Question 1

Waller Corporation had the following account balances for 2014:  Waller's 2014 net income is $450,000.What amount should Waller include as net cash provided by operating activities in its 2014 statement of cash flows?

Accepted Answer

A)  $436,200 
B)  $445,200 
C)  $453,600 
D)  $454,200

Question 2

Net income for the Hot Springs Company for the most recent year was $150,000,consisting of $865,000 of revenues,$360,000 of cost of goods sold,and $365,000 of operating expenses.The following changes in current assets and current liabilities have been identified:
  Required:
Calculate the cash flows from operating activities for the year,applying the direct method.Identify the individual amounts that would be disclosed in the statement of cash flows where possible.

Accepted Answer

The answer of Net income for the Hot Springs Company...

Question 3

Using the indirect method,cash flows from operating activities would be increased by which of the following?

Accepted Answer

A)  Gain on sale of investments 
B)  Decrease in accounts receivable 
C)  Decrease in accounts payable 
D)  Increase in prepaid expenses

Question 4

The following information is available from the financial statements of Barrington Corporation for the year ended December 31,2014:  What is Barrington Corporation's net cash flow from operating activities?

Accepted Answer

A)  $440,000 
B)  $466,000 
C)  $520,000 
D)  $542,000

Question 5

Which of the following is classified as a cash inflow from financing activities?

Accepted Answer

A)  Cash received from re-issuance of treasury stock held by the company 
B)  Cash received from the sale of stock held as a long-term investment 
C)  Cash received as dividends on stock held as a long-term investment 
D)  Cash received from the sale of land

Question 6

In a statement of cash flows,interest payments to lenders and other creditors should be classified as cash outflows for

Accepted Answer

A)  borrowing activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities.

Question 7

Which of the following is true?

Accepted Answer

A)  The FASB requires dividends paid to be classified as an operating activity. 
B)  The FASB requires interest paid to be classified as a financing activity. 
C)  The FASB allows dividends paid to be classified as an operating activity or as a financing activity. 
D)  The IASC allows dividends paid to be classified as an operating activity or as a financing activity.

Question 8

A cash dividend that is declared during an accounting period,to be paid in the next accounting period,may be presented in the statement of cash flows in which of the following ways?

Accepted Answer

A)  A use of cash from operating activities 
B)  A noncash transaction presented in a separate schedule 
C)  A use of cash from financing activities 
D)  A use of cash from investing activities

Question 9

Kirkland Company's prepaid rent was $40,000 at December 31,2014,and $15,000 at December 31,2013.Kirkland's income statement for 2014 reported rent expense as $10,000.What amount of cash disbursements for rent would be reported in Kirkland's net cash flows from operating activities for 2014 presented on a direct basis?

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $35,000 
D)  $45,000

Question 10

In a statement of cash flows (indirect method),depreciation is treated as an adjustment to reported net income because depreciation

Accepted Answer

A)  is an inflow of cash to a reserve account for asset replacement. 
B)  reduces the reported net income and involves an inflow of cash. 
C)  reduces the reported net income but does not involve an outflow of cash. 
D)  usually represents a significant portion of operating expenses.

Question 11

Daisy Corporation reported net income of $420,000 for 2014.Changes occurred in several balance sheet accounts as follows:  Additional information:
 In Daisy's 2014 statement of cash flows,net cash provided by operating activities should be

Accepted Answer

A)  $476,000. 
B)  $485,800. 
C)  $492,800. 
D)  $499,800.

Question 12

Supplemental disclosures required only when the statement of cash flows is prepared using the indirect method include

Accepted Answer

A)  a schedule reconciling net income with net cash provided by (used in)operating activities. 
B)  amounts paid for interest and taxes. 
C)  amounts deducted for depreciation and amortization. 
D)  significant noncash investing and financing activities.

Question 13

In a statement of cash flows using the direct method,which of the following would increase reported cash flows from operating activities?

Accepted Answer

A)  Dividends received from investments 
B)  Gain on sale of equipment 
C)  Gain on sale of a business segment 
D)  Sale of treasury stock

Question 14

The following pertains to the Excelsior Corp.for the year ended December 31,2014.
  Prepare a statement of cash flows in good form using the indirect method.Calculate the cash flow to net income and cash flow adequacy ratios for the company.

Accepted Answer

The answer of The following pertains to the Excelsior Corp.for...

Question 15

In preparing a statement of cash flows,which of the following transactions would be considered an investing activity?

Accepted Answer

A)  Sale of a business segment 
B)  Issuance of bonds payable at a discount 
C)  Purchase of treasury stock 
D)  Sale of capital stock

Question 16

In a statement of cash flows,if equipment is sold at a gain,the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment

Accepted Answer

A)  with no addition or subtraction. 
B)  plus the gain and less the amount of tax attributable to the gain. 
C)  plus the gain only. 
D)  plus both the gain and the amount of tax attributable to the gain.

Question 17

Cash flows from investing activities would be decreased by which of the following?

Accepted Answer

A)  Issuance of bonds 
B)  Issuance of common stock 
C)  Purchase of long-term investments 
D)  Payment of dividends

Question 18

Which of the following is not a source of cash?

Accepted Answer

A)  Sale of equipment below book value at a loss 
B)  Issuance of bonds payable below par value at a discount 
C)  Collection of a long-term note receivable from a customer 
D)  Declaration of a cash dividend to be paid in the next accounting period

Question 19

During 2014,Stewart Company reported revenues on an accrual basis of $70,000.Accounts receivable decreased during the year from $35,000 at the beginning to $24,500 at the end.How much cash was provided by collections from customers during the year?

Accepted Answer

A)  $45,500 
B)  $59,500 
C)  $70,000 
D)  $80,500

Question 20

FJR Company is preparing a forecast of its net income for the year 2014.In addition,FJR plans to construct a forecasted statement of cash flows for 2014.The balance sheet and income statement data for 2013 are presented below,as well as a forecast of the balance sheet for 2014.Management expects sales in 2014 to rise to $6,000,000.In order to achieve this level of increase,management estimates that operating expenses (specifically sales commissions)will rise to $410,134.
Prepare a forecasted income statement and forecasted statement of cash flows (using the indirect method)for the year ended December 31,2014,for FJR Company.Calculate the cash flow to net income and cash flow adequacy ratios.There were no changes in stockholders' equity other than net income and cash dividends.

Accepted Answer

The answer of FJR Company is preparing a forecast of...

Exam 5: Statement of Cash Flows and Articulation

Waller Corporation had the following account balances for 2014: Waller's 2014 net income is $450,000.What amount should Waller include as net cash provided by operating activities in its 2014 statement of cash flows?