Question 1

A company had wage expense of $750,000 during a given period. Compute cash paid for wages during this period given the following data.

Accepted Answer

A)  $750,000 
B)  $675,500 
C)  $824,500 
D)  $74,500 
E)  $125,500 
A)  $750,000 
B)  $675,500 
C)  $824,500 
D)  $74,500 
E)  $125,500

Question 2

The cash flow on total assets ratio:

Accepted Answer

A)  Is the same as return on assets 
B)  Is the same as profit margin 
C)  Can be an indicator of earnings quality 
D)  Is highly affected by accounting principles of income recognition and measurement 
E)  Is average net assets divided by cash flows from operations 
A)  Is the same as return on assets 
B)  Is the same as profit margin 
C)  Can be an indicator of earnings quality 
D)  Is highly affected by accounting principles of income recognition and measurement 
E)  Is average net assets divided by cash flows from operations

Question 3

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income balance.

Accepted Answer

A) True 
 B)False

Question 4

The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts the necessary items to calculate net cash provided or used by operating activities.

Accepted Answer

A) True 
 B)False

Question 5

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:

Accepted Answer

A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  Direct activities 
E)  Indirect activities 
A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  Direct activities 
E)  Indirect activities

Question 6

Use the cash flow on total assets ratio to determine which of these three companies is most efficiently using its assets.

Accepted Answer

A)  Company A 
B)  Company B 
C)  Company C 
D)  As all the companies have the same cash from operations, they are all equally efficient in the use of their assets 
E)  Cannot be determined from the given information 
A)  Company A 
B)  Company B 
C)  Company C 
D)  As all the companies have the same cash from operations, they are all equally efficient in the use of their assets 
E)  Cannot be determined from the given information

Question 7

A company's income statement showed the following: net income, $124,000; depreciation expense, $30,000 and gain on sale of plant assets, $14,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

Accepted Answer

A)  $139,000 
B)  $141,000 
C)  $145,800 
D)  $155,000 
E)  $167,000 
A)  $139,000 
B)  $141,000 
C)  $145,800 
D)  $155,000 
E)  $167,000

Question 8

A noncash investing transaction should be disclosed as either a footnote or small schedule attached to the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 9

Assume the following information was available for the current year's operations of Jungle Jim's International Market. Use these data to calculate the cash paid for merchandise.

Accepted Answer

A)  $218,000 
B)  $223,200 
C)  $220,000 
D)  $228,800 
E)  $234,000 
A)  $218,000 
B)  $223,200 
C)  $220,000 
D)  $228,800 
E)  $234,000

Question 10

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities 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

Question 11

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

Accepted Answer

The cash flow on total assets ratio is d

Question 12

Martin, Inc.'s, income statement is shown below. Based on this income statement and the other information provided, calculate the net cash provided by operations using the indirect method.
  
Additional information:

Accepted Answer

The answer of Martin, Inc.'s, income statement is shown below....

Question 13

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

Accepted Answer

A)  Cash 
B)  Cash received from customers 
C)  Increase (decrease) in accounts receivable 
D)  Net income 
E)  Adjustments to net income 
A)  Cash 
B)  Cash received from customers 
C)  Increase (decrease) in accounts receivable 
D)  Net income 
E)  Adjustments to net income

Question 14

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)  Investing activity. 
C)  Financing activity. 
D)  Noncash investing and financing activity. 
E)  None of these. This is not reported in the statement of cash flows. 
A)  Operating activity. 
B)  Investing activity. 
C)  Financing activity. 
D)  Noncash investing and financing activity. 
E)  None of these. This is not reported in the statement of cash flows.

Question 15

___________________ activities include those transactions that affect long-term liabilities and equity.

Accepted Answer

The answer of ___________________ activities include those transactions that affect...

Question 16

Depreciation expense is not reported on the statement of cash flows when the direct method is used.

Accepted Answer

A) True 
 B)False

Question 17

A purchase of land in exchange for shares of stock is disclosed on the statement of cash flows or in a note to the statement.

Accepted Answer

A) True 
 B)False

Question 18

Cash flows from interest received 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

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

Accepted Answer

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

Question 20

Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise.

Accepted Answer

The answer of Based on the following information provided about...

Exam 12: Reporting and Analyzing Cash Flows

A company had wage expense of $750,000 during a given period. Compute cash paid for wages during this period given the following data.

The cash flow on total assets ratio:

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income balance.

The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts the necessary items to calculate net cash provided or used by operating activities.

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:

Use the cash flow on total assets ratio to determine which of these three companies is most efficiently using its assets.

A noncash investing transaction should be disclosed as either a footnote or small schedule attached to the statement of cash flows.

Assume the following information was available for the current year's operations of Jungle Jim's International Market. Use these data to calculate the cash paid for merchandise.

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

Martin, Inc.'s, income statement is shown below. Based on this income statement and the other information provided, calculate the net cash provided by operations using the indirect method. Additional information:

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

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):

___________________ activities include those transactions that affect long-term liabilities and equity.

Depreciation expense is not reported on the statement of cash flows when the direct method is used.

A purchase of land in exchange for shares of stock is disclosed on the statement of cash flows or in a note to the statement.

Cash flows from interest received are reported in the statement of cash flows as part of:

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

Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

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