Deck 14: The Statement of Cash Flows

Question 1

Which of the following,if repeated for several consecutive years,would indicate financial distress?

A) negative net operating cash flows
B) negative net investing cash flows
C) negative net financing cash flows
D) positive net investing cash flows.

Answer 1

A

Question 2

Which of the following is classified as an operating activity in a cash flow statement?

A) dividend paid
B) amortisation of goodwill
C) sale of office equipment
D) income taxes paid.

Answer 2

D

Question 3

What were the cash flows from investing activities?

A) $8000
B) $45 000
C) ($45 000)
D) ($48,000).

Answer 3

C

Question 4

Which of the following is a financing activity?

A) repayment of loan by other entity
B) share buyback
C) discount received
D) discount allowed

Question 5

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

A) interest received
B) dividends received
C) interest paid
D) dividends paid.

Question 6

Which of the following is NOT a financing cash flow?

A) dividends received
B) issue of shares
C) the borrowing of $10 000 from the bank
D) share buybacks.

Question 7

Which of the following is NOT classified as a financing activity?

A) share buybacks
B) dividend payments
C) sale of equipment
D) borrowing from a finance company.

Question 8

What were the receipts from customers of Staple Ltd?

A) $25 000
B) $40 000
C) $65 000
D) $135 000.

Question 9

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

A) prepayment of insurance
B) issue of shares
C) issue of bonus shares
D) revenue received in advance.

Question 10

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

A) purchase of government bonds
B) purchase of motor vehicle
C) repayment of loan by other entity
D) obtaining a loan from another entity.

Question 11

What effect does increasing depreciation expense have on cash flows?

A) It increases operating cash flows.
B) It decreases operating cash flows.
C) It decreases investing cash flows.
D) It has no effect.

Question 12

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

A) purchase of plant and equipment
B) sale of plant and equipment
C) share buybacks
D) purchase of shares in another company.

Question 13

What were the cash flows from financing activities?

A) $20 000
B) $8000
C) ($12 000)
D) ($28,000).

Question 14

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 15

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 debentures.

Question 16

Which of the following is NOT an operating cash flow?

A) cash sales
B) payment of wages
C) dividends paid
D) interest paid.

Question 17

Which of the following is an operating cash flow?

A) issue of shares
B) purchase of equipment
C) repayment of a loan
D) taxes paid.

Question 18

What were the payments to suppliers and employees of Staple Ltd?

A) $45 000
B) $55 000
C) $80 000
D) $30 000.

Question 19

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 20

What were the cash flows from operating activities?

A) $25 000
B) $23 000
C) ($17 000)
D) $20 000.

Question 21

What was the value of debts written off as irrecoverable during the year?

A) $8000
B) $12 000
C) $20 000
D) $5000.

Question 22

The net profit reported on the income statement for the current year was $50 000.Depreciation on property,plant and equipment and amortisation of goodwill were $30 000 and $1000 respectively.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) $81 000
D) $80 000.

Question 23

What was the value of inventory purchased during the year?

A) $420 000
B) $425 000
C) $430 000
D) $200 000.

Question 24

What was the cash flow from financing activities of Staple Ltd?

A) $60 000
B) $40 000
C) ($20 000)
D) $20 000.

Question 25

What was the cash flow from financing activities?

A) $3200
B) $4300
C) ($400)
D) $7000.

Question 26

The income tax payable account showed an opening balance of $62 000 and a closing balance of $75 000.Income tax expense was $68 000.What was the income tax paid?

A) $55 000
B) $68 000
C) $81 000
D) $62 000.

Question 27

The cost of merchandise sold during the year was $50 000.Merchandise inventories were $11 500 and $9500 at the beginning and end of the year,respectively.Accounts payable were $5000 and $4000 at the beginning and end of the year,respectively.Using the direct method of reporting cash flows from operating activities,cash payments for merchandise would total:

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

Question 28

The amount of cash paid to suppliers during the year was:

A) $10 000
B) $501 000
C) $510 000
D) $519 000.

Question 29

What was the amount of cash received from customers?

A) $305 000
B) $465 000
C) $485 000
D) none of the above.

Question 30

What was the cash flow from investing activities?

A) $5700
B) $2100
C) ($2900)
D) ($3300).

Question 31

The amount of inventory purchased during the year was:

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

Question 32

What was the cash flow from operating activities?

A) ($900)
B) ($3500)
C) ($6100)
D) ($5000).

Question 33

The opening and closing balances of accounts receivable were $100 000 and $170 000 respectively.Sales on credit were $200 000.What was the amount of cash received from customers?

A) $130 000
B) $200 000
C) $270 000
D) $300 000.

Question 34

What was the cash flow from investing activities of Staple Ltd?

A) ($5000)
B) ($45 000)
C) ($65 000)
D) ($55 000).

Question 35

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) $590 000
C) $605 000
D) $632 000.

Question 36

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) $200 000
B) $190 000
C) $220 000
D) $230 000.

