Question 1

What are the five usual steps involved in the preparation of the statement of cash flows?

Accepted Answer

The preparation of the statement of cash

Question 2

The conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 3

When preparing the operating section of the statement of cash flows using the indirect method,an increase in income taxes payable is added back to net income.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

When preparing the operating section of the statement of cash flows using the indirect method,non-operating gains are added back to net income.

Accepted Answer

A) True 
 B)False

Question 6

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following is representative of typical cash flows from operating activities?

Accepted Answer

A) Proceeds from collecting the principal amount of loans 
B) Repayment of principal on loans 
C) Proceeds from the issuance of bonds and notes payable 
D) Payments by a merchandiser to acquire equity securities of other companies 
E) Receipts of cash sales 
A) Proceeds from collecting the principal amount of loans 
B) Repayment of principal on loans 
C) Proceeds from the issuance of bonds and notes payable 
D) Payments by a merchandiser to acquire equity securities of other companies 
E) Receipts of cash sales

Question 8

Explain how to determine cash flows from investing and financing activities.

Accepted Answer

Cash flows from investing activities are

Question 9

Net income of Lucky Company was $52,000.The accounting records reveal depreciation expense of $99,000 as well as increases in prepaid rent,salaries payable,and income taxes payable of $74,000,$15,700,and $14,000,respectively.What is the net cash flow provided (used)by operating activities?

Accepted Answer

A) $254,700 
B) $47,300 
C) $195,300 
D) $150,700 
E) $106,700 
A) $254,700 
B) $47,300 
C) $195,300 
D) $150,700 
E) $106,700

Question 10

When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are _____________ net income.

Accepted Answer

The answer of When preparing the operating section of the...

Question 11

Based on the following income statement and balance sheet for Rashid Corporation,determine the cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Based on the following income statement and...

Question 12

The following selected account balances are taken from a merchandising company's records:
 $\begin{array}{|l|r|r|r|}
\hline &\text { Dec. 31 } & \text { Dec. 31 } & \text { For the } \
&2009 & 2010 & \text { Year 2010 } \
\hline \text { Merchandise inventory } & \$ 15,600 & \$ 21,200 & \
\hline \text { Accounts payable } & 32,400 & 27,400 & \
\hline \text { Salaries payable } & 4,400 & 3,000 & \
\hline \text { Accounts receivable } & 42,000 & 36,000 & \
\hline \text { Total assets } & 234,000 & 286,000 & \
\hline \text { Sales } & & & \$ 312,000 \
\hline \text { Cost of goods sold } & & & 165,600 \
\hline \text { Salaries expense } & & & 48,000\
\hline 
\end{array}$ 
(a)Calculate the cash payments made during 2010 for merchandise.Assume all of the company's accounts payable balances are a result from merchandise purchases.
(b)Calculate the cash receipts from customer sales during 2010.
(c)Calculate the cash payments for salaries during 2010.

Accepted Answer

None

Question 13

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 14

A company had cost of goods sold of $150,000 during a given period.Compute cash paid for merchandise during this period given the following data.
$\begin{array}{|l|r|r|}
\hline &\text { Beginning } & \text { Ending } \
&\text { Balance } & \text { Balance }\ 
\hline \text { Accounts Payable } & \$ 20,000 & \$ 17,500 \
\hline \text { Merchandise Inventory } & 35,000 & 42,000\
\hline
\end{array}$

Accepted Answer

A) $145,500 
B) $159,500 
C) $140,500 
D) $154,500 
E) $157,000 
A) $145,500 
B) $159,500 
C) $140,500 
D) $154,500 
E) $157,000

Question 15

Under IFRS,cash outflows for interest expense are classified as

Accepted Answer

A) Operating 
B) Investing 
C) Financing 
D) Operating,Investing or Financing assuming that the classification is applied consistently across all periods 
E) Investing or Financing,depending upon who is the recipient of the interest paid 
A) Operating 
B) Investing 
C) Financing 
D) Operating,Investing or Financing assuming that the classification is applied consistently across all periods 
E) Investing or Financing,depending upon who is the recipient of the interest paid

Question 16

Spirit Company,a merchandiser,recently completed the 2010 calendar year.For the year, (1)all sales are credit sales, (2)all credits to Accounts Receivable reflect cash receipts from customers, (3)all purchases of inventory are on credit, (4)all debits to Accounts Payable reflect cash payments for inventory,and (5)Other Expenses are paid in advance and are initially debited to Prepaid Expenses.The company's balance sheet and income statement follow:

