Question 1

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 2

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

Accepted Answer

A) True 
 B)False

Question 3

The general ledger of Lopez Company provides the following information:   
The company's net sales for the year was $2,200,000 and cost of goods sold amounted to $1,500,000.
Instructions
Compute the following:
(a) Cash receipts from customers.
(b) Cash payments to suppliers.

Accepted Answer

The answer of The general ledger of Lopez Company provides...

Question 4

Joy Elle's Vegetable Market had the following transactions during 2010:
1) Issued $50,000 of par value common stock for cash.
2) Repaid a 6 year note payable in the amount of $22,000.
3) Acquired land by issuing common stock of par value $100,000.
4) Declared and paid a cash dividend of $2,000.
5) Sold a long-term investment (cost $63,000) for cash of $6,000.
6) Acquired an investment in IBM stock for cash of $12,000.
What is the net cash provided by investing activities?

Accepted Answer

A)  $12,000 
B)  $32,000 
C)  ($6,000) 
D)  $6,000 
A)  $12,000 
B)  $32,000 
C)  ($6,000) 
D)  $6,000

Question 5

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 6

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.

Accepted Answer

A) True 
 B)False

Question 7

Powell Corporation's comparative balance sheets are presented below.   
Additional information:
1. Net income was $25,630. Dividends declared and paid were $22,500.
2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $5,900.
Instruction
(a) Prepare a statement of cash flows for 2010 using the indirect method.
(b) Compute free cash flow.

Accepted Answer

The answer of Powell Corporation's comparative balance sheets are presented...

Question 8

Generally, the most important category on the statement of cash flows is cash flows from

Accepted Answer

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

Question 9

Cash equivalents do not include

Accepted Answer

A)  short-term corporate notes. 
B)  treasury bills. 
C)  money market funds. 
D)  2-year certificates of deposit. 
A)  short-term corporate notes. 
B)  treasury bills. 
C)  money market funds. 
D)  2-year certificates of deposit.

Question 10

Free cash flow equals cash provided by operations less capital expenditures and cash dividends.

Accepted Answer

A) True 
 B)False

Question 11

Marsh Company has other operating expenses of $240,000. There has been an increase in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Marsh's cash payments for operating expenses?

Accepted Answer

A)  $228,000 
B)  $232,000 
C)  $200,000 
D)  $280,000 
A)  $228,000 
B)  $232,000 
C)  $200,000 
D)  $280,000

Question 12

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 13

LF's Pest Control Products has the following information available:   What is LF's free cash flow?

Accepted Answer

A)  $28,000 
B)  $20,000 
C)  $17,000 
D)  $11,000 
A)  $28,000 
B)  $20,000 
C)  $17,000 
D)  $11,000

Question 14

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 15

The information to prepare the statement of cash flows usually comes from each of the following except

Accepted Answer

A)  the comparative balance sheet. 
B)  the retained earnings statement. 
C)  additional information. 
D)  the current income statement. 
A)  the comparative balance sheet. 
B)  the retained earnings statement. 
C)  additional information. 
D)  the current income statement.

Question 16

Bertucci Company had net income of $184,000 in 2010. Depreciation expense for the year is $45,000. During the year, Accounts Receivable increased $7,000 and Prepaid Expenses decreased $1,000. The company also sold equipment at a loss of $2,000.
Instructions
Calculate net cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Bertucci Company had net income of $184,000...

Question 17

Selected transactions of Eller Company are listed below.
1. Common stock is sold for cash above par value.
2. Bonds payable are issued for cash at a discount.
3. Interest receivable on a short-term note receivable is collected.
4. Land is sold for cash at book value.
5. Accounts payable are paid in cash.
6. Equipment is purchased by signing a 3-year, 10% note payable.
7. Cash dividends on common stock are declared and paid.
8. 100 shares of XYZ common stock are purchased for cash.
9. Merchandise is sold to customers for cash.
10. Bonds payable are converted into common stock.
Instructions
Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a noncash investing and financing activity.

Accepted Answer

1. (c) Financing activity 6. (d) Noncash

Question 18

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 19

The primary purpose of the statement of cash flows is to

Accepted Answer

A)  provide information about the investing and financing activities during a period. 
B)  prove that revenues exceed expenses if there is a net income. 
C)  provide information about the cash receipts and cash payments during a period. 
D)  facilitate banking relationships. 
A)  provide information about the investing and financing activities during a period. 
B)  prove that revenues exceed expenses if there is a net income. 
C)  provide information about the cash receipts and cash payments during a period. 
D)  facilitate banking relationships.

Question 20

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.

Exam 17: Statement of Cash Flows

Financing activities involve

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

The general ledger of Lopez Company provides the following information: The company's net sales for the year was $2,200,000 and cost of goods sold amounted to $1,500,000. Instructions Compute the following: (a) Cash receipts from customers. (b) Cash payments to suppliers.

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

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.

Generally, the most important category on the statement of cash flows is cash flows from

Cash equivalents do not include

Free cash flow equals cash provided by operations less capital expenditures and cash dividends.

The statement of cash flows

LF's Pest Control Products has the following information available: What is LF's free cash flow?

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

The information to prepare the statement of cash flows usually comes from each of the following except

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.

The primary purpose of the statement of cash flows is to

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

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