Question 1

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

Accepted Answer

A) True 
 B)False

Question 2

Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000. This implies that $40,000 cash was received from the sale.

Accepted Answer

A) True 
 B)False

Question 3

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: $\begin{array} { l  }
 \text {Cash dividends declared for the year }&\$40,000 \
 \text {Cash dividends payable at the beginning of the year }& 17,000\
 \text { Cash dividends payable at the end of the year}&13,000 \
\end{array}$
The amount of cash paid for dividends was:
A) $ \$ 57,000 $
B) $ \$ 53,000 $.
C) $ \$ 36,000 $.
D) $ \$ 40,000 $.
E) $ \$ 44,000 $

Accepted Answer

The answer of Marshland Company is preparing the company's statement...

Question 4

The payment of cash dividends to shareholders is classified as a financing activity.

Accepted Answer

A) True 
 B)False

Question 5

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

Accepted Answer

A) Direct method of reporting net cash provided or used by operating activities. 
B) Indirect method of reporting net cash provided or used by operating activities. 
C) Classified statement of cash flows. 
D) Cash basis of accounting. 
E) Net method of reporting cash flows from operating activities. 
A) Direct method of reporting net cash provided or used by operating activities. 
B) Indirect method of reporting net cash provided or used by operating activities. 
C) Classified statement of cash flows. 
D) Cash basis of accounting. 
E) Net method of reporting cash flows from operating activities.

Question 6

Information to prepare the statement of cash flows usually comes from (a)comparative balance sheets, (b)current income statement, and (c)additional information.

Accepted Answer

A) True 
 B)False

Question 7

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for all but which of the following?

Accepted Answer

A) Depreciation and amortization expense. 
B) Changes in current liabilities related to operating activities. 
C) Gains and losses from nonoperating items. 
D) Revenues and expenses that did not provide or use cash. 
E) Changes in noncurrent assets and noncurrent liabilities. 
A) Depreciation and amortization expense. 
B) Changes in current liabilities related to operating activities. 
C) Gains and losses from nonoperating items. 
D) Revenues and expenses that did not provide or use cash. 
E) Changes in noncurrent assets and noncurrent liabilities.

Question 8

Jamison Company reports depreciation expense of $35,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Jamison Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.
$\begin{array}{|l|l|l|}
\hline \text { At December 31 } &{\text { Y ear 2 }} & \text { Y ear 1 } \
\hline \text { Equipment } & \$ 610,000 & \$ 750,000 \
\hline \text { Accumulated Depreciation-Equipment } & 428,000 & 500,000\\hline
\end{array}$

Accepted Answer

A) $38,000. 
B) $23,000. 
C) $40,000. 
D) $35,000. 
E) $67,000. 
A) $38,000. 
B) $23,000. 
C) $40,000. 
D) $35,000. 
E) $67,000.

Question 9

The direct method separately lists each major item of operating cash receipts and cash payments.

Accepted Answer

A) True 
 B)False

Question 10

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows)and cash payments (outflows)during a period.

Accepted Answer

A) True 
 B)False

Question 11

Investing activities do not include the:

Accepted Answer

A) Sale of short-term investments other than cash equivalents. 
B) Sale of plant assets. 
C) Lending and collecting on notes receivable. 
D) Issuance of common stock. 
E) Purchase of plant assets. 
A) Sale of short-term investments other than cash equivalents. 
B) Sale of plant assets. 
C) Lending and collecting on notes receivable. 
D) Issuance of common stock. 
E) Purchase of plant assets.

Question 12

Alvez Company reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a
$15,200 increase in accounts payable, a $12,500 decrease in wages payable, and a $100,000 decrease in notes payable. Calculate the cash provided (used)in operating activities using the indirect method.

Accepted Answer

A) $361,000. 
B) $371,400. 
C) $461,800. 
D) $351,000. 
E) $381,400. 
A) $361,000. 
B) $371,400. 
C) $461,800. 
D) $351,000. 
E) $381,400.

Question 13

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):

Accepted Answer

A) Operating activity. 
B) Financing activity. 
C) Investing activity. 
D) This is not reported in the statement of cash flows. 
E) Noncash investing and financing activity. 
A) Operating activity. 
B) Financing activity. 
C) Investing activity. 
D) This is not reported in the statement of cash flows. 
E) Noncash investing and financing activity.

Question 14

Financing activities include receiving cash dividends from investments in other companies' stocks.

Accepted Answer

A) True 
 B)False

Question 15

Use the following information to calculate cash paid for income taxes: $\begin{array}{l|r}
\text { Income tax expense } & \$ 43,000 \
\hline \text { Income tax payable, January 1 } & 9,100 \
\hline \text { Income tax payable, December 31 } & 10,200
\end{array}$

Accepted Answer

A) $43,000. 
B) $52,100. 
C) $23,700. 
D) $41,900. 
E) $53,200. 
A) $43,000. 
B) $52,100. 
C) $23,700. 
D) $41,900. 
E) $53,200.

Question 16

The indirect method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Accepted Answer

A) True 
 B)False

Question 17

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Accepted Answer

A) True 
 B)False

Question 18

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Accepted Answer

A) True 
 B)False

Question 19

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

Accepted Answer

A) Financing activities. 
B) Investing activities. 
C) Schedule of noncash financing and investing activities. 
D) Operating activities. 
E) Reconciliation of cash balance. 
A) Financing activities. 
B) Investing activities. 
C) Schedule of noncash financing and investing activities. 
D) Operating activities. 
E) Reconciliation of cash balance.

Question 20

Bagwell's net income for the year ended December 31, Year 2 was $185,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2. $\begin{array}{|l|l|l|}
\hline \text { At December } 31 &{\text { Y ear 2 }} & \text { Y ear 1 } \
\hline \text { Common Stock, } \$ 5 \text { par value } & \$ 500,000 & \$ 450,000 \
\hline \text { Paid-in capital in excess of par } & 948,000 & 853,000 \
\hline \text { Retained earnings } & 688,000 & 582,000 \
\hline
\end{array}$

Accepted Answer

A) $145,000. 
B) $50,000. 
C) $95,000. 
D) $106,000. 
E) $185,000. 
A) $145,000. 
B) $50,000. 
C) $95,000. 
D) $106,000. 
E) $185,000.

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000. This implies that $40,000 cash was received from the sale.

The payment of cash dividends to shareholders is classified as a financing activity.

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

Information to prepare the statement of cash flows usually comes from (a)comparative balance sheets, (b)current income statement, and (c)additional information.

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for all but which of the following?

The direct method separately lists each major item of operating cash receipts and cash payments.

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows)and cash payments (outflows)during a period.

Investing activities do not include the:

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):

Financing activities include receiving cash dividends from investments in other companies' stocks.

Use the following information to calculate cash paid for income taxes: Income tax expense \ 43,000 Income tax payable, January 1 9,100 Income tax payable, December 31 10,200

The indirect method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

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

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000. This implies that $40,000 cash was received from the sale.

The payment of cash dividends to shareholders is classified as a financing activity.

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

Information to prepare the statement of cash flows usually comes from (a)comparative balance sheets, (b)current income statement, and (c)additional information.

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for all but which of the following?

The direct method separately lists each major item of operating cash receipts and cash payments.

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows)and cash payments (outflows)during a period.

Investing activities do not include the:

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):

Financing activities include receiving cash dividends from investments in other companies' stocks.

Use the following information to calculate cash paid for income taxes: Income tax expense \ 43,000 Income tax payable, January 1 9,100 Income tax payable, December 31 10,200

The indirect method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

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