Question 1

Business activities that generate or use cash are classified as operating, investing, or financing activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False  True

Question 2

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method: $\begin{array}{|l|r|}
\hline \text { Net income } & \$ 182,000 \
\hline \text { Gain on the sale of equipment } & 12,300 \
\hline \text { Proceeds from the sale of equipment } & 92,300 \
\hline \text { Depreciation expense - equipment } & 50,000 \
\hline \text { Payment of bonds at maturity } & 100,000 \
\hline \text { Purchase of land } & 200,000 \
\hline \text { Issuance of common stock } & 300,000 \
\hline \text { Increase in merchandise inventory } & 35,400 \
\hline \text { Decrease in accounts receivable } & 28,800 \
\hline \text { Increase in accounts payable } & 23,700 \
\hline \text { Payment of cash dividends } & 32,000\\hline
\end{array}$

Accepted Answer

A) $332,200. 
B) $186,800. 
C) $236,800. 
D) $261,400. 
E) $189,400. 
A) $332,200. 
B) $186,800. 
C) $236,800. 
D) $261,400. 
E) $189,400. C

Question 3

A company's income statement showed the following: net income, $134,000; depreciation expense, $30,000; and gain on sale of plant assets, $4,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses increased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

Accepted Answer

A) $96,600. 
B) $141,000. 
C) $88,600. 
D) $156,600. 
E) $148,600. 
A) $96,600. 
B) $141,000. 
C) $88,600. 
D) $156,600. 
E) $148,600. E

Question 4

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Accepted Answer

A) True 
 B)False

Question 5

Cash paid for merchandise is an operating activity.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

Accepted Answer

A) Depreciation expense. 
B) Cash collections from customers. 
C) Cash received from the sale of treasury stock. 
D) Cash received from the sale of a building. 
E) Credit sales. 
A) Depreciation expense. 
B) Cash collections from customers. 
C) Cash received from the sale of treasury stock. 
D) Cash received from the sale of a building. 
E) Credit sales.

Question 7

Explain how cash flows from investing and financing activities are determined.

Accepted Answer

Cash flows from investing activities are

Question 8

A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

Accepted Answer

A) 20.0%. 
B) 24.0%. 
C) 5.0%. 
D) 20.8%. 
E) 4.8%. 
A) 20.0%. 
B) 24.0%. 
C) 5.0%. 
D) 20.8%. 
E) 4.8%.

Question 9

Jeffreys Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Jeffreys Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.
$\begin{array}{|l|l|l|}
\hline \text { At December 31 } &{\text { Y ear 2 }} & \text { Y ear 1 } \
\hline \text { Equipment } & \$ 510,000 & \$ 750,000 \
\hline \text { Accumulated Depreciation-Equipment } & 328,000 & 500,000\\hline 
\end{array}$

Accepted Answer

A) $62,000. 
B) $58,000. 
C) $18,000. 
D) $38,000. 
E) $28,000. 
A) $62,000. 
B) $58,000. 
C) $18,000. 
D) $38,000. 
E) $28,000.

Question 10

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 11

The statement of cash flows helps analysts evaluate all but which of the following?

Accepted Answer

A) Source of cash used for debt repayments. 
B) Differences between net income and net operating cash flow. 
C) Ability of the company to generate profit. 
D) Source of cash used to finance investing activities. 
E) Source of cash used for plant expansion. 
A) Source of cash used for debt repayments. 
B) Differences between net income and net operating cash flow. 
C) Ability of the company to generate profit. 
D) Source of cash used to finance investing activities. 
E) Source of cash used for plant expansion.

Question 12

Typical cash flows from investing activities include each of the following except:

Accepted Answer

A) Proceeds from the sale of equipment. 
B) Payments to buy intangible assets. 
C) Payments to purchase property, plant and equipment or other productive assets (excluding inventory). 
D) Payments to acquire held-to maturity securities of other entities, except cash equivalents. 
E) Proceeds from collecting the principal amount of accounts receivable arising from customer sales. 
A) Proceeds from the sale of equipment. 
B) Payments to buy intangible assets. 
C) Payments to purchase property, plant and equipment or other productive assets (excluding inventory). 
D) Payments to acquire held-to maturity securities of other entities, except cash equivalents. 
E) Proceeds from collecting the principal amount of accounts receivable arising from customer sales.

Question 13

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from operating activities generally affect:

Accepted Answer

A) Noncurrent liability and equity accounts. 
B) Noncurrent assets. 
C) Net income, current assets, and current liabilities. 
D) Equity accounts only. 
E) Both noncurrent assets and noncurrent liabilities. 
A) Noncurrent liability and equity accounts. 
B) Noncurrent assets. 
C) Net income, current assets, and current liabilities. 
D) Equity accounts only. 
E) Both noncurrent assets and noncurrent liabilities.

Question 14

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

Accepted Answer

A) True 
 B)False

Question 15

When using a spreadsheet to prepare the statement of cash flows, a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Accepted Answer

A) True 
 B)False

Question 16

The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: $\begin{array} { l  }
 \text {Retained earnings balance at the beginning of the year }&\$126,000 \
 \text {Cash dividends declared for the year }& 46,000\
 \text {Proceeds from the sale of equipment }& 81,000\
 \text {Gain on the sale of equipment }&7,000 \
 \text {Cash dividends payable at the beginning of the year }&18,000 \
 \text { Cash dividends payable at the end of the year}& 20,000\
 \text { Net income for the year}&92,000 \
\end{array}$

What is the ending balance for retained earnings?
A) $ \$ 352,000 $
B) $ \$ 218000 $
C) $ \$ 179.000 $
D) $ \$ 172,000 $
E) $ \$ 170,000 $

Accepted Answer

The answer of The accountant for Crusoe Company is preparing...

Question 17

Noncash investing and financing activities may be disclosed in:

Accepted Answer

A) The reconciliation of cash balance section. 
B) The financing activities section of the statement of cash flows. 
C) A note in the financial statements or a schedule attached to the statement of cash flows. 
D) The operating activities section of the statement of cash flows. 
E) The investing activities section of the statement of cash flows. 
A) The reconciliation of cash balance section. 
B) The financing activities section of the statement of cash flows. 
C) A note in the financial statements or a schedule attached to the statement of cash flows. 
D) The operating activities section of the statement of cash flows. 
E) The investing activities section of the statement of cash flows.

Question 18

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Accepted Answer

A) This is not reported on the statement of cash flows. 
B) Operating activities. 
C) Schedule of noncash investing or financing activity. 
D) Financing activities. 
E) Investing activities. 
A) This is not reported on the statement of cash flows. 
B) Operating activities. 
C) Schedule of noncash investing or financing activity. 
D) Financing activities. 
E) Investing activities.

Question 19

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

Accepted Answer

A) $(7,000). 
B) $7,000. 
C) $(57,000). 
D) $(60,000). 
E) $(3,000). 
A) $(7,000). 
B) $7,000. 
C) $(57,000). 
D) $(60,000). 
E) $(3,000).

Question 20

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: $\begin{array} { l  }
 \text {Retained earnings balance at the beginning of the year  }&\$233,000 \
 \text {Cash dividends declared for the year }&50,000 \
 \text {Proceeds from the sale of equipment }&85,000 \
 \text { Gain on the sale of equipment}&4,500 \
 \text { Cash dividends payable at the beginning of the year}&22,000 \
 \text {Cash dividends payable at the end of the year }& 30,000\
 \text {Net income for the year }&110,000\
\end{array}$

Accepted Answer

A) $343,000. 
B) $301,000. 
C) $213,000. 
D) $293,000. 
E) $297,500. 
A) $343,000. 
B) $301,000. 
C) $213,000. 
D) $293,000. 
E) $297,500.

Business activities that generate or use cash are classified as operating, investing, or financing activities on the statement of cash flows.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Cash paid for merchandise is an operating activity.

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

Explain how cash flows from investing and financing activities are determined.

A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

The statement of cash flows helps analysts evaluate all but which of the following?

Typical cash flows from investing activities include each of the following except:

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from operating activities generally affect:

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

When using a spreadsheet to prepare the statement of cash flows, a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Noncash investing and financing activities may be disclosed in:

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Analysis of Financial Statements

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Exam 16: Reporting the Statement of Cash Flows

Business activities that generate or use cash are classified as operating, investing, or financing activities on the statement of cash flows.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Cash paid for merchandise is an operating activity.

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

Explain how cash flows from investing and financing activities are determined.

A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

The statement of cash flows helps analysts evaluate all but which of the following?

Typical cash flows from investing activities include each of the following except:

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from operating activities generally affect:

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

When using a spreadsheet to prepare the statement of cash flows, a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Noncash investing and financing activities may be disclosed in:

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Analysis of Financial Statements

Filters