Question 1

The statement of cash flows will not report the

Accepted Answer

A)  amount of checks outstanding at the end of the period. 
B)  sources of cash in the current period. 
C)  uses of cash in the current period. 
D)  change in the cash balance for the current period. 
A)  amount of checks outstanding at the end of the period. 
B)  sources of cash in the current period. 
C)  uses of cash in the current period. 
D)  change in the cash balance for the current period. A

Question 2

If a company reports a net loss, it

Accepted Answer

A)  may still have a net increase in cash. 
B)  will not be able to pay cash dividends. 
C)  will not be able to get a loan. 
D)  will not be able to make capital expenditures. 
A)  may still have a net increase in cash. 
B)  will not be able to pay cash dividends. 
C)  will not be able to get a loan. 
D)  will not be able to make capital expenditures. A

Question 3

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. B

Question 4

Free cash flow equals cash provided by

Accepted Answer

A)  operations less capital expenditures and cash dividends. 
B)  operations less cash dividends. 
C)  investing activities less capital expenditures and cash dividends. 
D)  operations less capital expenditures. 
A)  operations less capital expenditures and cash dividends. 
B)  operations less cash dividends. 
C)  investing activities less capital expenditures and cash dividends. 
D)  operations less capital expenditures.

Question 5

The sale of equipment at less than its book value is a(n) ______________ of cash that is reported in the ______________ activities section.

Accepted Answer

inflow, in

Question 6

Utley Company had a cost of purchases of $250,000. The comparative balance sheet analysis revealed a $10,000 decrease in inventory and a $20,000 increase in accounts payable. What were Utley's cash payments to suppliers?

Accepted Answer

A)  $230,000 
B)  $220,000 
C)  $260,000 
D)  $280,000 
A)  $230,000 
B)  $220,000 
C)  $260,000 
D)  $280,000

Question 7

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 8

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

Accepted Answer

A)  Determine the change in cash 
B)  Determine the cash provided by operations 
C)  Determine cash from financing and investing activities 
D)  Determine the cash in all bank accounts 
A)  Determine the change in cash 
B)  Determine the cash provided by operations 
C)  Determine cash from financing and investing activities 
D)  Determine the cash in all bank accounts

Question 9

Wintz Company reported net income of $295,000 for 2010. Wintz also reported depreciation expense of $45,000 and a loss of $8,000 on the sale of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $6,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2010. Use the indirect method.

Accepted Answer

The answer of Wintz Company reported net income of $295,000...

Question 10

Which of the following would not be an adjustment to net income using the indirect method?

Accepted Answer

A)  Depreciation Expense 
B)  An increase in Prepaid Insurance 
C)  Amortization Expense 
D)  An increase in Land 
A)  Depreciation Expense 
B)  An increase in Prepaid Insurance 
C)  Amortization Expense 
D)  An increase in Land

Question 11

Classify each of the following as a(n):
A. Operating Activity
B. Investing Activity
C. Financing Activity
_____ 1 Issuance of bonds.
_____ 2. Sale of equipment.
_____ 3. Amortization expense.
_____ 4. Purchase of treasury stock.
_____ 5. Receipt of dividends on investment.
_____ 6. Purchase of land.

Accepted Answer

1. C 4. C

Question 12

Tatum Company had an increase in inventory of $40,000. The cost of goods sold was $90,000. There was a $5,000 decrease in accounts payable from the prior period. What were Tatum's cash payments to suppliers?

Accepted Answer

A)  $135,000 
B)  $85,000 
C)  $125,000 
D)  $95,000 
A)  $135,000 
B)  $85,000 
C)  $125,000 
D)  $95,000

Question 13

All major financing and investing activities affect cash.

Accepted Answer

A) True 
 B)False

Question 14

Identify several alternatives for presenting significant noncash activities in financial statements.
(b) Give three examples of significant noncash transactions.

Accepted Answer

(a) Significant noncash transactions may

Question 15

Buster Company reported a net loss of $6,000 for the year ended December 31, 2010. During the year, accounts receivable increased $14,000, merchandise inventory decreased $10,000, accounts payable decreased by $20,000, and depreciation expense of $10,000 was recorded. During 2010, operating activities

Accepted Answer

A)  used net cash of $20,000. 
B)  used net cash of $28,000. 
C)  provided net cash of $28,000. 
D)  provided net cash of $18,000. 
A)  used net cash of $20,000. 
B)  used net cash of $28,000. 
C)  provided net cash of $28,000. 
D)  provided net cash of $18,000.

Question 16

The net income reported on the income statement for the current year was $240,000. Depreciation was $50,000. Account receivable and inventories decreased by $10,000 and $30,000, 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)  $301,000 
B)  $337,000 
C)  $321,000 
D)  $329,000 
A)  $301,000 
B)  $337,000 
C)  $321,000 
D)  $329,000

Question 17

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.

Question 18

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 19

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

Accepted Answer

A)  two cash effects can be netted and presented as one item in the investing activities section. 
B)  cash inflow and cash outflow should be reported separately in the investing activities section. 
C)  two cash effects can be netted and presented as one item in the financing activities section. 
D)  cash inflow and cash outflow should be reported separately in the financing activities section. 
A)  two cash effects can be netted and presented as one item in the investing activities section. 
B)  cash inflow and cash outflow should be reported separately in the investing activities section. 
C)  two cash effects can be netted and presented as one item in the financing activities section. 
D)  cash inflow and cash outflow should be reported separately in the financing activities section.

Question 20

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.

Exam 17: Statement of Cash Flows

The statement of cash flows will not report the

If a company reports a net loss, it

The statement of cash flows

Free cash flow equals cash provided by

The sale of equipment at less than its book value is a(n) ______________ of cash that is reported in the ______________ activities section.

Utley Company had a cost of purchases of $250,000. The comparative balance sheet analysis revealed a $10,000 decrease in inventory and a $20,000 increase in accounts payable. What were Utley's cash payments to suppliers?

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

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

Which of the following would not be an adjustment to net income using the indirect method?

Tatum Company had an increase in inventory of $40,000. The cost of goods sold was $90,000. There was a $5,000 decrease in accounts payable from the prior period. What were Tatum's cash payments to suppliers?

All major financing and investing activities affect cash.

Identify several alternatives for presenting significant noncash activities in financial statements. (b) Give three examples of significant noncash transactions.

Using the indirect method, patent amortization expense for the period

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

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

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

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Filters

The sale of equipment at less than its book value is a(n) of cash that is reported in the activities section.