Question 1

Use the following information to calculate cash paid for wages and salaries:

Accepted Answer

A)  $157,400. 
B)  $163,800. 
C)  $168,000. 
D)  $172,200. 
E)  $174,400. 
A)  $157,400. 
B)  $163,800. 
C)  $168,000. 
D)  $172,200. 
E)  $174,400. B

Question 2

Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 2011 using the indirect method, and (2) compute the company's cash flow on total assets ratio for 2011.
     Additional Information
a. A $20,000 note payable is retired at its carrying amount in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid. Cash dividends paid is to be classified under financing activities.
c. New equipment is acquired for $120,000 cash.
d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.
e. Prepaid expenses relate to Other Expenses on the income statement.
f. All purchases and sales of merchandise inventory are on credit.

Accepted Answer

(1)
     (2) $109,700/((522,280+427,480)/2) = 23.1%

Question 3

The direct method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)  Separately lists each major item of operating cash receipts and cash payments. 
B)  Reports adjustments to reconcile income to net cash provided or used by operating activities in the statement. 
C)  Reports a different amount of cash flows from operations than if the indirect method is used. 
D)  Is required if the company is a merchandiser. 
E)  Is required by the IASB. 
A)  Separately lists each major item of operating cash receipts and cash payments. 
B)  Reports adjustments to reconcile income to net cash provided or used by operating activities in the statement. 
C)  Reports a different amount of cash flows from operations than if the indirect method is used. 
D)  Is required if the company is a merchandiser. 
E)  Is required by the IASB. A

Question 4

All cash transactions eventually affect noncash ___________ accounts.

Accepted Answer

The answer of All cash transactions eventually affect noncash ___________...

Question 5

The statement of cash flows reports:

Accepted Answer

A)  Assets, liabilities, and equity. 
B)  Revenues, gains, expenses, and losses. 
C)  Cash inflows and cash outflows for an accounting period. 
D)  Equity, net income, and dividends. 
E)  Changes in equity. 
A)  Assets, liabilities, and equity. 
B)  Revenues, gains, expenses, and losses. 
C)  Cash inflows and cash outflows for an accounting period. 
D)  Equity, net income, and dividends. 
E)  Changes in equity.

Question 6

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Becker's statement of cash flows?

Accepted Answer

A)  In operating activities as a source of funds. 
B)  In investing activities as a source of funds. 
C)  In investing activities as a use of funds. 
D)  In financing activities as a source of funds. 
E)  In operating or financing activities as a use of funds. 
A)  In operating activities as a source of funds. 
B)  In investing activities as a source of funds. 
C)  In investing activities as a use of funds. 
D)  In financing activities as a source of funds. 
E)  In operating or financing activities as a use of funds.

Question 7

Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ____________________________.

Accepted Answer

The answer of Investments that are readily convertible to a...

Question 8

Use the following information to calculate cash received from dividends:

Accepted Answer

A)  $26,400. 
B)  $29,000. 
C)  $29,800. 
D)  $30,600. 
E)  $32,400. 
A)  $26,400. 
B)  $29,000. 
C)  $29,800. 
D)  $30,600. 
E)  $32,400.

Question 9

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt 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 10

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by the accounting constraints of recognition and measurement for net income.

Accepted Answer

A) True 
 B)False

Question 11

Mansell reported net income of $233.4 million, net cash provided by operating activities of $131.4 million, total cash flows of $187.7 million, and average total assets of $2,040.8 million at the end of the year. Calculate the cash flow on total assets ratio for Mansell.

Accepted Answer

$131.4/$2,

Question 12

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 13

The following information is available for the Ehrens Corporation:
     Additional information:
(1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.
(2) Old equipment with an original cost of $37,550 was sold for $2,100 cash.
(3) New equipment was purchased for $67,550 cash.
(4) Cash dividends of $33,600 were paid. Management wishes to classify this under financing activities.
(5) Additional shares were issued for cash.
Prepare a complete statement of cash flows for year 2011 using the indirect method.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& (a) Received from sales of long-term i

Question 14

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

Accepted Answer

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

Question 15

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

Accepted Answer

A) True 
 B)False

Question 16

Use the following information to calculate the net cash provided or used by financing activities for the Brooks Corporation:
(a) Net income, $10,000
(b) Sold ordinary shares for $4,000 cash
(c) Paid cash dividend of $3,000 (classify under financing activities)
(d) Paid bond payable, $8,000
(e) Purchased equipment for $12,000 cash

Accepted Answer

The answer of Use the following information to calculate the...

Question 17

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 18

A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

Accepted Answer

A) True 
 B)False

Question 19

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)  Separately lists each major item of operating cash receipts. 
B)  Separately lists each major item of operating cash payments. 
C)  Reports income and then adjusts it for items necessary to determine net cash provided or used by operating activities. 
D)  Is required if the company is a merchandiser. 
E)  Must not be used in all circumstances. 
A)  Separately lists each major item of operating cash receipts. 
B)  Separately lists each major item of operating cash payments. 
C)  Reports income and then adjusts it for items necessary to determine net cash provided or used by operating activities. 
D)  Is required if the company is a merchandiser. 
E)  Must not be used in all circumstances.

Question 20

The appropriate section in the statement of cash flows for reporting the issuance of ordinary shares for cash is:

Accepted Answer

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

Exam 16: Statement of Cash Flows

Use the following information to calculate cash paid for wages and salaries:

The direct method for the preparation of the operating activities section of the statement of cash flows:

All cash transactions eventually affect noncash ___________ accounts.

The statement of cash flows reports:

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Becker's statement of cash flows?

Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ____________________________.

Use the following information to calculate cash received from dividends:

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by the accounting constraints of recognition and measurement for net income.

Mansell reported net income of $233.4 million, net cash provided by operating activities of $131.4 million, total cash flows of $187.7 million, and average total assets of $2,040.8 million at the end of the year. Calculate the cash flow on total assets ratio for Mansell.

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

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 cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

The indirect method for the preparation of the operating activities section of the statement of cash flows:

The appropriate section in the statement of cash flows for reporting the issuance of ordinary shares for cash is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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