Deck 14: The Statement of Cash Flows

Question 1

Which of the following is NOT an investing cash flow?

A) Proceeds from the sale of equipment
B) Purchase of shares on the stock market
C) Purchase of another company
D) Repayment of a loan

Answer 1

D

Question 2

During the year, Penso Ltd received $50 000 from its customers, $5 000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3 000 for income tax and $50 000 for new machinery. In addition, it paid out $12 000 as loan repayments. Its cash balance at the commencement of the year was $19 000. What were the cash flows from financing activities?

A) $8 000
B) $20 000
C) ($12 000)
D) ($28 000)

Answer 2

A

Question 3

Which of the following is NOT an operating cash flow?

A) Cash sales
B) Payment of wages
C) Dividends paid
D) Interest paid

Answer 3

C

Question 4

During the year, Penso Ltd received $50 000 from its customers, $5 000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3 000 for income tax and $50 000 for new machinery. Its cash balance at the commencement of the year was $30 000. What were the cash flows from operating activities?

A) $25 000
B) $23 000
C) $20 000
D) None of the above

Question 5

Income tax expense was $200 000 for the year. Income tax payable was $20 000 at the beginning and $30 000 at the end of the year. Cash payment for income tax reported on the cash flow statement using the direct method is:

A) $190 000.
B) $200 000.
C) $220 000.
D) None of the above.

Question 6

Which of the following transactions does NOT involve a cash flow?

A) Prepayment of insurance in advance
B) Issue of shares
C) Accrual of waged expense
D) Unearned revenue

Question 7

During the year, Penso Ltd received $50 000 from its customers, $5 000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3 000 for income tax and $50 000 for new machinery. In addition, it paid out $12 000 to redeem bonds. Its cash balance at the commencement of the year was $22 000. What were the cash flows from investing activities?

A) $8 000
B) $45 000
C) ($45 000)
D) ($48 000)

Question 8

Which of the following is NOT classified as an investing activity?

A) Purchase of plant and equipment
B) Sale of plant and equipment
C) Issue of shares
D) Purchase of shares in another company

Question 9

Use the information below to answer the following question. What was the cash flow from investing activities?

A) $570
B) $210
C) ($290)
D) ($330)

Question 10

Which of the following is classified under cash flow from operations?

A) Dividend paid
B) Purchase of office equipment for cash
C) Sale of office equipment for cash
D) Income taxes paid

Question 11

The net profit reported on the income statement for the current year was $50 000. Depreciation on property, plant and equipment was $31 000. What is the amount of cash flows from operating activities that would appear on the statement of cash flows prepared using the indirect method?

A) $19 000
B) $49 000
C) $80 000
D) $81 000

Question 12

Determine the cash received from customers on account during July, based on the following data.

A) $37 900
B) $40 000
C) $42 100
D) None of the above

Question 13

Use the information below to answer the subsequent question. The amount of inventory purchased during the year was:

A) $490 000.
B) $500 000.
C) $510 000.
D) $520 000.

Question 14

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows: What were the receipts from customers of Staple Ltd?

A) $25 000
B) $40 000
C) $65 000
D) None of the above

Question 15

Which of the following is NOT a financing cash flow?

A) Dividends received
B) Issue of shares
C) Borrowing $10 000 from the bank
D) Share buybacks

Question 16

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows: What was the cash flow from investing activities of Staple Ltd?

A) ($5 000)
B) ($45 000)
C) ($65 000)
D) None of the above

Question 17

Consider the following information for the year ended 30 June 2018. What was the amount of cash received from customers?

A) $110 000
B) $180 000
C) $290 000
D) $310 000

Question 18

Which of the following is NOT an example of financing cash flows?

A) Repayment of borrowings
B) Purchase of another entity
C) Proceeds from borrowings
D) Issue of shares

Question 19

The cost of goods sold during the year was $50 000. Inventories were $11 500 and $9 500 at the beginning and end of the year, respectively. Accounts payable were $5 000 and $4 000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments to accounts payable would total:

A) $49 000.
B) $47 000.
C) $51 000.
D) $53 000.

Question 20

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows: What were the payments to suppliers and employees of Staple Ltd?