Additional Information on Year 2010 Transactions
a. The loss on the cash sale of equipment was $ \$ 5,875 $ (details in $ b $ ).
b. Sold equipment costing $ \$ 46,500 $, for a loss of $ \$ 5,875 $.
c. Purchased equipment costing $ \$ 99,000 $ by paying $ \$ 35,000 $ cash and signing a long-term note payable for the balance.
d. Borrowed $ \$ 2,000 $ cash by signing a short-term note payable.
e. Paid $ \$ 47,500 $ cash to reduce the long-term notes payable.
f. Issued 2,400 shares of common stock for $ \$ 20 $ cash per share.
g. Net income and dividends were the only items that affected retained earnings.

Determine the cash received by Spirit for the equipment sold in item C above.

Accepted Answer

A) $5,875 
B) $11,625 
C) $46,500 
D) $17,500 
E) $20,000 
A) $5,875 
B) $11,625 
C) $46,500 
D) $17,500 
E) $20,000

Question 17

A cash based measure that is used to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.

Accepted Answer

A) True 
 B)False

Question 18

Cash flows from selling trading securities are reported in the statement of cash flows as part of:

Accepted Answer

A) Operating activities 
B) Financing activities 
C) Investing activities 
D) Noncash activities 
E) None of these as this is not reported in the statement of cash flows 
A) Operating activities 
B) Financing activities 
C) Investing activities 
D) Noncash activities 
E) None of these as this is not reported in the statement of cash flows

Question 19

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

Accepted Answer

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

Question 20

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

Accepted Answer

A) Operating activities 
B) Financing activities 
C) Investing activities 
D) Schedule of noncash investing or financing activity 
E) None of these as this is not reported on the statement of cash flows 
A) Operating activities 
B) Financing activities 
C) Investing activities 
D) Schedule of noncash investing or financing activity 
E) None of these as this is not reported on the statement of cash flows

What are the five usual steps involved in the preparation of the statement of cash flows?

The conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

When preparing the operating section of the statement of cash flows using the indirect method,an increase in income taxes payable is added back to net income.

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:

When preparing the operating section of the statement of cash flows using the indirect method,non-operating gains are added back to net income.

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Which one of the following is representative of typical cash flows from operating activities?

Explain how to determine cash flows from investing and financing activities.

Net income of Lucky Company was $52,000.The accounting records reveal depreciation expense of $99,000 as well as increases in prepaid rent,salaries payable,and income taxes payable of $74,000,$15,700,and $14,000,respectively.What is the net cash flow provided (used)by operating activities?

When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are _____________ net income.

Based on the following income statement and balance sheet for Rashid Corporation,determine the cash flows from operating activities using the indirect method.

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

A company had cost of goods sold of $150,000 during a given period.Compute cash paid for merchandise during this period given the following data. Beginning Ending Balance Balance Accounts Payable \ 20,000 \ 17,500 Merchandise Inventory 35,000 42,000

Under IFRS,cash outflows for interest expense are classified as

A cash based measure that is used to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.

Cash flows from selling trading securities are reported in the statement of cash flows as part of:

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

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

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Exam 12: Reporting and Analyzing Cash Flows

What are the five usual steps involved in the preparation of the statement of cash flows?

The conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

When preparing the operating section of the statement of cash flows using the indirect method,an increase in income taxes payable is added back to net income.

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:

When preparing the operating section of the statement of cash flows using the indirect method,non-operating gains are added back to net income.

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Which one of the following is representative of typical cash flows from operating activities?

Explain how to determine cash flows from investing and financing activities.

Net income of Lucky Company was $52,000.The accounting records reveal depreciation expense of $99,000 as well as increases in prepaid rent,salaries payable,and income taxes payable of $74,000,$15,700,and $14,000,respectively.What is the net cash flow provided (used)by operating activities?

When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are _____________ net income.

Based on the following income statement and balance sheet for Rashid Corporation,determine the cash flows from operating activities using the indirect method.

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

A company had cost of goods sold of $150,000 during a given period.Compute cash paid for merchandise during this period given the following data. Beginning Ending Balance Balance Accounts Payable \ 20,000 \ 17,500 Merchandise Inventory 35,000 42,000

Under IFRS,cash outflows for interest expense are classified as

A cash based measure that is used to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.

Cash flows from selling trading securities are reported in the statement of cash flows as part of:

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

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

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters