Question 1

Using the indirect method, patent amortization expense for the period

Accepted Answer

A) is deducted from net income. 
B) causes cash to increase. 
C) causes cash to decrease. 
D) is added to net income. 
A) is deducted from net income. 
B) causes cash to increase. 
C) causes cash to decrease. 
D) is added to net income. D

Question 2

A statement of cash flows should help investors and creditors assess the entity's ability to generate future income.

Accepted Answer

A) True 
 B)False  False

Question 3

Which one of the following items is not generally used in preparing a statement of cash flows?

Accepted Answer

A) Adjusted trial balance 
B) Comparative balance sheets 
C) Current income statement 
D) Additional information 
A) Adjusted trial balance 
B) Comparative balance sheets 
C) Current income statement 
D) Additional information A

Question 4

Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

Accepted Answer

A) True 
 B)False

Question 5

Using the indirect method, if equipment is sold at a gain, the

Accepted Answer

A) sale proceeds received are deducted in the operating activities section. 
B) sale proceeds received are added in the operating activities section. 
C) amount of the gain is added in the operating activities section. 
D) amount of the gain is deducted in the operating activities section. 
A) sale proceeds received are deducted in the operating activities section. 
B) sale proceeds received are added in the operating activities section. 
C) amount of the gain is added in the operating activities section. 
D) amount of the gain is deducted in the operating activities section.

Question 6

Ware Company had purchases of $260,000.The comparative balance sheet analysis revealed a $15,000 decrease in inventory and a $25,000 increase in accounts payable.What were Ware's cash payments to suppliers?

Accepted Answer

A) $235,000 
B) $220,000 
C) $275,000 
D) $300,000 
A) $235,000 
B) $220,000 
C) $275,000 
D) $300,000

Question 7

Wilson Company reported net income of $105,000 for the year ended December 31, 2017.During the year, inventories decreased by $15,000, accounts payable decreased by $20,000, depreciation expense was $18,000 and a gain on disposal of equipment of $9,000 was recorded.Net cash provided by operating activities in 2017 using the indirect method was

Accepted Answer

A) $101,000. 
B) $109,000. 
C) $120,000. 
D) $118,000. 
A) $101,000. 
B) $109,000. 
C) $120,000. 
D) $118,000.

Question 8

Of the items below, the one that appears first on the statement of cash flows is

Accepted Answer

A) noncash investing and financing activities. 
B) net increase (decrease) in cash. 
C) cash at the end of the period. 
D) cash at the beginning of the period. 
A) noncash investing and financing activities. 
B) net increase (decrease) in cash. 
C) cash at the end of the period. 
D) cash at the beginning of the period.

Question 9

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Accepted Answer

A) True 
 B)False

Question 10

The third (final) step in preparing the statement of cash flows is to

Accepted Answer

A) analyze changes in noncurrent asset and liability accounts. 
B) compare the net change in cash with the change in the cash account reported on the balance sheet. 
C) determine net cash provided by operating activities. 
D) list the noncash activities. 
A) analyze changes in noncurrent asset and liability accounts. 
B) compare the net change in cash with the change in the cash account reported on the balance sheet. 
C) determine net cash provided by operating activities. 
D) list the noncash activities.

Question 11

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 12

The order of presentation of activities on the statement of cash flows is

Accepted Answer

A) operating, investing, and financing. 
B) operating, financing, and investing. 
C) financing, operating, and investing. 
D) financing, investing, and operating. 
A) operating, investing, and financing. 
B) operating, financing, and investing. 
C) financing, operating, and investing. 
D) financing, investing, and operating.

Question 13

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect? $\begin{array}{lll}&\text { Add to Net Income }&\text { Deduct from Net Income }\
\text { a. Accounts Receivable } & \text { decrease } & \text { increase } \
\text { b. Prepaid Expenses } & \text { increase } & \text { decrease } \
\text { c. Inventory } & \text { decrease } & \text { increase } \
\text { d. Accounts Pavable } & \text { increase } & \text { decrease }
\end{array}$

Accepted Answer

The answer of Which of the following adjustments to convert...

Question 14

A statement of cash flows indicates the sources and uses of cash during a period.

Accepted Answer

A) True 
 B)False

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 preparing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

Accepted Answer

A) True 
 B)False

Question 17

Lager Company has other operating expenses of $260,000.There has been an increase in prepaid expenses of $20,000 during the year, and accrued liabilities are $15,000 lower than in the prior period.Using the direct method of reporting cash flows from operating activities, what were Lager's cash payments for operating expenses?

Accepted Answer

A) $255,000 
B) $265,000 
C) $225,000 
D) $295,000 
A) $255,000 
B) $265,000 
C) $225,000 
D) $295,000

Question 18

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 19

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 20

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Accepted Answer

A) subtraction from net income. 
B) addition to net income. 
C) addition to cash flow from investing activities. 
D) subtraction from cash flow from investing activities. 
A) subtraction from net income. 
B) addition to net income. 
C) addition to cash flow from investing activities. 
D) subtraction from cash flow from investing activities.

Using the indirect method, patent amortization expense for the period

A statement of cash flows should help investors and creditors assess the entity's ability to generate future income.

Which one of the following items is not generally used in preparing a statement of cash flows?

Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

Using the indirect method, if equipment is sold at a gain, the

Ware Company had purchases of $260,000.The comparative balance sheet analysis revealed a $15,000 decrease in inventory and a $25,000 increase in accounts payable.What were Ware's cash payments to suppliers?

Of the items below, the one that appears first on the statement of cash flows is

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

The third (final) step in preparing the statement of cash flows is to

The statement of cash flows

The order of presentation of activities on the statement of cash flows is

A statement of cash flows indicates the sources and uses of cash during a period.

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

In preparing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

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

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

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Managerial Accounting

Time Value of Money

Filters

Exam 13: Financial Analysis: the Big Picture

Using the indirect method, patent amortization expense for the period

A statement of cash flows should help investors and creditors assess the entity's ability to generate future income.

Which one of the following items is not generally used in preparing a statement of cash flows?

Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

Using the indirect method, if equipment is sold at a gain, the

Ware Company had purchases of $260,000.The comparative balance sheet analysis revealed a $15,000 decrease in inventory and a $25,000 increase in accounts payable.What were Ware's cash payments to suppliers?

Of the items below, the one that appears first on the statement of cash flows is

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

The third (final) step in preparing the statement of cash flows is to

The statement of cash flows

The order of presentation of activities on the statement of cash flows is

A statement of cash flows indicates the sources and uses of cash during a period.

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

In preparing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

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

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

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Managerial Accounting

Time Value of Money

Filters