Question 1

In developing the cash flows from operating activities, most companies in the U. S.

Accepted Answer

A) use the direct method. 
B) use the indirect method. 
C) present both the indirect and direct methods in their financial reports. 
D) prepare the operating activities section on the accrual basis. 
A) use the direct method. 
B) use the indirect method. 
C) present both the indirect and direct methods in their financial reports. 
D) prepare the operating activities section on the accrual basis.

Question 2

Financing activities involve

Accepted Answer

A) lending money. 
B) acquiring investments. 
C) issuing debt. 
D) acquiring long-lived assets. 
A) lending money. 
B) acquiring investments. 
C) issuing debt. 
D) acquiring long-lived assets.

Question 3

Which of the following would not be needed to determine net cash provided by operating activities?

Accepted Answer

A) Depreciation expense 
B) Change in accounts receivable 
C) Payment of cash dividends 
D) Change in prepaid expenses 
A) Depreciation expense 
B) Change in accounts receivable 
C) Payment of cash dividends 
D) Change in prepaid expenses

Question 4

In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

Accepted Answer

A) credit to Land $50,000 and a debit to Sale of Land $50,000 under investing activities. 
B) debit to Land $92,000 and a credit to Purchase of Land $92,000 under financing activities. 
C) net debit to Land $42,000 and a credit to Purchase of Land $42,000 under investing activities. 
D) credit to Land $50,000 and a debit to Sale of Land $50,000 under financing activities. 
A) credit to Land $50,000 and a debit to Sale of Land $50,000 under investing activities. 
B) debit to Land $92,000 and a credit to Purchase of Land $92,000 under financing activities. 
C) net debit to Land $42,000 and a credit to Purchase of Land $42,000 under investing activities. 
D) credit to Land $50,000 and a debit to Sale of Land $50,000 under financing activities.

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

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

Question 7

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 8

Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were

Accepted Answer

A) $39,000. 
B) $51,000. 
C) $305,000. 
D) $285,000. 
A) $39,000. 
B) $51,000. 
C) $305,000. 
D) $285,000.

Question 9

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Accepted Answer

A) True 
 B)False

Question 10

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Accepted Answer

A) True 
 B)False

Question 11

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Accepted Answer

A) $185,000. 
B) $197,000. 
C) $222,000. 
D) $148,000. 
A) $185,000. 
B) $197,000. 
C) $222,000. 
D) $148,000.

Question 12

In the bottom portion of the statement of cash flows worksheet,

Accepted Answer

A) inflows of cash are debits in the reconciling columns. 
B) outflows of cash are debits in the reconciling columns. 
C) information pertaining to investing and financing activities only is entered. 
D) only significant noncash transactions are entered. 
A) inflows of cash are debits in the reconciling columns. 
B) outflows of cash are debits in the reconciling columns. 
C) information pertaining to investing and financing activities only is entered. 
D) only significant noncash transactions are entered.

Question 13

The statement of cash flows will not provide insight into

Accepted Answer

A) why dividends were not increased. 
B) whether cash flow is greater than net income. 
C) the exact proceeds of a future bond issue. 
D) how the retirement of debt was accomplished. 
A) why dividends were not increased. 
B) whether cash flow is greater than net income. 
C) the exact proceeds of a future bond issue. 
D) how the retirement of debt was accomplished.

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

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Accepted Answer

A) deducted from net income. 
B) added to net income. 
C) ignored because it does not affect income. 
D) ignored because it does not affect expenses. 
A) deducted from net income. 
B) added to net income. 
C) ignored because it does not affect income. 
D) ignored because it does not affect expenses.

Question 16

Each of the following is added to net income in computing net cash provided by operating activities except

Accepted Answer

A) amortization expense. 
B) an increase in accrued expenses payable. 
C) a gain on sale of equipment. 
D) a decrease in inventory. 
A) amortization expense. 
B) an increase in accrued expenses payable. 
C) a gain on sale of equipment. 
D) a decrease in inventory.

Question 17

Net income for the period.

Accepted Answer

A) 1 
B) 2 
C) Neither 1 nor 2. 
D) Both 1 and 2. 
A) 1 
B) 2 
C) Neither 1 nor 2. 
D) Both 1 and 2.

Question 18

During 2014, Harvey Industries reported cash provided by operations of $670,000, cash used in investing of $1,039,000, and cash used in financing of $145,000. In addition, cash spent for fixed assets during the period was $404,000. No dividends were paid. Based on this information, what was Harvey's free cash flow?

Accepted Answer

A) ($369,000) 
B) $1,450,000 
C) $266,000 
D) ($918,000) 
A) ($369,000) 
B) $1,450,000 
C) $266,000 
D) ($918,000)

Question 19

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 20

If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Accepted Answer

A) net increase in cash of $120,000. 
B) net decrease in cash of $120,000. 
C) increase in cash of $250,000 and a decrease in cash of $130,000. 
D) net gain on retirement of bonds of $120,000. 
A) net increase in cash of $120,000. 
B) net decrease in cash of $120,000. 
C) increase in cash of $250,000 and a decrease in cash of $130,000. 
D) net gain on retirement of bonds of $120,000.

In developing the cash flows from operating activities, most companies in the U. S.

Financing activities involve

Which of the following would not be needed to determine net cash provided by operating activities?

In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

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

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

In the bottom portion of the statement of cash flows worksheet,

The statement of cash flows will not provide insight into

The statement of cash flows

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Each of the following is added to net income in computing net cash provided by operating activities except

Net income for the period.

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

If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

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, Dividends, and Retained Earnings

Investments

Financial Statement Analysis

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Exam 13: Statement of Cash Flows

In developing the cash flows from operating activities, most companies in the U. S.

Financing activities involve

Which of the following would not be needed to determine net cash provided by operating activities?

In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

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

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

In the bottom portion of the statement of cash flows worksheet,

The statement of cash flows will not provide insight into

The statement of cash flows

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Each of the following is added to net income in computing net cash provided by operating activities except

Net income for the period.

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

If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

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, Dividends, and Retained Earnings

Investments

Financial Statement Analysis

Filters