Question 1

Team Shirts,Inc.had $12,000 of insurance expense and $1,000 of prepaid insurance at the end of the year.The cash paid for insurance was $12,800.Calculate the amount of prepaid insurance at the beginning of the year.

Accepted Answer

The answer of Team Shirts,Inc.had $12,000 of insurance expense and...

Question 2

Cash paid for salaries will be less than the salary expense for the same period if the salary payable balance increases.

Accepted Answer

A) True 
 B)False

Question 3

The indirect method of preparing the statement of cash flows ________.

Accepted Answer

A) is preferred by business over the direct method 
B) provides greater clarity for users than the direct method 
C) reports a greater amount of cash than the direct method 
D) starts by converting net income into an accrual-based number

Question 4

Match each of the following line items with the type of activity.

-purchase of land in exchange for stock

Accepted Answer

A) operating activities 
B) investing activities 
C) financing activities 
D) noncash item

Question 5

On January 1,2011,Company X had accounts receivable of $20,000.During the year,Company X sold $100,000 of merchandise to credit customers.At December 31,2011,Company X had accounts receivable of $50,000.How much cash did the company collect from credit customers during the year?

Accepted Answer

A) $130,000 
B) $120,000 
C) $100,000 
D) $70,000

Question 6

Team Shirts,Inc.paid $3,250 for advertising.This is an ________ activities.

Accepted Answer

A) inflow from investing 
B) outflow for financing 
C) inflow from operating 
D) outflow for operating

Question 7

Team Instructions: Divide the class into teams of three or four people.Each team member should work the following problem separately outside of class.Then give the students time in class to compare answers with their teammates and put together a final correct copy of the problem.Each team should turn in only one copy of the problem for grading.All team members will receive the same grade.
Answer the following questions using the Statement of Cash Flows for Fixzit,Inc.below:

Accepted Answer

The answer of Team Instructions: Divide the class into teams...

Question 8

Negative cash flow from financing activities on the statement of cash flows most likely indicates a company is ________.

Accepted Answer

A) borrowing more than it is paying off 
B) buying more long-term assets than it is selling 
C) paying off more of its debts than it is borrowing 
D) in poor financial health

Question 9

The statement of cash flows shows all the cash a company has received and all the cash a company has paid during the accounting period.

Accepted Answer

A) True 
 B)False

Question 10

Analysts use the statement of cash flows to measure ________.

Accepted Answer

A) the ability of a company to repay loans 
B) the ability of a company to expand by investing in new equipment 
C) the amount of excess cash generated by operating activities 
D) all of these

Question 11

To prepare the statement of cash flows using the indirect method,dividends paid are ________.

Accepted Answer

A) added to net income 
B) subtracted from net income 
C) already included in net income 
D) included as an item in the financing section

Question 12

The following information is from ABC,Inc.'s December 31,2011 annual report:  Cash paid to vendors on ABC,Inc.'s statement of cash flows equals ________.

Accepted Answer

A) $100,000 
B) $110,000 
C) $104,000 
D) $96,000

Question 13

The following information is from Avatar,Inc.'s December 31,2011 annual report:  Note: Avatar always collects cash from its customers in advance.
Cash paid for insurance on Avatar,Inc.'s statement of cash flows equals ________.

Accepted Answer

A) $23,000 
B) $22,000 
C) $21,000 
D) $19,000

Question 14

A positive cash flow from investing activities indicates the company is expanding.

Accepted Answer

A) True 
 B)False

Question 15

A source of cash from financing activities is ________.

Accepted Answer

A) issuing of a note receivable 
B) collection of an account receivable 
C) cash received from the sale of treasury stock 
D) collection of a note receivable

Question 16

A building cost $550,000 and had accumulated depreciation of $450,000 when it was sold for cash at a loss of $30,000.Proceeds from the sale of the building are:
1.$________ and are 2.a(n)________ activity.

Accepted Answer

The answer of A building cost $550,000 and had accumulated...

Question 17

To prepare the statement of cash flows using the indirect method,depreciation expense is ________.

Accepted Answer

A) added to net income 
B) subtracted from net income 
C) included as an item in the financing section 
D) included as an item in the investing section

Question 18

The following information is available for two different retailers,both of whom began business this year:  Which company appears to be purchasing long-term assets?

Accepted Answer

A) Gnu Co. 
B) Lube Co. 
C) Both are purchasing long-term assets 
D) Neither is purchasing long-term assets

Question 19

Positive cash flow from financing activities on the statement of cash flows most likely indicates a company is ________.

