Question 1

Companies classify some cash flows relating to investing or financing activities as operating activities.

Accepted Answer

A) True 
 B)False

Question 2

Use the following information for questions 51 through 55.
Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2015 and 2014 are provided below.  
 The following additional data were provided:
1. Dividends for the year 2015 were $144,000.
 2. During the year, equipment was sold for $180,000. This equipment cost $264,000 originally and had a book value of $216,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales.
 3. All depreciation expense is in the selling expense category.
-The net cash provided by operating activities is

Accepted Answer

A)  $306,000. 
B)  $216,000. 
C)  $180,000. 
D)  $150,000. 
A)  $306,000. 
B)  $216,000. 
C)  $180,000. 
D)  $150,000.

Question 3

A company can convert net income to net cash flow from operating activities through either the direct method or the indirect method.

Accepted Answer

A) True 
 B)False

Question 4

In determining net cash flow from operating activities, a decrease in accounts payable during a period

Accepted Answer

A)  means that income on an accrual basis is less than income on a cash basis. 
B)  requires an addition adjustment to net income under the indirect method. 
C)  requires an increase adjustment to cost of goods sold under the direct method. 
D)  requires a decrease adjustment to cost of goods sold under the direct method. 
A)  means that income on an accrual basis is less than income on a cash basis. 
B)  requires an addition adjustment to net income under the indirect method. 
C)  requires an increase adjustment to cost of goods sold under the direct method. 
D)  requires a decrease adjustment to cost of goods sold under the direct method.

Question 5

Equipment which cost $213,000 and had accumulated depreciation of $114,000 was sold for $111,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n)

Accepted Answer

A)  addition to net income of $12,000 and a $111,000 cash inflow from financing activities. 
B)  deduction from net income of $12,000 and a $99,000 cash inflow from investing activities. 
C)  deduction from net income of $12,000 and a $111,000 cash inflow from investing activities. 
D)  addition to net income of $12,000 and a $99,000 cash inflow from financing activities. 
A)  addition to net income of $12,000 and a $111,000 cash inflow from financing activities. 
B)  deduction from net income of $12,000 and a $99,000 cash inflow from investing activities. 
C)  deduction from net income of $12,000 and a $111,000 cash inflow from investing activities. 
D)  addition to net income of $12,000 and a $99,000 cash inflow from financing activities.

Question 6

Use the following information for questions 111 and 112.
A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.
-In a statement of cash flows, what amount is included in investing activities for the above transaction?

Accepted Answer

A)  Cash payment 
B)  Acquisition price 
C)  Zero 
D)  Mortgage amount 
A)  Cash payment 
B)  Acquisition price 
C)  Zero 
D)  Mortgage amount

Question 7

Calculations for statement of cash flows.During 2015 equipment was sold for $73,000. This equipment cost $120,000 and had a book value of $72,000. Accumulated depreciation for equipment was $325,000 at 12/31/14 and $310,000 at 12/31/15.
InstructionsWhat three items would be shown on a statement of cash flows (indirect method) from this information? Show your calculations.

Accepted Answer

The answer of Calculations for statement of cash flows.During 2015...

Question 8

Use the following information for questions 113 and 114.
Smiley Corp.'s transactions for the year ended December 31, 2015 included the following:
$\bullet$Purchased real estate for $625,000 cash which was borrowed from a bank.
$\bullet$Sold available-for-sale securities for $500,000.
$\bullet$Paid dividends of $600,000.
$\bullet$Issued 500 shares of common stock for $250,000.
$\bullet$Purchased machinery and equipment for $125,000 cash.
$\bullet$Paid $450,000 toward a bank loan.
$\bullet$Reduced accounts receivable by $100,000.
$\bullet$Increased accounts payable $200,000.
-Smiley's net cash used in financing activities for 2015 was

Accepted Answer

A)  $225,000. 
B)  $175,000. 
C)  $450,000. 
D)  $425,000. 
A)  $225,000. 
B)  $175,000. 
C)  $450,000. 
D)  $425,000.

Question 9

Use the following information for questions 63 through 67.
Financial statements for Kiner Company are given below:   Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000.
-Capital stock (plus any additional paid-in capital) at December 31, 2015 was

Accepted Answer

A)  $1,600,000. 
B)  $1,840,000. 
C)  $1,040,000. 
D)  $2,480,000. 
A)  $1,600,000. 
B)  $1,840,000. 
C)  $1,040,000. 
D)  $2,480,000.

Question 10

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?

Accepted Answer

The answer of When preparing a statement of cash flows,...

Question 11

The direct method, also called the reconciliation method, reports cash receipts and cash disbursements from operating activities.

Accepted Answer

A) True 
 B)False

Question 12

Noncash investing and financing activities are disclosed either in a separate schedule or in a separate note to the financial statements.

Accepted Answer

A) True 
 B)False

Question 13

The first step in the preparation of the statement of cash flows is to determine the net cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 14

Use the following information for questions 61 and 62.
Equipment that cost $525,000 and had a book value of $234,000 was sold for $270,000. Data from the comparative balance sheets are: $\begin{array}{lrr}&12 / 31 / 15&12 / 31 / 14\
\text { Equipment } & \$ 3,240,000 & \$ 2,925,000 \
\text { Accumulated Depreciation } & 990,000 & 855,000
\end{array}$
-Depreciation expense for 2015 was

Accepted Answer

A)  $462,000. 
B)  $426,000. 
C)  $81,000. 
D)  $54,000. 
A)  $462,000. 
B)  $426,000. 
C)  $81,000. 
D)  $54,000.