A) $45 000
B) $55 000
C) $80 000
D) None of the above

Question 21

The following information is taken from the accounts of Spratt Ltd. What were the proceeds from the sale of plant?

A) $9 000
B) $19 000
C) $29 000
D) None of the above

Question 22

M Ltd had these transactions during the first month of the new accounting period: $\bullet$ Sold merchandise for $12 000 on credit; its cost was $5 000 and it was purchased and paid for last year
$\bullet$ Collected $3 000 from an account receivable
$\bullet$ Borrowed $10 000 from the bank
$\bullet$ Paid dividends of $500
Using the above information, M Ltd would report net cash flow from operating activities for the new period as:

A) $2 500.
B) $3 000.
C) $8 000.
D) None of the above.

Question 23

Assume zero opening balances for all balance sheet accounts. $\bullet$ Credit sales of $100 000, of which $80 000 was received at year end
$\bullet$ Paid wages of $40 000
$\bullet$ Depreciation expenses was $8 000
Net profit and cash flow from operations are respectively:

A) $32 000 and $40 000
B) $52 000 and $32 000
C) $52 000 and $40 000
D) None of the above

Question 24

The wages payable account showed an opening balance of $27 000 and a closing balance of $42 000. Wages expense was $590 000. What was the cash payment for wages?

A) $575 000
B) $605 000
C) $632 000
D) None of the above

Question 25

The following information is taken from the accounts of Spratt Ltd. What was the value of plant purchased?

A) $20 000
B) $70 000
C) $88 000
D) $120 000

Question 26

Given the following information, what was the amount paid to suppliers during the year?

A) $700 000
B) $580 000
C) $540 000
D) $240 000

Question 27

Which of the following is NOT added back to net income to obtain cash flow from operations?

A) Depreciation
B) Gain on sale of investment
C) Decrease in accounts receivable
D) Increase in accounts payable

Question 28

The following information is taken from the accounts of Spratt Ltd. What was the accumulated depreciation on plant sold during the year?

A) $32 000
B) $42 000
C) $52 000
D) None of the above

Question 29

The net operating profit of Patrick Ltd was $31 000. Depreciation expense was $10 000 and gain on sale of equipment was $2 000. Accounts receivable increased by $15 000 and inventory decreased by $7 000. Accounts payable decreased by $8 000. What was the cash flow from operations?

A) $47 000
B) $39 000
C) $25 000
D) $23 000

Question 30

Which of the following statements about the indirect method of presenting cash flow from operations is NOT true?

A) The direct and indirect methods give the same cash flow from operations.
B) Australian companies do not need to report information about the indirect method.
C) Depreciation expense is added back to operating profit in the indirect method.
D) Decreases in accounts payable are deducted from operating profit in the indirect method.

Question 31

Using the following information, calculate net operating profit after tax.

A) $270 000
B) $430 000
C) $530 000
D) None of the above

Question 32

The retained profits of Franko Ltd at the beginning of the year were $270 000 and at the end of the year $320 000. Net profit after tax for the year was $510 000. During the year, $100 000 was transferred to general reserve. The proposed final dividend at the beginning of the year was $200 000 and at the end of the year $250 000. What was the amount of interim dividend paid during the year?

A) $110 000
B) $160 000
C) $260 000
D) None of the above

Question 33

Consecutive balance sheets of Crow Ltd showed the following balances: During the year ended 30 June 2019, land was revalued upwards by $120 000, and $80 000 was borrowed to acquire land. What was the value of land purchased for cash?

A) $50 000
B) $130 000
C) $170 000
D) None of the above

Question 34

The following information is taken from the financial statements of Cyrus Ltd for the year ended 30 June 2019. What were the total dividends paid during the year?

A) $250 000
B) $460 000
C) $480 000
D) None of the above

Question 35

The prepaid insurance account showed an opening balance of $22 000 and a closing balance of $25 000. Insurance expense was $67 000. What was the cash payment for insurance?

A) $64 000
B) $67 000
C) $70 000
D) $45 000

Question 36

The following information is taken from the accounts of Birmingham Ltd for year ended 30 June 2019. What was the value of debts written off as irrecoverable during the year?

A) $5 000
B) $8 000
C) $12 000
D) $20 000