Accepted Answer

A) borrowing more than it is paying off 
B) buying more long-term assets than it is selling 
C) paying off more of its debts than it is borrowing 
D) in poor financial health

Question 20

purchase of land in exchange for stock

Accepted Answer

A) operating activities 
B) investing activities 
C) financing activities 
D) noncash item

Exam 9: Preparing and Analyzing the Statement of Cash Flows

Team Shirts,Inc.had $12,000 of insurance expense and $1,000 of prepaid insurance at the end of the year.The cash paid for insurance was $12,800.Calculate the amount of prepaid insurance at the beginning of the year.

Cash paid for salaries will be less than the salary expense for the same period if the salary payable balance increases.

The indirect method of preparing the statement of cash flows ________.

Match each of the following line items with the type of activity. -purchase of land in exchange for stock

On January 1,2011,Company X had accounts receivable of $20,000.During the year,Company X sold $100,000 of merchandise to credit customers.At December 31,2011,Company X had accounts receivable of $50,000.How much cash did the company collect from credit customers during the year?

Team Shirts,Inc.paid $3,250 for advertising.This is an ________ activities.

Negative cash flow from financing activities on the statement of cash flows most likely indicates a company is ________.

The statement of cash flows shows all the cash a company has received and all the cash a company has paid during the accounting period.

Analysts use the statement of cash flows to measure ________.

To prepare the statement of cash flows using the indirect method,dividends paid are ________.

The following information is from ABC,Inc.'s December 31,2011 annual report: Cash paid to vendors on ABC,Inc.'s statement of cash flows equals ________.

The following information is from Avatar,Inc.'s December 31,2011 annual report: Note: Avatar always collects cash from its customers in advance. Cash paid for insurance on Avatar,Inc.'s statement of cash flows equals ________.

A positive cash flow from investing activities indicates the company is expanding.

A source of cash from financing activities is ________.

A building cost $550,000 and had accumulated depreciation of $450,000 when it was sold for cash at a loss of $30,000.Proceeds from the sale of the building are: 1.$ and are 2.a(n) activity.

To prepare the statement of cash flows using the indirect method,depreciation expense is ________.

The following information is available for two different retailers,both of whom began business this year: Which company appears to be purchasing long-term assets?

Positive cash flow from financing activities on the statement of cash flows most likely indicates a company is ________.

purchase of land in exchange for stock

Exam 9: Preparing and Analyzing the Statement of Cash Flows

Team Shirts,Inc.had $12,000 of insurance expense and $1,000 of prepaid insurance at the end of the year.The cash paid for insurance was $12,800.Calculate the amount of prepaid insurance at the beginning of the year.

Cash paid for salaries will be less than the salary expense for the same period if the salary payable balance increases.

The indirect method of preparing the statement of cash flows ________.

Match each of the following line items with the type of activity. -purchase of land in exchange for stock

On January 1,2011,Company X had accounts receivable of $20,000.During the year,Company X sold $100,000 of merchandise to credit customers.At December 31,2011,Company X had accounts receivable of $50,000.How much cash did the company collect from credit customers during the year?

Team Shirts,Inc.paid $3,250 for advertising.This is an ________ activities.

Negative cash flow from financing activities on the statement of cash flows most likely indicates a company is ________.

The statement of cash flows shows all the cash a company has received and all the cash a company has paid during the accounting period.

Analysts use the statement of cash flows to measure ________.

To prepare the statement of cash flows using the indirect method,dividends paid are ________.

The following information is from ABC,Inc.'s December 31,2011 annual report: Cash paid to vendors on ABC,Inc.'s statement of cash flows equals ________.

The following information is from Avatar,Inc.'s December 31,2011 annual report: Note: Avatar always collects cash from its customers in advance. Cash paid for insurance on Avatar,Inc.'s statement of cash flows equals ________.

A positive cash flow from investing activities indicates the company is expanding.

A source of cash from financing activities is ________.

A building cost $550,000 and had accumulated depreciation of $450,000 when it was sold for cash at a loss of $30,000.Proceeds from the sale of the building are: 1.$________ and are 2.a(n)________ activity.

To prepare the statement of cash flows using the indirect method,depreciation expense is ________.

The following information is available for two different retailers,both of whom began business this year: Which company appears to be purchasing long-term assets?

Positive cash flow from financing activities on the statement of cash flows most likely indicates a company is ________.

purchase of land in exchange for stock

A building cost $550,000 and had accumulated depreciation of $450,000 when it was sold for cash at a loss of $30,000.Proceeds from the sale of the building are: 1.$ and are 2.a(n) activity.