Question 1

In the preparation of a statement of cash flows,adjustments to net income to reconcile net income to cash from operating activities include

Accepted Answer

A)  amortization of organization cost. 
B)  the difference between the purchase price and the resale price of treasury stock (assuming the cost method of accounting for treasury stock). 
C)  dividends received. 
D)  redemption premium on preferred stock redeemed during the period. 
A)  amortization of organization cost. 
B)  the difference between the purchase price and the resale price of treasury stock (assuming the cost method of accounting for treasury stock). 
C)  dividends received. 
D)  redemption premium on preferred stock redeemed during the period. A

Question 2

Choose the combination that best reflects the appropriate classification of cash paid for operating,investing and financing activities. Operating Investing Financing

Accepted Answer

A)  Cash paid to suppliers Interest paid Dividends paid 
B)  Interest paid Cash paid to suppliers Income taxes paid 
C)  Income taxes paid Purchase of stock of another entity Dividends paid 
D)  Dividends paid Income taxes paid Cash paid to suppliers 
A)  Cash paid to suppliers Interest paid Dividends paid 
B)  Interest paid Cash paid to suppliers Income taxes paid 
C)  Income taxes paid Purchase of stock of another entity Dividends paid 
D)  Dividends paid Income taxes paid Cash paid to suppliers C

Question 3

A company sold an investment in trading securities originally costing $30,000,for $28,000.At the beginning of the year,the investment had a valuation allowance of $3,000,debit.What is the correct disclosure for these events on the statement of cash flows prepared under the direct method,assuming that this is the only investment in trading securities?

Accepted Answer

A)  $28,000 operating cash inflow;add $5,000 in the reconciliation of earnings and net operating cash flow 
B)  $28,000 operating cash inflow 
C)  $28,000 operating cash inflow;add $33,000 in the reconciliation of earnings and net operating cash flow 
D)  Add $5,000 in the reconciliation of earnings and net operating cash flow. 
A)  $28,000 operating cash inflow;add $5,000 in the reconciliation of earnings and net operating cash flow 
B)  $28,000 operating cash inflow 
C)  $28,000 operating cash inflow;add $33,000 in the reconciliation of earnings and net operating cash flow 
D)  Add $5,000 in the reconciliation of earnings and net operating cash flow. C

Question 4

Which of the following is NOT an adjustment to reconcile net income to cash from operating activities?

Accepted Answer

A)  Increase or decrease in an accrued liability 
B)  Amortization of premium or discount on bonds payable 
C)  Cash dividend declared but not yet paid 
D)  Increase or decrease in a prepaid expense 
A)  Increase or decrease in an accrued liability 
B)  Amortization of premium or discount on bonds payable 
C)  Cash dividend declared but not yet paid 
D)  Increase or decrease in a prepaid expense

Question 5

On a statement of cash flows prepared using the direct method,cash from customers would be sales plus a(n)

Accepted Answer

A)  decrease in accounts payable. 
B)  increase in accounts payable. 
C)  decrease in accounts receivable. 
D)  increase in accounts receivable. 
A)  decrease in accounts payable. 
B)  increase in accounts payable. 
C)  decrease in accounts receivable. 
D)  increase in accounts receivable.

Question 6

Which of the following independent transactions would cause net income to be more than cash from operating activities?

Accepted Answer

A)  A decrease in the accounts receivable account 
B)  An increase in the merchandise inventory account 
C)  An increase in the accounts payable account 
D)  An increase in the accrued wages payable account 
A)  A decrease in the accounts receivable account 
B)  An increase in the merchandise inventory account 
C)  An increase in the accounts payable account 
D)  An increase in the accrued wages payable account

Question 7

Proceeds from the sale of investments in common stock accounted for by the equity method would be classified into which of the following sections of the statement of cash flows?

Accepted Answer

A)  Operating 
B)  Investing 
C)  Financing 
D)  Non-cash item 
A)  Operating 
B)  Investing 
C)  Financing 
D)  Non-cash item

Question 8

The following is Grafton Corporation's comparative balance sheets for 2014 and 2013:
   Additional information:
     Required:
Prepare a statement of cash flows for Grafton Company for 2014 using the indirect method.Include relevant supplemental schedules.

Accepted Answer

The answer of The following is Grafton Corporation's comparative balance...

Question 9

Which of the following is a non-cash transaction that should be disclosed in a schedule accompanying the statement of cash flows?

Accepted Answer

A)  Sale of an investment for cash 
B)  Purchase of a machine for cash 
C)  Issuance of common stock in exchange for land 
D)  Declaration and payment of a cash dividend on common stock 
A)  Sale of an investment for cash 
B)  Purchase of a machine for cash 
C)  Issuance of common stock in exchange for land 
D)  Declaration and payment of a cash dividend on common stock

Question 10

Cash outflows from investing activities would include payments for all of the following except

Accepted Answer

A)  operational assets. 
B)  investments in securities-available-for-sale. 
C)  purchase of treasury stock. 
D)  loans to customers. 
A)  operational assets. 
B)  investments in securities-available-for-sale. 
C)  purchase of treasury stock. 
D)  loans to customers.

