Question 1

Do "cash flows from operating activities" report all the elements of the income statement on a cash basis? Explain.

Accepted Answer

Although the cash flows from operating a

Question 2

What activities are included in the statement of cash flows under the section titled "Cash flows from financing activities"?

Accepted Answer

Cash flows from financing acti

Question 3

Why is the statement of cash flows required as part of the set of external financial statements?

Accepted Answer

Generally accepted accounting principles

Question 4

Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction. $$\begin{array} { | l | l | l | } 
\hline \text { CLASSIFICATION } & \text { TRANSACTIONS } & \text { NUMIBER } \
\hline
\text { 1. Not reported for the } & & \
\text { statement of cash flows } & \text { Payment of cash dividends. } &- \
\hline \text { 2.Noncash financing and } & \
\text { investing activity } & \text { Purchase of treasury stock. } &- \
\hline & \text { Investment of excess cash in an interest-bearing } &- \
\text { 3. Financing cash outflow } & \text { security classified as a cash equivalent. } \
\hline & \text { Appropriation of retained earnings for expansion } & \
\text { 4. Financing cash inflow } &\text { of the } \mathrm{R} \& \mathrm{D} \text { program. }&-\
\hline \text { 5.Not reported for the } & \text { Acquisition of equipment under a finance lease } & -\
\text { statement of cash flows } & \text { agreement. } & -\
\hline
\end{array}$$

Accepted Answer

The answer of Listed below are the reporting classifications for...

Question 5

In its 2018 Annual Report to Shareholders, Kinney Inc. reported the following Consolidated Statement of Cash Flows:
For the years ended December 31,

-Kinney reported cost of goods sold of $168,114,150 in its fiscal 2018 income statement Assuming that Kinney uses accounts payable strictly for inventory purchases and that all such purchases are on credit, how much cash did Kinney pay during the year for inventories:
(a) To inventory suppliers?
(b) To employees?

Accepted Answer

(a.) Assuming that there were no invento

Question 6

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Accepted Answer

A)  Depreciation expense. 
B)  Amortization of a patent. 
C)  Amortization of premium on bonds payable. 
D)  Dividends declared. 
A)  Depreciation expense. 
B)  Amortization of a patent. 
C)  Amortization of premium on bonds payable. 
D)  Dividends declared.

Question 7

Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

Accepted Answer

A)  $477. 
B)  $457. 
C)  $497. 
D)  None of these answer choices are correct. 
A)  $477. 
B)  $457. 
C)  $497. 
D)  None of these answer choices are correct.

Question 8

Determine the amount of cash paid to suppliers for each of the four independent situations below. $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Situation } & \begin{array} { c } 
\text { Cost d } \
\text { goods } \
\text { sold }
\end{array} & \begin{array} { c } 
\text { Inventory } \
\text { incr. } \
\text { (decr.) }
\end{array} & \begin{array} { c } 
\text { Accounts } \
\text { payable } \
\text { incr. } \
\text { (decr.) }
\end{array} & \begin{array} { l } 
\text { Cash paid } \
\text { to suppliers }
\end{array} \
\hline 1 & \$ 300,000 & \$ 6,000 & \$ 0 & \$ \
\hline 3 & 300,000 & 0 & 7,000 & \$ \
\hline  & 400,000 & 6,000 & 7,000 & \$ \
\hline 4 & 400,000 & ( 6,000 ) & ( 7,000 ) & \$ \
\hline
\end{array}$$

Accepted Answer

1) $300,000 + $6,000 = $306,00

Question 9

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below.
-Operating activity, positive adjustment to net income

Accepted Answer

A) Issuance of bonds at a discount for cash. 
B) Depreciation expense. 
C) Acquisition of a building for cash. 
D) Payment of semi-annual interest on bonds payable. 
E) Decrease in accounts payable. 
A) Issuance of bonds at a discount for cash. 
B) Depreciation expense. 
C) Acquisition of a building for cash. 
D) Payment of semi-annual interest on bonds payable. 
E) Decrease in accounts payable.