Question 37

What was the amount paid to suppliers (cash and credit)during the year?

A) $190 000
B) $420 000
C) $610 000
D) $435 000.

Question 38

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) $200 000
B) $190 000
C) $220 000
D) $230 000.

Question 39

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 40

If a gain of $50 000 is incurred in selling equipment that has a book value of $250 000,the total amount reported in the cash flows from the investing activities section of the statement of cash flows is:

A) $50 000
B) $200 000
C) $300 000
D) $250 000.

Question 41

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) $360 000.

Question 42

Use the information below to answer the following questions:
The following information is taken from the accounts of Ray Ltd.
$\begin{array}{llcc}&\$\\ \text { Motor vehicles, 1 January 2012 } &620000 \\ \text {Motor vehicles, 31 December 2012 } &740000\\ \text {Accumulated depreciation } &\\ \text { - Motor vehicles, 1 January 2012 } &230000\\ \text {Accumulated depreciation } &\\ \text { - Motor vehicles, 31 December } &290000\\ \text {Depreciation expense } &\\ \text {- Motor vehicles, year ended 31 December 2012 } &1500\\ \text { Gain on sale of motor vehicle, } &\\ \text { year ended 31 December} &10000\\ \text { Acquisition of motor vehicles financed by loan} &\\ \text {to be paid in 5 years' time } &170000\\ \text { Cost price motor vehicles sold during the year } &130000\\\end{array}$



-What was the accumulated depreciation on motor vehicles sold during the year?

A) $90 000
B) $150 000
C) $210 000
D) $80 000.

Question 43

Use the information below to answer the following questions:
The following information is taken from the accounts of Ray Ltd.
$\begin{array}{llcc}&\$\\ \text { Motor vehicles, 1 January 2012 } &620000 \\ \text {Motor vehicles, 31 December 2012 } &740000\\ \text {Accumulated depreciation } &\\ \text { - Motor vehicles, 1 January 2012 } &230000\\ \text {Accumulated depreciation } &\\ \text { - Motor vehicles, 31 December } &290000\\ \text {Depreciation expense } &\\ \text {- Motor vehicles, year ended 31 December 2012 } &1500\\ \text { Gain on sale of motor vehicle, } &\\ \text { year ended 31 December} &10000\\ \text { Acquisition of motor vehicles financed by loan} &\\ \text {to be paid in 5 years' time } &170000\\ \text { Cost price motor vehicles sold during the year } &130000\\\end{array}$



-What were the proceeds from sale of motor vehicles?

A) $30 000
B) $40 000
C) $50 000
D) $140 000.

Question 44

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 45

What were the total dividends paid during the year?

A) $250 000
B) $460 000
C) $480 000
D) $230 000

Question 46

The net operating profit of Patrick Ltd was $31 000.Depreciation expense was $10 000 and gain on sale of equipment was $2000.Accounts receivable increased by $15 000 and inventory decreased by $7000.Accounts payable decreased b.y $8000.What was the cash flow from operations?

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

Question 47

Dividends of $100 000 were declared during the year,and the balances in the dividends payable account at the beginning and end of the year were $15 000 and $25 000 respectively.What amount would be reported as payment of dividends in the cash flows from the financing activities section of the statement of cash flows?

A) $90 000
B) $25 000
C) $100 000
D) $110 000.

Question 48

Use the information below to answer the following questions:
The following information is taken from the accounts of Ray Ltd.
$\begin{array}{llcc}&\$\\ \text { Motor vehicles, 1 January 2012 } &620000 \\ \text {Motor vehicles, 31 December 2012 } &740000\\ \text {Accumulated depreciation } &\\ \text { - Motor vehicles, 1 January 2012 } &230000\\ \text {Accumulated depreciation } &\\ \text { - Motor vehicles, 31 December } &290000\\ \text {Depreciation expense } &\\ \text {- Motor vehicles, year ended 31 December 2012 } &1500\\ \text { Gain on sale of motor vehicle, } &\\ \text { year ended 31 December} &10000\\ \text { Acquisition of motor vehicles financed by loan} &\\ \text {to be paid in 5 years' time } &170000\\ \text { Cost price motor vehicles sold during the year } &130000\\\end{array}$



-What was the value of motor vehicles purchased for cash?

A) $140 000
B) $190 000
C) $250 000
D) $80 000.

Question 49

What was the amount of interim dividend paid during the year?

A) $620 000
B) $460 000
C) $230 000
D) $210 000.

Question 50

Shippers Ltd made a net operating loss of $42 000.Depreciation expense was $80 000 and loss on sale of vessels was $170 000.Accounts receivable increased by $65 000 and inventory decreased by $18 000.Accounts payable increased by $160 000 and expenses payable decreased by $1000.What was the cash flow from operations?

A) $404 000
B) $320 000
C) ($20 000)
D) none of the above.

Question 51

What was the value of plant purchased?

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

Question 52

What were the proceeds from the sale of plant?

A) $9000
B) $19 000
C) $29 000
D) $47 000.

Question 53

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.