Question 1

Financing activities involve

Accepted Answer

A)  lending money to other entities and collecting on those loans. 
B)  cash receipts from sales of goods and services. 
C)  acquiring and disposing of productive long-lived assets. 
D)  long-term liability and stockholders' equity items. 
A)  lending money to other entities and collecting on those loans. 
B)  cash receipts from sales of goods and services. 
C)  acquiring and disposing of productive long-lived assets. 
D)  long-term liability and stockholders' equity items.

Question 2

If $250000 of bonds are issued during the year but $130000 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 $120000. 
B)  net decrease in cash of $120000. 
C)  increase in cash of $250000 and a decrease in cash of $130000. 
D)  net gain on retirement of bonds of $120000. 
A)  net increase in cash of $120000. 
B)  net decrease in cash of $120000. 
C)  increase in cash of $250000 and a decrease in cash of $130000. 
D)  net gain on retirement of bonds of $120000.

Question 3

Christine Company had an increase in inventory of $55000. The cost of goods sold was $95000. There was a $6000 decrease in accounts payable from the prior period. What were Christine's cash payments to suppliers?

Accepted Answer

A)  $156000 
B)  $61000 
C)  $144000 
D)  $101000 
A)  $156000 
B)  $61000 
C)  $144000 
D)  $101000

Question 4

During the year Salaries Payable decreased by $5000. If Salary Expense amounted to $174000 for the year the cash paid to employees (including deductions from gross pay) is

Accepted Answer

A)  $179000. 
B)  $174000. 
C)  $169000. 
D)  $184000. 
A)  $179000. 
B)  $174000. 
C)  $169000. 
D)  $184000.

Question 5

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

Accepted Answer

A) True 
 B)False

Question 6

The income statement of Frank Company is shown below: $\begin{array}{c}
\text {FRANK COMPANY}\
\text { Income Statement}\
\text { For the Year Ended December 31, 2017}\
\\begin{array}{lr}
\text { Sales}&&\$8,400,000\
\text { Cost of goods sold}&&5,400,000\
\text { Gross profit}&&3,000,000\
\text { Operating expenses}\
\text { Selling expenses } & \$ 500,000 \
\text { Administrative expense } & 700,000 \
\text { Depreciation expense } & 90,000 \
\text { Amortization expense } & 30,000&1,320,000 \
\text { Net income }&&\$1,680,000
\end{array}\end{array}$ Additional information:
1. Accounts receivable increased $400000 during the year.
2. Inventory increased $250000 during the year.
3. Prepaid expenses increased $200000 during the year.
4. Accounts payable to merchandise suppliers increased $100000 during the year.
5. Accrued expenses payable increased $160000 during the year.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended December 31 2017 for Frank Company using the direct method.

Accepted Answer

The answer of The income statement of Frank Company is...

Question 7

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 8

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 9

Under IFRS some companies present which section of the cash flow statement as a single line item?

Accepted Answer

A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  Noncash investing and financing activities 
A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  Noncash investing and financing activities

Question 10

Plexis Company reported net income of $148000. For 2016 depreciation was $45000 and the company reported a gain on sale of investments of $12000. Accounts receivable increased $25000 and accounts payable decreased $23000.
Instructions
Compute net cash provided by operating activities using the indirect method.

Accepted Answer

None

Question 11

The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

Under the direct method noncash charges such as depreciation are _______________ in the statement of cash flows.

Accepted Answer

The answer of Under the direct method noncash charges such...

Question 14

Spa Company uses the direct method in determining net cash provided by operating activities. The income statement shows income tax expense $85000. Income taxes payable were $35000 at the beginning of the year and $20000 at the end of the year. Cash payments for income taxes are

Accepted Answer

A)  $70000. 
B)  $85000. 
C)  $100000. 
D)  $140000. 
A)  $70000. 
B)  $85000. 
C)  $100000. 
D)  $140000.

Question 15

Hogan Enterprises reported cash flow from operations of $275000. The company made capital expenditures of $110000 and paid dividends of $35000.
Instructions
Compute free cash flow.

Accepted Answer

Free cash flow = $27

Question 16

Which of the following transactions would not be classified as a financing activity?

Accepted Answer

A)  Purchase of treasury stock 
B)  Payment of dividends 
C)  Issuance of bonds at a discount 
D)  Purchase of a long-term investment in bonds 
A)  Purchase of treasury stock 
B)  Payment of dividends 
C)  Issuance of bonds at a discount 
D)  Purchase of a long-term investment in bonds

Question 17

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

Accepted Answer

A)  direct method. 
B)  indirect method. 
C)  working capital method. 
D)  cost-benefit method. 
A)  direct method. 
B)  indirect method. 
C)  working capital method. 
D)  cost-benefit method.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following affects cash during a period?

Accepted Answer

A)  Recording depreciation expense 
B)  Declaration of a cash dividend 
C)  Write-off of an uncollectible account receivable 
D)  Payment of an accounts payable 
A)  Recording depreciation expense 
B)  Declaration of a cash dividend 
C)  Write-off of an uncollectible account receivable 
D)  Payment of an accounts payable

Question 20

Which of the following steps is not required in preparing the statement of cash flows?

Accepted Answer

A)  Determine the net change in cash. 
B)  Determine the net cash provided by operating activities. 
C)  Determine cash from investing and financing activities. 
D)  Determine the change in current assets. 
A)  Determine the net change in cash. 
B)  Determine the net cash provided by operating activities. 
C)  Determine cash from investing and financing activities. 
D)  Determine the change in current assets.

Exam 17: Statement of Cash Flows

Financing activities involve

If $250000 of bonds are issued during the year but $130000 of old bonds are retired during the year the statement of cash flows will show a(n)

Christine Company had an increase in inventory of $55000. The cost of goods sold was $95000. There was a $6000 decrease in accounts payable from the prior period. What were Christine's cash payments to suppliers?

During the year Salaries Payable decreased by $5000. If Salary Expense amounted to $174000 for the year the cash paid to employees (including deductions from gross pay) is

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

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

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

Under IFRS some companies present which section of the cash flow statement as a single line item?

The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.

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

Under the direct method noncash charges such as depreciation are _______________ in the statement of cash flows.

Spa Company uses the direct method in determining net cash provided by operating activities. The income statement shows income tax expense $85000. Income taxes payable were $35000 at the beginning of the year and $20000 at the end of the year. Cash payments for income taxes are

Hogan Enterprises reported cash flow from operations of $275000. The company made capital expenditures of $110000 and paid dividends of $35000. Instructions Compute free cash flow.

Which of the following transactions would not be classified as a financing activity?

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

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

Which one of the following affects cash during a period?

Which of the following steps is not required in preparing the statement of cash flows?

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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