Question 10

Freeman Company's accounting records include the following information: $\begin{array}{lr}
\text { Payments to suppliers } & 50,000 \
\text { Collections on accounts receivable } & 90,000 \
\text { Cash sales } & 20,000\
\text { Income taxes paid }&5,000\
\text { Equipment purchased }&15,000
\end{array}$ What is the amount of net cash provided by operating activities indicated by these transactions?

Accepted Answer

A)  $40,000. 
B)  $45,000. 
C)  $55,000. 
D)  $60,000. 
A)  $40,000. 
B)  $45,000. 
C)  $55,000. 
D)  $60,000.

Question 11

When using the indirect method to determine cash flows from operating activities, an increase in held-to-maturity securities that does not arise from the interest component of the debt should be reported as:

Accepted Answer

A)  A deduction from net income in determining cash flows from operating activities. 
B)  An addition to net income in determining cash flows from operating activities. 
C)  An investing activity. 
D)  A financing activity. 
A)  A deduction from net income in determining cash flows from operating activities. 
B)  An addition to net income in determining cash flows from operating activities. 
C)  An investing activity. 
D)  A financing activity.

Question 12

Which one of the following financial statements does not report amounts primarily on an accrual basis?

Accepted Answer

A)  Income statement. 
B)  Balance sheet. 
C)  Statement of cash flows. 
D)  Statement of shareholders' equity. 
A)  Income statement. 
B)  Balance sheet. 
C)  Statement of cash flows. 
D)  Statement of shareholders' equity.

Question 13

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below.
-Operating activity, negative adjustment to net income

Accepted Answer

A) Issuance of bonds at a discount for cash. 
B) Depreciation expense. 
C) Acquisition of a building for cash. 
D) Payment of semi-annual interest on bonds payable. 
E) Decrease in accounts payable. 
A) Issuance of bonds at a discount for cash. 
B) Depreciation expense. 
C) Acquisition of a building for cash. 
D) Payment of semi-annual interest on bonds payable. 
E) Decrease in accounts payable.

Question 14

Partial balance sheets and additional information are listed below for Rickey Company.   Additional information for 2018:
Net income was $160,000.
Depreciation expense was $20,000.
Required:
Prepare the operating activities section of the statement of cash flows for 2018 using the indirect method.

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 15

Sales revenue for Hy Marx Tutoring was $220,000. The following data are from the accounting records of Marx:   The cash received from customers was:

Accepted Answer

A)  $165,000. 
B)  $209,000. 
C)  $220,000. 
D)  $231,000. 
A)  $165,000. 
B)  $209,000. 
C)  $220,000. 
D)  $231,000.

Question 16

What are the general guidelines for an investment to be considered a cash equivalent?

Accepted Answer

To be classified as a cash equivalent, a

Question 17

Which of the following never requires an outflow of cash?

Accepted Answer

A)  Early extinguishment of debt. 
B)  Retirement of common stock. 
C)  Payment of dividends. 
D)  Amortization of patent. 
A)  Early extinguishment of debt. 
B)  Retirement of common stock. 
C)  Payment of dividends. 
D)  Amortization of patent.

Question 18

When using the indirect method to determine cash flows from operating activities, adjustments to net income should not include:

Accepted Answer

A)  An addition for amortization expense. 
B)  An addition for bond discount amortization. 
C)  An addition for a gain. 
D)  An addition for a loss. 
A)  An addition for amortization expense. 
B)  An addition for bond discount amortization. 
C)  An addition for a gain. 
D)  An addition for a loss.

Question 19

Which of the following is not true regarding the statement of cash flows?