Question 15

Selected information from Dinkel Company's 2015 accounting records is as follows: $$\begin{array} { l r } 
\text { Proceeds from issuance of common stock } & 600,000 \
\text { Proceeds from issuance of bonds } & 1,800,000 \
\text { Cash dividends on common stock paid } & 220,000 \
\text { Cash dividends on preferred stock paid } & 90,000 \
\text { Purchases of treasury stock } & 180,000 \
\text { Sale of stock to officers and employees not included above } & 150,000
\end{array}$$ Dinkel's statement of cash flows for the year ended December 31, 2015, would show net cash provided (used) by financing activities of

Accepted Answer

A)  $90,000. 
B)  $(310,000). 
C)  $220,000. 
D)  $2,020,000. 
A)  $90,000. 
B)  $(310,000). 
C)  $220,000. 
D)  $2,020,000.

Question 16

During 2015, Oldham Corporation, which uses the allowance method of accounting for doubtful accounts, recorded a provision for bad debt expense of $35,000 and in addition it wrote off, as uncollectible, accounts receivable of $10,000. As a result of these transactions, net cash flows from operating activities would be calculated (indirect method) by adjusting net income with a

Accepted Answer

A)  $35,000 increase. 
B)  $10,000 increase. 
C)  $25,000 increase. 
D)  $25,000 decrease. 
A)  $35,000 increase. 
B)  $10,000 increase. 
C)  $25,000 increase. 
D)  $25,000 decrease.

Question 17

During 2015, Orton Company earned net income of $464,000 which included deprecia-tion expense of $78,000. In addition, the company experienced the following changes in the account balances listed below: $$\begin{array} { l r l r } 
 { \text { Increases } } && { \text { Decreases } } \
\text { Accounts payable } & \$ 45,000 & \text { Accounts receivable } & \$ 12,000 \
\text { Inventory } & 36,000 & \text { Accrued liabilities } & 24,000 \
\quad \text { Prepaid insurance } & 33,000 & &
\end{array}$$ Based upon this information what amount will be shown for net cash provided by operating activities for 2015?

Accepted Answer

A)  $572,000 
B)  $545,000 
C)  $365,000 
D)  $347,000 
A)  $572,000 
B)  $545,000 
C)  $365,000 
D)  $347,000

Question 18

The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

Accepted Answer

A)  Statements of cash flows 
B)  Balance sheets 
C)  Income statements 
D)  Statements of retained earnings 
A)  Statements of cash flows 
B)  Balance sheets 
C)  Income statements 
D)  Statements of retained earnings

Question 19

An analysis of the machinery accounts of Noller Company for 2015 is as follows:   The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

Accepted Answer

A)  subtraction from net income of $100,000 and a $200,000 decrease in cash flows from financing activities. 
B)  addition to net income of $100,000 and a $200,000 decrease in cash flows from investing activities. 
C)  $100,000 increase in cash flows from financing activities. 
D)  $200,000 decrease in cash flows from investing activities. 
A)  subtraction from net income of $100,000 and a $200,000 decrease in cash flows from financing activities. 
B)  addition to net income of $100,000 and a $200,000 decrease in cash flows from investing activities. 
C)  $100,000 increase in cash flows from financing activities. 
D)  $200,000 decrease in cash flows from investing activities.

Question 20

Use the following information for questions 51 through 55.
Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2015 and 2014 are provided below.  
 The following additional data were provided:
1. Dividends for the year 2015 were $144,000.
 2. During the year, equipment was sold for $180,000. This equipment cost $264,000 originally and had a book value of $216,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales.
 3. All depreciation expense is in the selling expense category.
-Under the direct method, the cash received from customers is

Accepted Answer

A)  $6,408,000. 
B)  $6,192,000. 
C)  $6,300,000. 
D)  $6,330,000. 
A)  $6,408,000. 
B)  $6,192,000. 
C)  $6,300,000. 
D)  $6,330,000.

Companies classify some cash flows relating to investing or financing activities as operating activities.

A company can convert net income to net cash flow from operating activities through either the direct method or the indirect method.

In determining net cash flow from operating activities, a decrease in accounts payable during a period

Equipment which cost $213,000 and had accumulated depreciation of $114,000 was sold for $111,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n)

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?

The direct method, also called the reconciliation method, reports cash receipts and cash disbursements from operating activities.

Noncash investing and financing activities are disclosed either in a separate schedule or in a separate note to the financial statements.

The first step in the preparation of the statement of cash flows is to determine the net cash flow from operating activities.

The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

An analysis of the machinery accounts of Noller Company for 2015 is as follows: The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Full Disclosure in Financial Reporting

Appendix

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Exam 23: Statement of Cash Flows

Companies classify some cash flows relating to investing or financing activities as operating activities.

A company can convert net income to net cash flow from operating activities through either the direct method or the indirect method.

In determining net cash flow from operating activities, a decrease in accounts payable during a period

Equipment which cost $213,000 and had accumulated depreciation of $114,000 was sold for $111,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n)

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?

The direct method, also called the reconciliation method, reports cash receipts and cash disbursements from operating activities.

Noncash investing and financing activities are disclosed either in a separate schedule or in a separate note to the financial statements.

The first step in the preparation of the statement of cash flows is to determine the net cash flow from operating activities.

The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

An analysis of the machinery accounts of Noller Company for 2015 is as follows: The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Full Disclosure in Financial Reporting

Appendix

Filters