Question 1

Which of the following would be a cash outflow from operating activities for Poe Company?

Accepted Answer

A)  Cash paid for dividends on Poe Co.common stock 
B)  Cash paid for treasury stock 
C)  Cash paid for the purchase of an investment in securities of Raven Company classified as trading securities 
D)  Cash paid for dividends on Poe Co.preferred stock 
A)  Cash paid for dividends on Poe Co.common stock 
B)  Cash paid for treasury stock 
C)  Cash paid for the purchase of an investment in securities of Raven Company classified as trading securities 
D)  Cash paid for dividends on Poe Co.preferred stock

Question 2

The following information for Connor Company is available at December 31,2014,and for the year then ending:
   The book value of equipment sold was $300.All dividends declared were cash dividends.
Required:
Prepare a statement of cash flows for Connor Company for the year ending December 31,2014,using the direct method.

Accepted Answer

The answer of The following information for Connor Company is...

Question 3

A firm purchased $20,000 worth of investments classified as trading securities.At the end of the year,the investments are worth $23,000.What is the correct disclosure of these events in the statement of cash flows prepared under the direct method?

Accepted Answer

A)  Operating cash inflow,$3,000 
B)  Addition of $17,000 in reconciliation of earnings and net operating cash flow 
C)  Operating cash outflow,$20,000;subtract $3,000 in reconciliation of earnings and net operating cash flow 
D)  No disclosure is needed. 
A)  Operating cash inflow,$3,000 
B)  Addition of $17,000 in reconciliation of earnings and net operating cash flow 
C)  Operating cash outflow,$20,000;subtract $3,000 in reconciliation of earnings and net operating cash flow 
D)  No disclosure is needed.

Question 4

A change in unearned revenue would be classified into which of the following categories for purposes of disclosure in the statement of cash flows?

Accepted Answer

A)  Operating cash flow 
B)  Investing cash flow 
C)  Financing cash flow 
D)  As an item reconciling earnings and operating cash flow 
A)  Operating cash flow 
B)  Investing cash flow 
C)  Financing cash flow 
D)  As an item reconciling earnings and operating cash flow

Question 5

On a statement of cash flows prepared using the direct method,cash paid for income taxes would be income tax expense minus

Accepted Answer

A)  an increase in income taxes payable. 
B)  a decrease in income taxes payable. 
C)  beginning income taxes payable. 
D)  ending income taxes payable. 
A)  an increase in income taxes payable. 
B)  a decrease in income taxes payable. 
C)  beginning income taxes payable. 
D)  ending income taxes payable.

Question 6

On October 1,2014,Amphora purchased land for $85,000 cash.
Required:
Prepare a statement of cash flows for Amphora Company for the year ending December 31,2014,using the indirect method.

Accepted Answer

The answer of On October 1,2014,Amphora purchased land for $85,000...

Question 7

The statement of cash flows and related disclosures would be of the least assistance in helping a potential investor assess

Accepted Answer

A)  a firm's ability to generate cash. 
B)  a firm's ability to make good use of cash reserves to earn interest or other return. 
C)  a firm's ability to meet its obligations. 
D)  the reasons for differences between income and associated cash flows. 
A)  a firm's ability to generate cash. 
B)  a firm's ability to make good use of cash reserves to earn interest or other return. 
C)  a firm's ability to meet its obligations. 
D)  the reasons for differences between income and associated cash flows.

Question 8

A gain on the sale of a plant assets should be included in which of the following sections of a statement of cash flows prepared using the indirect method?

Accepted Answer

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

Question 9

Which of the following would NOT be a cash flow from financing activities for Carlton Company?

