Question 1

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

Question 2

In a statement of cash flows,if equipment is sold at a gain,the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment

Accepted Answer

A) with no addition or subtraction. 
B) plus the gain and less the amount of tax attributable to the gain. 
C) plus the gain only. 
D) plus both the gain and the amount of tax attributable to the gain. 
A) with no addition or subtraction. 
B) plus the gain and less the amount of tax attributable to the gain. 
C) plus the gain only. 
D) plus both the gain and the amount of tax attributable to the gain. C

Question 3

A review of the financial records of Stonehenge,Inc.for the current year revealed the following information:
(a)Reported interest expense of $36,000.The Interest Payable balance decreased $4,000.
(b)Declared and paid cash dividends of $175,000.
(c)Purchased a $400,000 building with a $220,000 long-term mortgage note.The remainder was paid in cash.
(d)Issued bonds with a $600,000 par value to retire 6,000 shares of $100 par value preferred stock.
(e)Held-to-maturity securities with a book value of $7,600 were sold for $9,000 during the year.
(f)Reported income tax expense of $55,000.The Income Taxes Payable balance increased $15,000.
(g)The Accounts Payable balance increased $7,740.
(h)Cash of $127,000 was paid to purchase business assets consisting of:
   
(i)Sold equipment with a net book value of $95,000 for $99,700.
(j)Issued $75,000 in common stock to acquire land with a selling price of $120,000.The difference was paid in cash.
Explain how each of the preceding items is presented in the cash flow statement,indirect method,or disclosed in the financial statements of Stonehenge,Inc.Indicate "not included" for any item that would not be reported or disclosed.Evaluate each item separately.

Accepted Answer

The answer of A review of the financial records of...

Question 4

The following data were taken from the books of Golden Company.
   
Cash dividends of $169,000 were declared and paid during 2011.Also,$56,000 of preferred stock was issued during the period.
Compute the net cash flow provided by (used in)operating activities during 2014 for Golden Company.

Accepted Answer

The answer of The following data were taken from the...

Question 5

Waller Corporation had the following account balances for 2014:
 
Waller's 2014 net income is $450,000.What amount should Waller include as net cash provided by operating activities in its 2014 statement of cash flows?

Accepted Answer

A) $436,200 
B) $445,200 
C) $453,600 
D) $454,200 
A) $436,200 
B) $445,200 
C) $453,600 
D) $454,200

Question 6

A gain on the sale of a plant asset should be included in which of the following sections of a statement of cash flows prepared using the direct method?

Accepted Answer

A) Investing activities 
B) Operating activities 
C) Financing activities 
D) Any of these, if applied consistently from year to year 
A) Investing activities 
B) Operating activities 
C) Financing activities 
D) Any of these, if applied consistently from year to year

Question 7

During 2014,Larson Corp.acquired buildings for $325,000,paying $75,000 cash and signing a 10% mortgage note payable in 10 years for the balance.How should the transaction be shown in the cash flow statement for Larson in 2014?

Accepted Answer

A) As a $325,000 reduction in cash flows from investing activities and a $250,000 increase in cash flows from financing activities 
B) As a $325,000 reduction in cash flows from investing activities 
C) As a $75,000 reduction in cash flows from investing activities 
D) As a $250,000 increase in cash flows from financing activities 
A) As a $325,000 reduction in cash flows from investing activities and a $250,000 increase in cash flows from financing activities 
B) As a $325,000 reduction in cash flows from investing activities 
C) As a $75,000 reduction in cash flows from investing activities 
D) As a $250,000 increase in cash flows from financing activities

Question 8

Delilah, Inc., presents the following comparative balance sheets and income statement (all amounts in thousands of dollars):
   S1U1P11S1S1P0Includes interest paid in cash of $23.
-See information regarding Delilah,Inc.above.The following additional information is provided:
1.Fully depreciated equipment costing $6,000 was abandoned on the first business day of 2014.
2.A building to store materials was acquired for $26,000.
3.A stock dividend of $20,000 was declared and distributed as was a cash dividend of $8,000.
4.Additional stock was sold during 2014 for cash.
Required:
Compute the following:
1.Cash received from customers
2.Cash paid to purchase inventory
3.Cash paid for income taxes
4.Cash from sale of common stock

Accepted Answer

The answer of Delilah, Inc., presents the following comparative balance...

