Question 1

The information in a statement of cash flows will not help investors to assess the entity's ability to

Accepted Answer

A)  generate future cash flows. 
B)  obtain favorable borrowing terms at a bank. 
C)  pay dividends. 
D)  pay its obligations when they become due. 
A)  generate future cash flows. 
B)  obtain favorable borrowing terms at a bank. 
C)  pay dividends. 
D)  pay its obligations when they become due.

Question 2

The operating activities section of the statement of cash flows may be prepared using the ______________ method or the ______________ method.

Accepted Answer

indirect,

Question 3

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 4

The following data are available for Nichols Corporation.   Net cash provided by investing activities is:

Accepted Answer

A)  $240,000. 
B)  $260,000. 
C)  $300,000. 
D)  $380,000. 
A)  $240,000. 
B)  $260,000. 
C)  $300,000. 
D)  $380,000.

Question 5

Selected transactions for the Eldon Company are listed below.
1. Collected accounts receivable.
2. Declared and paid dividends on common stock.
3. Sold long-term investments for cash.
4. Issued stock for equipment.
5. Repaid five year note payable.
6. Paid employee wages.
7. Converted bonds payable to common stock.
8. Acquired long-term investment with cash.
9. Sold buildings and equipment for cash.
10. Sold merchandise to customers.
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. (a) Operating activity 6. (a) Operati

Question 6

On the statement of cash flows worksheet,

Accepted Answer

A)  significant noncash investing and financing activities are not entered in the reconciling columns. 
B)  a decrease in cash will be offset by a debit in the reconciling items columns at the bottom of the worksheet. 
C)  an increase in cash will be offset by a debit in the reconciling items column at the bottom of the worksheet. 
D)  income statement accounts are listed after balance sheet accounts in the top half of the worksheet under the indirect method. 
A)  significant noncash investing and financing activities are not entered in the reconciling columns. 
B)  a decrease in cash will be offset by a debit in the reconciling items columns at the bottom of the worksheet. 
C)  an increase in cash will be offset by a debit in the reconciling items column at the bottom of the worksheet. 
D)  income statement accounts are listed after balance sheet accounts in the top half of the worksheet under the indirect method.

Question 7

Using the indirect approach, noncash charges in the income statement are ______________ to net income and noncash credits are ______________ to compute cash provided by operations.

Accepted Answer

The answer of Using the indirect approach, noncash charges in...

Question 8

The following data are available for Cole Company.   Net cash provided by financing activities is:

Accepted Answer

A)  $270,000. 
B)  $390,000. 
C)  $480,000. 
D)  $510,000. 
A)  $270,000. 
B)  $390,000. 
C)  $480,000. 
D)  $510,000.

Question 9

The best measure of a company's ability to generate sufficient cash to continue as a going concern is net cash provided by

Accepted Answer

A)  financing activities. 
B)  investing activities. 
C)  operating activities. 
D)  processing activities. 
A)  financing activities. 
B)  investing activities. 
C)  operating activities. 
D)  processing activities.

Question 10

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 11

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 12

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 direct method.
A. Added in determining cash receipts from customers
B. Deducted in determining cash receipts from customers
C. Added in determining cash payments to suppliers
D. Deducted in determining cash payments to suppliers
E. Cash outflow-investing activity
F. Cash inflow-investing activity
G. Cash outflow-financing activity
H. Cash inflow-financing activity
I. Significant noncash investing and financing activity
J. Is not shown
____ 1. Decrease in accounts payable during a period.
____ 2. Declaration and payment of a cash dividend.
____ 3. Decrease in accounts receivable during a period.
____ 4. Depreciation expense.
____ 5. Conversion of bonds payable into common stock.
____ 6. Decrease in merchandise inventory during a period.
____ 7. Sale of equipment for cash at book value.
____ 8. Issuance of preferred stock for cash.
____ 9. Purchase of land for cash.
____ 10. Loss on sale of a plant asset.

Accepted Answer

1. C 6. D
2. G 7. F

Question 13

The following information is available for Snider Company:   
Instructions
Based on the preceding information, compute the net cash provided by operating activities.

Accepted Answer

The answer of The following information is available for Snider...

Question 14

Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?

Accepted Answer

A)  Gain on Sale of Equipment 
B)  Depreciation Expense 
C)  Patent Amortization Expense 
D)  Depletion Expense 
A)  Gain on Sale of Equipment 
B)  Depreciation Expense 
C)  Patent Amortization Expense 
D)  Depletion Expense

Question 15

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Accepted Answer

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

Question 16

Pierce Company reported net income of $180,000 for the current year. Depreciation recorded on buildings and equipment amounted to $80,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:   
Instructions
Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Accepted Answer

The answer of Pierce Company reported net income of $180,000...

Question 17

Which of the following transactions does not affect cash during a period?

Accepted Answer

A)  Write-off of an uncollectible account 
B)  Collection of an accounts receivable 
C)  Sale of treasury stock 
D)  Exercise of the call option on bonds payable 
A)  Write-off of an uncollectible account 
B)  Collection of an accounts receivable 
C)  Sale of treasury stock 
D)  Exercise of the call option on bonds payable

Question 18

Flynn Company reported a net loss of $30,000 for the year ended December 31, 2010. During the year, accounts receivable decreased $15,000, merchandise inventory increased $24,000, accounts payable increased by $30,000, and depreciation expense of $15,000 was recorded. During 2010, operating activities

Accepted Answer

A)  used net cash of $6,000. 
B)  used net cash of $24,000. 
C)  provided net cash of $6,000. 
D)  provided net cash of $24,000. 
A)  used net cash of $6,000. 
B)  used net cash of $24,000. 
C)  provided net cash of $6,000. 
D)  provided net cash of $24,000.

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

Bent Company reports a $20,000 increase in inventory and a $5,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $170,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Accepted Answer

A)  $170,000. 
B)  $185,000. 
C)  $195,000. 
D)  $155,000. 
A)  $170,000. 
B)  $185,000. 
C)  $195,000. 
D)  $155,000.

Exam 17: Statement of Cash Flows

The information in a statement of cash flows will not help investors to assess the entity's ability to

The operating activities section of the statement of cash flows may be prepared using the ______________ method or the ______________ method.

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

The following data are available for Nichols Corporation. Net cash provided by investing activities is:

On the statement of cash flows worksheet,

Using the indirect approach, noncash charges in the income statement are ______________ to net income and noncash credits are ______________ to compute cash provided by operations.

The following data are available for Cole Company. Net cash provided by financing activities is:

The best measure of a company's ability to generate sufficient cash to continue as a going concern is net cash provided by

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

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

The following information is available for Snider Company: Instructions Based on the preceding information, compute the net cash provided by operating activities.

Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Which of the following transactions does not affect cash during a period?

Which one of the following affects cash during a period?

Bent Company reports a $20,000 increase in inventory and a $5,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $170,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

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 operating activities section of the statement of cash flows may be prepared using the method or the method.

Using the indirect approach, noncash charges in the income statement are to net income and noncash credits are to compute cash provided by operations.