Question 1

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.

Question 2

Cash provided by operations is generally equal to operating income.

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 5

Indicate where the payment of income taxes would appear if at all on the 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 6

In Jude Company land decreased $150000 because of a cash sale for $150000 the equipment account increased $60000 as a result of a cash purchase and Bonds Payable increased $120000 from issuance for cash at face value. The net cash provided by investing activities is

Accepted Answer

A)  $150000. 
B)  $210000. 
C)  $90000. 
D)  $270000. 
A)  $150000. 
B)  $210000. 
C)  $90000. 
D)  $270000.

Question 7

The income statement of Reagan Inc. for the year ended December 31 2017 reported the following condensed information: $\begin{array}{lr}
\text { Service revenue } & \$ 700,000 \
\text { Operating expenses } & 340,000 \
\text { Income from operations } & 360,000 \
\text { Income tax expense } & 50,000 \
\text { Net income } & \$ 310,000
\end{array}$ Roman's balance sheet contained the following comparative data at December 31: $\begin{array}{lrr}
&2017&2016\
\text { Accounts receivable } & \$ 75,000 & \$ 45,000 \
\text { Accounts payable } & 40,000 & 50,000 \
\text { Income taxes payable } & 6,000 & 4,000
\end{array}$ Reagan has no depreciable assets. Accounts payable pertains to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.

Accepted Answer

The answer of The income statement of Reagan Inc. for...

Question 8

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 9

The following information is available for Redcands Company: $\begin{array}{lr}
\text { Receipts from customers } & \$ 215,000 \
\text { Dividends from stock investments } & 3,000 \
\text { Proceeds from sale of equipment } & 18,000 \
\text { Proceeds from issuance of stock } & 90,000 \
\text { Payments for inventory } & 100,000 \
\text { Payments for operating expenses } & 78,000 \
\text { Interest paid } & 6,000 \
\text { Taxes paid } & 4,000 \
\text { Dividends paid } & 20,000
\end{array}$ Instructions
Based on the preceding information compute the net cash provided by operating activities.

Accepted Answer

None

Question 10

How is it possible for a company to suffer a net loss for a given year yet produce a positive net cash flow from operating activities?

Accepted Answer

A net loss means that accrual-based expe

Question 11

Which of the following adjustments to convert net income to net cash provided by operating activities is correct?$\begin{array}{lll}
&&&&&&&&&&\text {  Add to Net Income}&\text {   Deduct from Net Income}\\end{array}$
A)$\begin{array}{lll}
\text {  Accounts Receivable } && \text { increase } &&&& \text { decrease } \\end{array}$
B)$\begin{array}{lll}\text {  Prepaid Expenses } &&& \text { increase } &&&& \text { decrease } \\end{array}$
C)$\begin{array}{lll}\text {  Inventory } &&&&&& \text { decrease }&&& & \text { increase } \\end{array}$
D)$\begin{array}{lll}\text {  Taxes Pavable } &&&& \text { decrease } &&&& \text { increase }
\end{array}$

Accepted Answer

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

Question 12

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?
1) Declaration and payment of a cash dividend during the period.
2) 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 13

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

The answer of For each of the following items indicate...

Question 14

The statement of cash flows is prepared from all of the following except

Accepted Answer

A)  the adjusted trial balance. 
B)  comparative balance sheets. 
C)  selected transaction data. 
D)  the current income statement. 
A)  the adjusted trial balance. 
B)  comparative balance sheets. 
C)  selected transaction data. 
D)  the current income statement.

Question 15

In converting net income to net cash provided by operating activities under the indirect method:

Accepted Answer

A)  decreases in accounts receivable and increases in prepaid expenses are added. 
B)  decreases in inventory and increases in accrued liabilities are added. 
C)  decreases in accounts payable and decreases in inventory are deducted. 
D)  increases in accounts receivable and increases in accrued liabilities are deducted. 
A)  decreases in accounts receivable and increases in prepaid expenses are added. 
B)  decreases in inventory and increases in accrued liabilities are added. 
C)  decreases in accounts payable and decreases in inventory are deducted. 
D)  increases in accounts receivable and increases in accrued liabilities are deducted.

Question 16

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 answers are correct. 
A)  the current year's income statement. 
B)  a comparative balance sheet. 
C)  additional information. 
D)  All of these answers are correct.

Question 17

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.

Question 18

Jean's Vegetable Market had the following transactions during 2016:
1) Issued $50000 of par value common stock for cash.
2) Repaid a 6 year note payable in the amount of $22000.
3) Acquired land by issuing common stock of par value $100000.
4) Declared and paid a cash dividend of $2000.
5) Sold a long-term investment (cost $3000) for cash of $8000.
6) Acquired an investment in IBM stock for cash of $15000.
What is the net cash provided (used) by investing activities?

Accepted Answer

A)  $15000 
B)  $33000 
C)  ($7000) 
D)  $8000 
A)  $15000 
B)  $33000 
C)  ($7000) 
D)  $8000

Question 19

Doctor Company prepared the tabulation below at December 31 2017.   Instructions
Show how each item should be reported in the statement of cash flows. Use parentheses for deductions.

Accepted Answer

None

Question 20

The indirect and direct methods of preparing the statement of cash flows are identical except for the

Accepted Answer

A)  significant noncash activity section. 
B)  operating activities section. 
C)  investing activities section. 
D)  financing activities section. 
A)  significant noncash activity section. 
B)  operating activities section. 
C)  investing activities section. 
D)  financing activities section.

Exam 17: Statement of Cash Flows

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

Cash provided by operations is generally equal to operating income.

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

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.

Indicate where the payment of income taxes would appear if at all on the statement of cash flows.

In Jude Company land decreased $150000 because of a cash sale for $150000 the equipment account increased $60000 as a result of a cash purchase and Bonds Payable increased $120000 from issuance for cash at face value. The net cash provided by investing activities is

The statement of cash flows

How is it possible for a company to suffer a net loss for a given year yet produce a positive net cash flow from operating activities?

Which of the following adjustments to convert net income to net cash provided by operating activities is correct? Add to Net Income Deduct from Net Income A) Accounts Receivable increase decrease B) Prepaid Expenses increase decrease C) Inventory decrease increase D) Taxes Pavable decrease increase

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows? 1) Declaration and payment of a cash dividend during the period. 2) Net income for the period.

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.

The statement of cash flows is prepared from all of the following except

In converting net income to net cash provided by operating activities under 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

Doctor Company prepared the tabulation below at December 31 2017. Instructions Show how each item should be reported in the statement of cash flows. Use parentheses for deductions.

The indirect and direct methods of preparing the statement of cash flows are identical except for the

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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