Accepted Answer

A)  The indirect method derives cash flows indirectly by starting with sales revenue and "working backwards" to convert that amount to a cash basis. 
B)  Noncash transactions sometimes are reported in conjunction with the statement. 
C)  Either the direct or the indirect method can be used to calculate and report the net cash increase or decrease from operating activities. 
D)  The statement of cash flows provides information about cash flows that the other statements either do not provide or provide only indirectly. 
A)  The indirect method derives cash flows indirectly by starting with sales revenue and "working backwards" to convert that amount to a cash basis. 
B)  Noncash transactions sometimes are reported in conjunction with the statement. 
C)  Either the direct or the indirect method can be used to calculate and report the net cash increase or decrease from operating activities. 
D)  The statement of cash flows provides information about cash flows that the other statements either do not provide or provide only indirectly.

Question 20

Following are the income statement and some additional information for Carolina Consulting Company.   All sales were on credit and accounts receivable decreased by $900 in 2018 compared to 2017. Merchandise purchases were on credit with a decrease in accounts payable of $700 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash.
Required:
Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.

Accepted Answer

The answer of Following are the income statement and some...

Do "cash flows from operating activities" report all the elements of the income statement on a cash basis? Explain.

What activities are included in the statement of cash flows under the section titled "Cash flows from financing activities"?

Why is the statement of cash flows required as part of the set of external financial statements?

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

Determine the amount of cash paid to suppliers for each of the four independent situations below. Situation Cost d goods sold Inventory incr. (decr.) Accounts payable incr. (decr.) Cash paid to suppliers 1 \ 300,000 \ 6,000 \ 0 \ 3 300,000 0 7,000 \ 400,000 6,000 7,000 \ 4 400,000 (6,000) (7,000) \

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Operating activity, positive adjustment to net income

When using the indirect method to determine cash flows from operating activities, an increase in held-to-maturity securities that does not arise from the interest component of the debt should be reported as:

Which one of the following financial statements does not report amounts primarily on an accrual basis?

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Operating activity, negative adjustment to net income

Partial balance sheets and additional information are listed below for Rickey Company. Additional information for 2018: Net income was $160,000. Depreciation expense was $20,000. Required: Prepare the operating activities section of the statement of cash flows for 2018 using the indirect method.

Sales revenue for Hy Marx Tutoring was $220,000. The following data are from the accounting records of Marx: The cash received from customers was:

What are the general guidelines for an investment to be considered a cash equivalent?

Which of the following never requires an outflow of cash?

When using the indirect method to determine cash flows from operating activities, adjustments to net income should not include:

Which of the following is not true regarding the statement of cash flows?

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

Filters

Exam 21: The Statement of Cash Flows Revisited

Do "cash flows from operating activities" report all the elements of the income statement on a cash basis? Explain.

What activities are included in the statement of cash flows under the section titled "Cash flows from financing activities"?

Why is the statement of cash flows required as part of the set of external financial statements?

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

Determine the amount of cash paid to suppliers for each of the four independent situations below. Situation Cost d goods sold Inventory incr. (decr.) Accounts payable incr. (decr.) Cash paid to suppliers 1 \ 300,000 \ 6,000 \ 0 \ 3 300,000 0 7,000 \ 400,000 6,000 7,000 \ 4 400,000 (6,000) (7,000) \

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Operating activity, positive adjustment to net income

When using the indirect method to determine cash flows from operating activities, an increase in held-to-maturity securities that does not arise from the interest component of the debt should be reported as:

Which one of the following financial statements does not report amounts primarily on an accrual basis?

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Operating activity, negative adjustment to net income

Partial balance sheets and additional information are listed below for Rickey Company. Additional information for 2018: Net income was $160,000. Depreciation expense was $20,000. Required: Prepare the operating activities section of the statement of cash flows for 2018 using the indirect method.

Sales revenue for Hy Marx Tutoring was $220,000. The following data are from the accounting records of Marx: The cash received from customers was:

What are the general guidelines for an investment to be considered a cash equivalent?

Which of the following never requires an outflow of cash?

When using the indirect method to determine cash flows from operating activities, adjustments to net income should not include:

Which of the following is not true regarding the statement of cash flows?

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

Filters