Question 1

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

Accepted Answer

A) Net income 
B) Cash paid for dividends 
C) Sale of a plant asset 
D) Cash paid for wages 
A) Net income 
B) Cash paid for dividends 
C) Sale of a plant asset 
D) Cash paid for wages D

Question 2

Since investing activities center on the long-term assets shown on the balance sheet,they do not include any short-term investments shown under current assets on the balance sheet

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following statements is incorrect regarding the statement of cash flows?

Accepted Answer

A) The direct and indirect methods always produce the same amount of cash flows from operating activities. 
B) The direct method presentation of operating cash flows is more straightforward than that of the indirect method. 
C) The indirect method is more difficult to implement in practice. 
D) When the direct method is presented,preparation and disclosure of the indirect method of presenting cash flows from operating activities is also required. 
A) The direct and indirect methods always produce the same amount of cash flows from operating activities. 
B) The direct method presentation of operating cash flows is more straightforward than that of the indirect method. 
C) The indirect method is more difficult to implement in practice. 
D) When the direct method is presented,preparation and disclosure of the indirect method of presenting cash flows from operating activities is also required. C

Question 4

Cash payments made on accounts payable or accrued liabilities are considered repayments of loans and are classified as financing activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 5

Match between columns
                        Premises: Collected proceeds from the sale of a long-term investment at cost.
Declared stock dividends.
Purchased equipment with cash.
Exchanged shares of stock for 15-year bonds.
Paid off long-term debt with cash.
Acquired land and buildings by issuance of long-term mortgage payable.
Paid the U.S.Treasury for income taxes.
Company sold shares of its own stock for cash.
Declared and paid cash dividends.
Received interest income.

Accepted Answer

The Answer of investing activity and financing activity and operating is...

Question 6

Dina Corporation purchased plant assets for $60,000 cash.The journal entry to record the transaction that correctly shows the outflow of cash is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 7

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Expense (assume that cash payments are equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities. 
A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities.

Question 8

Which accounts are analyzed to determine cash flows from financing activities?

Accepted Answer

Cash flow from financing activ

Question 9

When preparing a statement of cash flows using the indirect method,why is depreciation added back to net income within the operating activities section?

Accepted Answer

The indirect method begins with accrual-

Question 10

To determine whether a company's operations are covering its dividend payments,it is best to focus on which of the following sections of the statement of cash flows?

Accepted Answer

A) Operating activities 
B) Financing activities 
C) Investing activities and financing activities 
D) Operating activities and investing activities 
A) Operating activities 
B) Financing activities 
C) Investing activities and financing activities 
D) Operating activities and investing activities

Question 11

Which of the following is reported as a noncash investing and financing transaction on the statement of cash flows?

Accepted Answer

A) Purchase of a building by taking out a long-term mortgage. 
B) Purchase of treasury stock. 
C) Payment of long-term debt. 
D) Sale of preferred stock. 
A) Purchase of a building by taking out a long-term mortgage. 
B) Purchase of treasury stock. 
C) Payment of long-term debt. 
D) Sale of preferred stock.

Question 12

During 20x5,Oates Company had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $26,000,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Cash flow yield equals (Round amounts to one decimal place)

Accepted Answer

A) 1.5 times. 
B) 1.0 times. 
C) 2.1 times. 
D) 1.3 times. 
A) 1.5 times. 
B) 1.0 times. 
C) 2.1 times. 
D) 1.3 times.

Question 13

Assume that the balance of accounts payable does not change during a period.When preparing a statement of cash flows,an increase in ending inventory over beginning inventory will result in an adjustment to net income under the indirect approach because

Accepted Answer

A) the amount of cost of goods sold is equal to the amount of cash paid for purchases. 
B) consumed inventory is an expense but not a use of funds. 
C) the amount of cost of goods sold on an accrual basis is less than the amount of cash paid for purchases of inventory. 
D) the amount of cash paid for purchases of inventory is less than the amount of cost of goods sold on an accrual basis. 
A) the amount of cost of goods sold is equal to the amount of cash paid for purchases. 
B) consumed inventory is an expense but not a use of funds. 
C) the amount of cost of goods sold on an accrual basis is less than the amount of cash paid for purchases of inventory. 
D) the amount of cash paid for purchases of inventory is less than the amount of cost of goods sold on an accrual basis.

Question 14

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Receivable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities. 
A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities.

Question 15

On a statement of cash flows prepared using the indirect method,the amount representing cash paid for interest would

Accepted Answer

A) be included in the net cash flows from financing activities section. 
B) not be shown. 
C) be included in the net cash flows from investing activities section. 
D) be included in the net cash flows from operating activities section. 
A) be included in the net cash flows from financing activities section. 
B) not be shown. 
C) be included in the net cash flows from investing activities section. 
D) be included in the net cash flows from operating activities section.

Question 16

When preparing a statement of cash flows using the indirect method,a gain on sale of land is deducted from net income to arrive at net cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 17

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Income Taxes Payable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities. 
A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities.

Question 18

Lincoln Company engaged in this transaction: Paid income taxes.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

A) Schedule of noncash investing and financing transactions. 
B) Investing activities section. 
C) Operating activities section. 
D) Financing activities section. 
A) Schedule of noncash investing and financing transactions. 
B) Investing activities section. 
C) Operating activities section. 
D) Financing activities section.

Question 19

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accrued Liabilities-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities. 
A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities.

Question 20

Cash inflows and outflows are easier to manipulate than earnings.

Accepted Answer

A) True 
 B)False

Exam 15: The Statement of Cash Flows

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

Since investing activities center on the long-term assets shown on the balance sheet,they do not include any short-term investments shown under current assets on the balance sheet

Which of the following statements is incorrect regarding the statement of cash flows?

Cash payments made on accounts payable or accrued liabilities are considered repayments of loans and are classified as financing activities on the statement of cash flows.

Dina Corporation purchased plant assets for $60,000 cash.The journal entry to record the transaction that correctly shows the outflow of cash is:

Which accounts are analyzed to determine cash flows from financing activities?

When preparing a statement of cash flows using the indirect method,why is depreciation added back to net income within the operating activities section?

To determine whether a company's operations are covering its dividend payments,it is best to focus on which of the following sections of the statement of cash flows?

Which of the following is reported as a noncash investing and financing transaction on the statement of cash flows?

Assume that the balance of accounts payable does not change during a period.When preparing a statement of cash flows,an increase in ending inventory over beginning inventory will result in an adjustment to net income under the indirect approach because

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Receivable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

On a statement of cash flows prepared using the indirect method,the amount representing cash paid for interest would

When preparing a statement of cash flows using the indirect method,a gain on sale of land is deducted from net income to arrive at net cash flows from operating activities.

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Income Taxes Payable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Lincoln Company engaged in this transaction: Paid income taxes. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accrued Liabilities-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Cash inflows and outflows are easier to manipulate than earnings.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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