expenses is:

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is:

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in stock of other companies.

A company's income statement for the year shows a net loss of $90,000. Additional information for the year follows: What is the net cash flows from operating activities?

A growing, start-up company may have a cash flow pattern of borrowing cash to offset a cash shortage from the cash flows from operating activities and to purchase additional productive assets.

The starting and ending balances for relevant asset and liability accounts that changed during the year are presented below. Net income was $650,000 for the year and dividends paid were $150,000. Depreciation expense for 2011 was $7,000, and all other changes in accumulated depreciation and property, plant, and equipment related to the sale of property at book value. No other non-cash transactions occurred. Use this information to calculate the net cash inflows (outflows) from investing and financing activities in 2011.

If a company uses the direct method of calculating net cash flows from operating activities, it must adjust net income for gains or losses when selling property, plant, and equipment.

Assume a company uses the direct method to prepare its statement of cash flows. If the company's accounts receivable increase during the accounting period, the change in accounts receivable Is:

Suppose a company generally records revenues and expenses before receiving or making cash payments. Which of the following statements is NOT true?

Free cash flow is a positive cash flow:

Cash and cash equivalents include:

Corporation X has no short-term investments, carries only a minimal amount of cash, and has a capital acquisitions ratio of 0.7. Which of the following is suggested by these facts?

Which of the following journal entries would change the Net Cash Flows from Operating Activities line of the statement of cash flows?

Which of the following represent cash inflows from financing activities?