Question 11

Which of the following would appear in both the operating activities section of the direct method format and the reconciliation of earnings to net operating cash flow format?

Accepted Answer

A)  Sale of cash equivalents at a gain 
B)  Sale of cash equivalents at cost 
C)  Dividends received on equity method investments 
D)  Collection of an account receivable previously written off 
A)  Sale of cash equivalents at a gain 
B)  Sale of cash equivalents at cost 
C)  Dividends received on equity method investments 
D)  Collection of an account receivable previously written off

Question 12

Assume cash paid to suppliers for 2014 is $420,000,that merchandise inventory increased by $20,000 during the year,and that cost of goods sold was $415,000 for the year.During 2014,accounts payable must have

Accepted Answer

A)  increased by $5,000. 
B)  decreased by $5,000. 
C)  increased by $15,000. 
D)  decreased by $15,000. 
A)  increased by $5,000. 
B)  decreased by $5,000. 
C)  increased by $15,000. 
D)  decreased by $15,000.

Question 13

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows as a(n):

Accepted Answer

A)  adjustment to reconcile net income to cash from operating activities. 
B)  operating activity. 
C)  investing activity. 
D)  noncash exchange. 
A)  adjustment to reconcile net income to cash from operating activities. 
B)  operating activity. 
C)  investing activity. 
D)  noncash exchange.

Question 14

A company's income statement disclosed $45,000 of investment revenue on equity method investments.The company did not purchase or dispose of any such investments during the year,yet the equity method investments account increased $30,000 during the year.What is the complete disclosure of these events in the statement of cash flows prepared under the indirect method?

Accepted Answer

A)  Operating cash inflow,$45,000;$30,000 subtraction in reconciliation of earnings and net operating cash flow 
B)  $30,000 subtraction in reconciliation of earnings and net operating cash flow 
C)  Operating cash inflow,$15,000;$30,000 subtraction in reconciliation of earnings and net operating cash flow 
D)  Operating cash inflow,$15,000 
A)  Operating cash inflow,$45,000;$30,000 subtraction in reconciliation of earnings and net operating cash flow 
B)  $30,000 subtraction in reconciliation of earnings and net operating cash flow 
C)  Operating cash inflow,$15,000;$30,000 subtraction in reconciliation of earnings and net operating cash flow 
D)  Operating cash inflow,$15,000

Question 15

Under the direct method,which one of the following would represent cash paid?

Accepted Answer

A)  Losses on sales of plant assets 
B)  Gains on sales of plant assets 
C)  Interest expense,adjusted for changes in interest payable and amortization of bond premium or discount 
D)  Depreciation expense,adjusted for changes in depreciation methods 
A)  Losses on sales of plant assets 
B)  Gains on sales of plant assets 
C)  Interest expense,adjusted for changes in interest payable and amortization of bond premium or discount 
D)  Depreciation expense,adjusted for changes in depreciation methods

Question 16

Assume Bellini Company holds the following assets at year-end and classifies as cash equivalents everything allowed by professional standards.   What would be the total cash equivalents at year-end for Bellini Company?

Accepted Answer

A)  $90,000 
B)  $115,000 
C)  $135,000 
D)  $160,000 
A)  $90,000 
B)  $115,000 
C)  $135,000 
D)  $160,000

Question 17

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $60,000 in both its lease liability and leased assets accounts.The contract calls for December 31 payments of $15,000.The lessee's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.The direct method statement of cash flows for the lessee should reflect which of the following in the first year of the lease contract (ignore noncash disclosures)?

Accepted Answer

A)  $15,000 financing cash outflow 
B)  $15,000 operating cash outflow 
C)  $6,000 operating cash outflow;$9,000 financing cash outflow 
D)  $9,000 financing cash outflow 
A)  $15,000 financing cash outflow 
B)  $15,000 operating cash outflow 
C)  $6,000 operating cash outflow;$9,000 financing cash outflow 
D)  $9,000 financing cash outflow

Question 18

A company with substantial operating profits prepares its statement of cash flows using the indirect method.The gain on the sale of a long-term investment should be disclosed separately as a(n)

Accepted Answer

A)  inflow from operating activities. 
B)  adjustment to net income in the reconciliation of net income to cash from operating activities. 
C)  inflow from investing activities. 
D)  outflow from investing activities. 
A)  inflow from operating activities. 
B)  adjustment to net income in the reconciliation of net income to cash from operating activities. 
C)  inflow from investing activities. 
D)  outflow from investing activities.