Accepted Answer

A)  Cash from issuance of Carlton Co.common stock 
B)  Cash from issuance of Carlton Co.preferred stock 
C)  Cash from issuance of Carlton Co.bonds payable 
D)  Cash from sale of Fern Company common stock 
A)  Cash from issuance of Carlton Co.common stock 
B)  Cash from issuance of Carlton Co.preferred stock 
C)  Cash from issuance of Carlton Co.bonds payable 
D)  Cash from sale of Fern Company common stock

Question 10

Financial information for Princeton Company at December 31,2014,and for the year then ended,are presented below:
   Additional information:
   Required:
Prepare the statement of cash flows using the indirect method.

Accepted Answer

The answer of Financial information for Princeton Company at December...

Question 11

How should the sale of $3,000 worth of cash equivalents costing $2,500 be reflected on the statement of cash flows prepared under the indirect method?

Accepted Answer

A)  $500 operating cash inflow 
B)  No disclosure 
C)  $500 operating cash outflow 
D)  $500 subtraction in the reconciliation of earnings to net operating cash flow 
A)  $500 operating cash inflow 
B)  No disclosure 
C)  $500 operating cash outflow 
D)  $500 subtraction in the reconciliation of earnings to net operating cash flow

Question 12

Which of the following is not an inflow of cash?

Accepted Answer

A)  Collection of a short-term receivable 
B)  Sale of an operational asset 
C)  Cash borrowed on a short-term note 
D)  Depletion expense 
A)  Collection of a short-term receivable 
B)  Sale of an operational asset 
C)  Cash borrowed on a short-term note 
D)  Depletion expense

Question 13

Which of the following items involving current trade accounts receivable is most likely to appear in a statement of cash flows?

Accepted Answer

A)  The balance in the allowance for doubtful accounts 
B)  The change in net sales 
C)  Sales returns and allowances 
D)  Collection of an account previously written off 
A)  The balance in the allowance for doubtful accounts 
B)  The change in net sales 
C)  Sales returns and allowances 
D)  Collection of an account previously written off

Question 14

Show the U.S.Approach and the U.K.Approach to compute the cash flow from operating activities using the following information:

Accepted Answer

The answer of Show the U.S.Approach and the U.K.Approach to...

Question 15

A firm sold an investment in securities available for sale 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 in the statement of cash flows prepared under the direct method,assuming this is the only investment in securities available for sale?

Accepted Answer

A)  $28,000 investing cash inflow;add $33,000 in the reconciliation of earnings and net operating cash flow 
B)  $28,000 investing cash inflow;add $2,000 in the reconciliation of earnings and net operating cash inflow 
C)  $28,000 investing cash inflow;add $5,000 in the reconciliation of earnings and net operating cash inflow 
D)  Add $5,000 in the reconciliation of earnings and net operating cash flow. 
A)  $28,000 investing cash inflow;add $33,000 in the reconciliation of earnings and net operating cash flow 
B)  $28,000 investing cash inflow;add $2,000 in the reconciliation of earnings and net operating cash inflow 
C)  $28,000 investing cash inflow;add $5,000 in the reconciliation of earnings and net operating cash inflow 
D)  Add $5,000 in the reconciliation of earnings and net operating cash flow.

Question 16

On a reconciliation of net income to cash from operations,depreciation is added back to net income as depreciation

Accepted Answer

A)  is a direct outflow of cash. 
B)  reduces net income but does not involve an outflow of cash. 
C)  reduces net income and involves an outflow of cash. 
D)  is an outflow of cash to a fund established for the replacement of assets. 
A)  is a direct outflow of cash. 
B)  reduces net income but does not involve an outflow of cash. 
C)  reduces net income and involves an outflow of cash. 
D)  is an outflow of cash to a fund established for the replacement of assets.

Question 17

Which of the following is NOT added to net income as an adjustment to reconcile net income to cash from operating activities on the statement of cash flows?

Accepted Answer

A)  Increase in an accrued liability 
B)  Amortization of discount on bond payable 
C)  Loss on sale of operational asset 
D)  Increase in deferred tax asset 
A)  Increase in an accrued liability 
B)  Amortization of discount on bond payable 
C)  Loss on sale of operational asset 
D)  Increase in deferred tax asset

Question 18

Which of the following need not be disclosed in a statement of cash flows as a noncash exchange?

