Question 1

Which of the following would be added to net income using the indirect method?

Accepted Answer

A)  An increase in accounts receivable 
B)  An increase in prepaid expenses 
C)  Depreciation expense 
D)  A decrease in accounts payable 
A)  An increase in accounts receivable 
B)  An increase in prepaid expenses 
C)  Depreciation expense 
D)  A decrease in accounts payable C

Question 2

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Accepted Answer

A)  the current year's income statement. 
B)  a comparative balance sheet. 
C)  additional information. 
D)  all of these must be analyzed. 
A)  the current year's income statement. 
B)  a comparative balance sheet. 
C)  additional information. 
D)  all of these must be analyzed. D

Question 3

Land acquired from the issuance of common stock is reported

Accepted Answer

A)  as a financing activity. 
B)  as an investing activity. 
C)  as an operating activity. 
D)  in a separate schedule at the bottom of the statement of cash flows. 
A)  as a financing activity. 
B)  as an investing activity. 
C)  as an operating activity. 
D)  in a separate schedule at the bottom of the statement of cash flows. D

Question 4

Ale Company reports a $16,000 increase in inventory and a $8,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $150,000. The cash payments made to suppliers were

Accepted Answer

A)  $150,000. 
B)  $158,000. 
C)  $126,000. 
D)  $174,000. 
A)  $150,000. 
B)  $158,000. 
C)  $126,000. 
D)  $174,000.

Question 5

The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities?

Accepted Answer

A)  $296,000 
B)  $339,000 
C)  $323,000 
D)  $311,000 
A)  $296,000 
B)  $339,000 
C)  $323,000 
D)  $311,000

Question 6

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Accepted Answer

A)  the financing section. 
B)  the "extraordinary" section. 
C)  a separate schedule or note to the financial statements. 
D)  the stockholders' equity section. 
A)  the financing section. 
B)  the "extraordinary" section. 
C)  a separate schedule or note to the financial statements. 
D)  the stockholders' equity section.

Question 7

Indicate where the issuance of common stock issued for cash would appear, if at all, on the indirect statement of cash flows.

Accepted Answer

A)  Operating activities section 
B)  Investing activities section 
C)  Financing activities section 
D)  Does not represent a cash flow 
A)  Operating activities section 
B)  Investing activities section 
C)  Financing activities section 
D)  Does not represent a cash flow

Question 8

For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.

Accepted Answer

1. B 6. D
2. E 7. F

Question 9

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Accepted Answer

A) True 
 B)False

Question 10

The acquisition of land by issuing common stock is

Accepted Answer

A)  a noncash transaction which is not reported in the body of a statement of cash flows. 
B)  a cash transaction and would be reported in the body of a statement of cash flows. 
C)  a noncash transaction and would be reported in the body of a statement of cash flows. 
D)  only reported if the statement of cash flows is prepared using the direct method. 
A)  a noncash transaction which is not reported in the body of a statement of cash flows. 
B)  a cash transaction and would be reported in the body of a statement of cash flows. 
C)  a noncash transaction and would be reported in the body of a statement of cash flows. 
D)  only reported if the statement of cash flows is prepared using the direct method.

Question 11

Sact Creek Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better.
Ted Flay, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers.
Will Smith, financial manager, immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures.
Required:
1. Were Ted Flay's actions ethical? Explain.
2. Were Will Smith's actions ethical? Explain.
3. Were the company president's actions ethical? Explain.

Accepted Answer

1. There is a valid question as to wheth

Question 12

Net income from operations is generally not the same as cash provided from operations because revenues and expenses are recognized in the income statement on the ______________ basis.

Accepted Answer

The answer of Net income from operations is generally not...

Question 13

The reconciling entry for depreciation expense in a worksheet is a credit to Accumulated Depreciation and a debit to Operating-Depreciation Expense.

Accepted Answer

A) True 
 B)False

Question 14

The statement of cash flows

Accepted Answer

A)  must be prepared on a daily basis. 
B)  summarizes the operating, financing, and investing activities of an entity. 
C)  is another name for the income statement. 
D)  is a special section of the income statement. 
A)  must be prepared on a daily basis. 
B)  summarizes the operating, financing, and investing activities of an entity. 
C)  is another name for the income statement. 
D)  is a special section of the income statement.

Question 15

Under the indirect method, retained earnings is adjusted for items that affected reported net income but did not affect cash.

Accepted Answer

A) True 
 B)False

Question 16

In addition to the three basic financial statements, which of the following is also a required financial statement?

Accepted Answer

A)  the "Cash Budget" 
B)  the Statement of Cash Flows 
C)  the Statement of Cash Inflows and Outflows 
D)  the "Cash Reconciliation" 
A)  the "Cash Budget" 
B)  the Statement of Cash Flows 
C)  the Statement of Cash Inflows and Outflows 
D)  the "Cash Reconciliation"

Question 17

Cost of goods sold for the year amounted to $130,000, and during the year, accounts payable ______________ by $9,000 and inventory ______________ by $5,000 resulting in cash paid to suppliers of $116,000.

Accepted Answer

The answer of Cost of goods sold for the year...

Question 18

The statement of cash flows

Accepted Answer

A)  is prepared instead of an income statement under generally accepted accounting principles. 
B)  is used to assess an entity's ability to pay dividends and meet obligations. 
C)  is prepared from comparative income statements. 
D)  reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement. 
A)  is prepared instead of an income statement under generally accepted accounting principles. 
B)  is used to assess an entity's ability to pay dividends and meet obligations. 
C)  is prepared from comparative income statements. 
D)  reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement.

Question 19

Ale Company has other operating expenses of $80,000. There has been a decrease in prepaid expenses of $6,000 during the year, and accrued liabilities are $5,000 larger than in the prior period. What were Ale's cash payments for operating expenses?

Accepted Answer

A)  $81,000 
B)  $82,000 
C)  $69,000 
D)  $80,000 
A)  $81,000 
B)  $82,000 
C)  $69,000 
D)  $80,000

Question 20

On the statement of cash flows using the indirect method, patent amortization expense will

Accepted Answer

A)  be added to net income in the operating section. 
B)  be deducted from net income in the operating section. 
C)  appear as an inflow of cash in the investing section. 
D)  appear as an outflow of cash in the investing section. 
A)  be added to net income in the operating section. 
B)  be deducted from net income in the operating section. 
C)  appear as an inflow of cash in the investing section. 
D)  appear as an outflow of cash in the investing section.

Which of the following would be added to net income using the indirect method?

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Land acquired from the issuance of common stock is reported

Ale Company reports a $16,000 increase in inventory and a $8,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $150,000. The cash payments made to suppliers were

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Indicate where the issuance of common stock issued for cash would appear, if at all, on the indirect statement of cash flows.

For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

The acquisition of land by issuing common stock is

Net income from operations is generally not the same as cash provided from operations because revenues and expenses are recognized in the income statement on the ______________ basis.

The reconciling entry for depreciation expense in a worksheet is a credit to Accumulated Depreciation and a debit to Operating-Depreciation Expense.

The statement of cash flows

Under the indirect method, retained earnings is adjusted for items that affected reported net income but did not affect cash.

In addition to the three basic financial statements, which of the following is also a required financial statement?

Cost of goods sold for the year amounted to $130,000, and during the year, accounts payable by $9,000 and inventory by $5,000 resulting in cash paid to suppliers of $116,000.

The statement of cash flows

Ale Company has other operating expenses of $80,000. There has been a decrease in prepaid expenses of $6,000 during the year, and accrued liabilities are $5,000 larger than in the prior period. What were Ale's cash payments for operating expenses?

On the statement of cash flows using the indirect method, patent amortization expense will

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Exam 12: Statement of Cash Flows

Which of the following would be added to net income using the indirect method?

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Land acquired from the issuance of common stock is reported

Ale Company reports a $16,000 increase in inventory and a $8,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $150,000. The cash payments made to suppliers were

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Indicate where the issuance of common stock issued for cash would appear, if at all, on the indirect statement of cash flows.

For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

The acquisition of land by issuing common stock is

Net income from operations is generally not the same as cash provided from operations because revenues and expenses are recognized in the income statement on the ______________ basis.

The reconciling entry for depreciation expense in a worksheet is a credit to Accumulated Depreciation and a debit to Operating-Depreciation Expense.

The statement of cash flows

Under the indirect method, retained earnings is adjusted for items that affected reported net income but did not affect cash.

In addition to the three basic financial statements, which of the following is also a required financial statement?

Cost of goods sold for the year amounted to $130,000, and during the year, accounts payable ______________ by $9,000 and inventory ______________ by $5,000 resulting in cash paid to suppliers of $116,000.

The statement of cash flows

Ale Company has other operating expenses of $80,000. There has been a decrease in prepaid expenses of $6,000 during the year, and accrued liabilities are $5,000 larger than in the prior period. What were Ale's cash payments for operating expenses?

On the statement of cash flows using the indirect method, patent amortization expense will

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Cost of goods sold for the year amounted to $130,000, and during the year, accounts payable by $9,000 and inventory by $5,000 resulting in cash paid to suppliers of $116,000.