Question 19

The amortization of patents should be presented in a statement of cash flows prepared using the indirect method as a(n)

Accepted Answer

A)  inflow and outflow of cash. 
B)  outflow of cash. 
C)  addition to net income in the adjustments to reconcile net income to cash from operating activities. 
D)  deduction from net income in the adjustments to reconcile net income to cash from operating activities. 
A)  inflow and outflow of cash. 
B)  outflow of cash. 
C)  addition to net income in the adjustments to reconcile net income to cash from operating activities. 
D)  deduction from net income in the adjustments to reconcile net income to cash from operating activities.

Question 20

Which of the following is a deduction from net income in reconciling net income to cash flow from operating activities?

Accepted Answer

A)  Amortization of bond premium 
B)  Cash dividend declared and paid 
C)  Collection of an account receivable 
D)  Write-off of an uncollectible account receivable 
A)  Amortization of bond premium 
B)  Cash dividend declared and paid 
C)  Collection of an account receivable 
D)  Write-off of an uncollectible account receivable

In the preparation of a statement of cash flows,adjustments to net income to reconcile net income to cash from operating activities include

Choose the combination that best reflects the appropriate classification of cash paid for operating,investing and financing activities. Operating Investing Financing

Which of the following is NOT an adjustment to reconcile net income to cash from operating activities?

On a statement of cash flows prepared using the direct method,cash from customers would be sales plus a(n)

Which of the following independent transactions would cause net income to be more than cash from operating activities?

Proceeds from the sale of investments in common stock accounted for by the equity method would be classified into which of the following sections of the statement of cash flows?

The following is Grafton Corporation's comparative balance sheets for 2014 and 2013: Additional information: Required: Prepare a statement of cash flows for Grafton Company for 2014 using the indirect method.Include relevant supplemental schedules.

Which of the following is a non-cash transaction that should be disclosed in a schedule accompanying the statement of cash flows?

Cash outflows from investing activities would include payments for all of the following except

Which of the following would appear in both the operating activities section of the direct method format and the reconciliation of earnings to net operating cash flow format?

Assume cash paid to suppliers for 2014 is $420,000,that merchandise inventory increased by $20,000 during the year,and that cost of goods sold was $415,000 for the year.During 2014,accounts payable must have

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows as a(n):

Under the direct method,which one of the following would represent cash paid?

Assume Bellini Company holds the following assets at year-end and classifies as cash equivalents everything allowed by professional standards. What would be the total cash equivalents at year-end for Bellini Company?

A company with substantial operating profits prepares its statement of cash flows using the indirect method.The gain on the sale of a long-term investment should be disclosed separately as a(n)

The amortization of patents should be presented in a statement of cash flows prepared using the indirect method as a(n)

Which of the following is a deduction from net income in reconciling net income to cash flow from operating activities?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 21: Statement of Cash Flows Revisited

In the preparation of a statement of cash flows,adjustments to net income to reconcile net income to cash from operating activities include

Choose the combination that best reflects the appropriate classification of cash paid for operating,investing and financing activities. Operating Investing Financing

Which of the following is NOT an adjustment to reconcile net income to cash from operating activities?

On a statement of cash flows prepared using the direct method,cash from customers would be sales plus a(n)

Which of the following independent transactions would cause net income to be more than cash from operating activities?

Proceeds from the sale of investments in common stock accounted for by the equity method would be classified into which of the following sections of the statement of cash flows?

The following is Grafton Corporation's comparative balance sheets for 2014 and 2013: Additional information: Required: Prepare a statement of cash flows for Grafton Company for 2014 using the indirect method.Include relevant supplemental schedules.

Which of the following is a non-cash transaction that should be disclosed in a schedule accompanying the statement of cash flows?

Cash outflows from investing activities would include payments for all of the following except

Which of the following would appear in both the operating activities section of the direct method format and the reconciliation of earnings to net operating cash flow format?

Assume cash paid to suppliers for 2014 is $420,000,that merchandise inventory increased by $20,000 during the year,and that cost of goods sold was $415,000 for the year.During 2014,accounts payable must have

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows as a(n):

Under the direct method,which one of the following would represent cash paid?

Assume Bellini Company holds the following assets at year-end and classifies as cash equivalents everything allowed by professional standards. What would be the total cash equivalents at year-end for Bellini Company?

A company with substantial operating profits prepares its statement of cash flows using the indirect method.The gain on the sale of a long-term investment should be disclosed separately as a(n)

The amortization of patents should be presented in a statement of cash flows prepared using the indirect method as a(n)

Which of the following is a deduction from net income in reconciling net income to cash flow from operating activities?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Accounting in a Global Market

Analysis of Financial Statements

Filters