Question 9

The following information was taken from the 2014 financial statements of Glocken Corporation:
 
No accounts receivable were written off or recovered during the year.If Glocken prepares a statement of cash flows using the direct method,what amount should be reported as collected from customers in 2014?

Accepted Answer

A) $2,239,000 
B) $2,234,000 
C) $2,146,000 
D) $2,141,000 
A) $2,239,000 
B) $2,234,000 
C) $2,146,000 
D) $2,141,000

Question 10

American Corporation purchased a 3-month U.S.Treasury bill.In preparing American's statement of cash flows,this purchase would

Accepted Answer

A) be treated as an outflow from investing activities. 
B) be treated as an outflow from operating activities. 
C) have no effect. 
D) be treated as an outflow from financing activities. 
A) be treated as an outflow from investing activities. 
B) be treated as an outflow from operating activities. 
C) have no effect. 
D) be treated as an outflow from financing activities.

Question 11

The Dakota Corporation prepared,for 2014 and 2013,the following balance sheet data:
   
Additional information:
(a)Sold available-for-sale securities (not cash equivalents)costing $87,750 for $90,000.
(b)Equipment costing $18,750 with a book value of $3,750 was sold for $4,500.
(c)Issued 8% bonds payable at par,$375,000.
(d)Purchased new equipment for cash,$310,125.
(e)Paid cash dividends of $22,500 during the year.
(f)Net income for 2014 was $45,000.
(g)Proceeds from the notes payable were used for operating purposes.
Prepare a cash flow statement for Dakota Corporation for 2014,using the indirect method.Calculate the Cash Flow to Net Income and the Cash Flow Adequacy ratios.

Accepted Answer

The answer of The Dakota Corporation prepared,for 2014 and 2013,the...

Question 12

Net income for Parton Company for 2014 includes the effect of the following transactions involving the sale of fixed assets:
 
Purchases of fixed assets during 2014 amounted to $340,000.The Accumulated Depreciation account increased $40,000 during 2014.How much was depreciation expense for 2014?

Accepted Answer

A) $175,000 
B) $187,000 
C) $197,000 
D) $215,000 
A) $175,000 
B) $187,000 
C) $197,000 
D) $215,000

Question 13

The most likely situation in which reported earnings are positive but operations are consuming rather than generating cash would be a

Accepted Answer

A) rapidly growing company. 
B) company reporting large noncash expenses. 
C) company using very conservative accounting standards that lower earnings. 
D) company paying large cash dividends to its shareholders. 
A) rapidly growing company. 
B) company reporting large noncash expenses. 
C) company using very conservative accounting standards that lower earnings. 
D) company paying large cash dividends to its shareholders.

Question 14

Supplemental disclosures required only when the statement of cash flows is prepared using the indirect method include

Accepted Answer

A) a schedule reconciling net income with net cash provided by (used in) operating activities. 
B) amounts paid for interest and taxes. 
C) amounts deducted for depreciation and amortization. 
D) significant noncash investing and financing activities. 
A) a schedule reconciling net income with net cash provided by (used in) operating activities. 
B) amounts paid for interest and taxes. 
C) amounts deducted for depreciation and amortization. 
D) significant noncash investing and financing activities.

Question 15

Which of the following is not a source of cash?

Accepted Answer

A) Sale of equipment below book value at a loss 
B) Issuance of bonds payable below par value at a discount 
C) Collection of a long-term note receivable from a customer 
D) Declaration of a cash dividend to be paid in the next accounting period 
A) Sale of equipment below book value at a loss 
B) Issuance of bonds payable below par value at a discount 
C) Collection of a long-term note receivable from a customer 
D) Declaration of a cash dividend to be paid in the next accounting period

Question 16

Thomson Company's income statement for the year ended December 31,2014,reported net income of $360,000.The financial statements also disclosed the following information:
 
Net cash provided by operating activities for 2014 should be reported as

Accepted Answer

A) $84,000. 
B) $204,000. 
C) $234,000. 
D) $324,000. 
A) $84,000. 
B) $204,000. 
C) $234,000. 
D) $324,000.

Question 17

In a statement of cash flows,proceeds from the sale of a company's own bonds or mortgages should be classified as cash inflows from

Accepted Answer

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

Question 18

In preparing a statement of cash flows,sale of treasury stock at an amount greater than cost would be classified as a(n)

Accepted Answer

A) transfer activity. 
B) operating activity. 
C) investing activity. 
D) financing activity. 
A) transfer activity. 
B) operating activity. 
C) investing activity. 
D) financing activity.