Accepted Answer

A)  Dividend paid in capital stock of the company (stock dividend). 
B)  Acquisition of fixed assets in exchange for capital stock 
C)  Retirement of a bond issue through the issuance of another bond issue 
D)  Conversion of convertible debt to capital stock 
A)  Dividend paid in capital stock of the company (stock dividend). 
B)  Acquisition of fixed assets in exchange for capital stock 
C)  Retirement of a bond issue through the issuance of another bond issue 
D)  Conversion of convertible debt to capital stock

Question 19

A firm purchased $35,000 worth of investments classified as securities available for sale.At the end of the year,the investments were worth $23,000.What is the correct presentation of these events in the statement of cash flows prepared under the direct method?

Accepted Answer

A)  Investing cash outflow,$35,000 
B)  Add $23,000 in reconciliation of earnings and net operating cash flow 
C)  Investing cash outflow,$35,000;subtract $12,000 in reconciliation of earnings and net operating cash flow 
D)  No disclosure is needed. 
A)  Investing cash outflow,$35,000 
B)  Add $23,000 in reconciliation of earnings and net operating cash flow 
C)  Investing cash outflow,$35,000;subtract $12,000 in reconciliation of earnings and net operating cash flow 
D)  No disclosure is needed.

Question 20

Cash inflows from investing activities would include all of the following except

Accepted Answer

A)  interest collect on notes receivable. 
B)  proceeds from sale of investments accounted for by the equity method. 
C)  proceeds from sale of operating assets. 
D)  proceeds from sale of securities available for sale. 
A)  interest collect on notes receivable. 
B)  proceeds from sale of investments accounted for by the equity method. 
C)  proceeds from sale of operating assets. 
D)  proceeds from sale of securities available for sale.

Exam 21: Statement of Cash Flows Revisited

Which of the following would be a cash outflow from operating activities for Poe Company?

A firm purchased $20,000 worth of investments classified as trading securities.At the end of the year,the investments are worth $23,000.What is the correct disclosure of these events in the statement of cash flows prepared under the direct method?

A change in unearned revenue would be classified into which of the following categories for purposes of disclosure in the statement of cash flows?

On a statement of cash flows prepared using the direct method,cash paid for income taxes would be income tax expense minus

On October 1,2014,Amphora purchased land for $85,000 cash. Required: Prepare a statement of cash flows for Amphora Company for the year ending December 31,2014,using the indirect method.

The statement of cash flows and related disclosures would be of the least assistance in helping a potential investor assess

A gain on the sale of a plant assets should be included in which of the following sections of a statement of cash flows prepared using the indirect method?

Which of the following would NOT be a cash flow from financing activities for Carlton Company?

Financial information for Princeton Company at December 31,2014,and for the year then ended,are presented below: Additional information: Required: Prepare the statement of cash flows using the indirect method.

How should the sale of $3,000 worth of cash equivalents costing $2,500 be reflected on the statement of cash flows prepared under the indirect method?

Which of the following is not an inflow of cash?

Which of the following items involving current trade accounts receivable is most likely to appear in a statement of cash flows?

Show the U.S.Approach and the U.K.Approach to compute the cash flow from operating activities using the following information:

On a reconciliation of net income to cash from operations,depreciation is added back to net income as depreciation

Which of the following is NOT added to net income as an adjustment to reconcile net income to cash from operating activities on the statement of cash flows?

Which of the following need not be disclosed in a statement of cash flows as a noncash exchange?

A firm purchased $35,000 worth of investments classified as securities available for sale.At the end of the year,the investments were worth $23,000.What is the correct presentation of these events in the statement of cash flows prepared under the direct method?

Cash inflows from investing activities would include all of the following except

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

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