Question 19

In preparing a statement of cash flows,which of the following transactions would be considered an investing activity?

Accepted Answer

A) Sale of a business segment 
B) Issuance of bonds payable at a discount 
C) Purchase of treasury stock 
D) Sale of capital stock 
A) Sale of a business segment 
B) Issuance of bonds payable at a discount 
C) Purchase of treasury stock 
D) Sale of capital stock

Question 20

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.

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

In a statement of cash flows,if equipment is sold at a gain,the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment

The following data were taken from the books of Golden Company. Cash dividends of $169,000 were declared and paid during 2011.Also,$56,000 of preferred stock was issued during the period. Compute the net cash flow provided by (used in)operating activities during 2014 for Golden Company.

Waller Corporation had the following account balances for 2014: Waller's 2014 net income is $450,000.What amount should Waller include as net cash provided by operating activities in its 2014 statement of cash flows?

A gain on the sale of a plant asset should be included in which of the following sections of a statement of cash flows prepared using the direct method?

During 2014,Larson Corp.acquired buildings for $325,000,paying $75,000 cash and signing a 10% mortgage note payable in 10 years for the balance.How should the transaction be shown in the cash flow statement for Larson in 2014?

American Corporation purchased a 3-month U.S.Treasury bill.In preparing American's statement of cash flows,this purchase would

Net income for Parton Company for 2014 includes the effect of the following transactions involving the sale of fixed assets: Purchases of fixed assets during 2014 amounted to $340,000.The Accumulated Depreciation account increased $40,000 during 2014.How much was depreciation expense for 2014?

The most likely situation in which reported earnings are positive but operations are consuming rather than generating cash would be a

Supplemental disclosures required only when the statement of cash flows is prepared using the indirect method include

Which of the following is not a source of cash?

Thomson Company's income statement for the year ended December 31,2014,reported net income of $360,000.The financial statements also disclosed the following information: Net cash provided by operating activities for 2014 should be reported as

In a statement of cash flows,proceeds from the sale of a company's own bonds or mortgages should be classified as cash inflows from

In preparing a statement of cash flows,sale of treasury stock at an amount greater than cost would be classified as a(n)

In preparing a statement of cash flows,which of the following transactions would be considered an investing activity?

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

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 Compissues

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

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Exam 5: Statement of Cash Flows and Articulation

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

In a statement of cash flows,if equipment is sold at a gain,the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment

The following data were taken from the books of Golden Company. Cash dividends of $169,000 were declared and paid during 2011.Also,$56,000 of preferred stock was issued during the period. Compute the net cash flow provided by (used in)operating activities during 2014 for Golden Company.

Waller Corporation had the following account balances for 2014: Waller's 2014 net income is $450,000.What amount should Waller include as net cash provided by operating activities in its 2014 statement of cash flows?

A gain on the sale of a plant asset should be included in which of the following sections of a statement of cash flows prepared using the direct method?

During 2014,Larson Corp.acquired buildings for $325,000,paying $75,000 cash and signing a 10% mortgage note payable in 10 years for the balance.How should the transaction be shown in the cash flow statement for Larson in 2014?

American Corporation purchased a 3-month U.S.Treasury bill.In preparing American's statement of cash flows,this purchase would

Net income for Parton Company for 2014 includes the effect of the following transactions involving the sale of fixed assets: Purchases of fixed assets during 2014 amounted to $340,000.The Accumulated Depreciation account increased $40,000 during 2014.How much was depreciation expense for 2014?

The most likely situation in which reported earnings are positive but operations are consuming rather than generating cash would be a

Supplemental disclosures required only when the statement of cash flows is prepared using the indirect method include

Which of the following is not a source of cash?

Thomson Company's income statement for the year ended December 31,2014,reported net income of $360,000.The financial statements also disclosed the following information: Net cash provided by operating activities for 2014 should be reported as

In a statement of cash flows,proceeds from the sale of a company's own bonds or mortgages should be classified as cash inflows from

In preparing a statement of cash flows,sale of treasury stock at an amount greater than cost would be classified as a(n)

In preparing a statement of cash flows,which of the following transactions would be considered an investing activity?

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

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 Compissues

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