Question 1

Which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle?

Accepted Answer

A) Cash from operations on the statements of cash flows will be less than net income on the income statement. 
B) Collections on accounts receivable will lag behind sales. 
C) Cash from investing is positive. 
D) Cash from financing is positive. 
A) Cash from operations on the statements of cash flows will be less than net income on the income statement. 
B) Collections on accounts receivable will lag behind sales. 
C) Cash from investing is positive. 
D) Cash from financing is positive.

Question 2

If accounts receivable have increased during the period,

Accepted Answer

A) revenues on an accrual basis are less than revenues on a cash basis. 
B) revenues on an accrual basis are greater than revenues on a cash basis. 
C) revenues on an accrual basis are the same as revenues on a cash basis. 
D) expenses on an accrual basis are greater than expenses on a cash basis. 
A) revenues on an accrual basis are less than revenues on a cash basis. 
B) revenues on an accrual basis are greater than revenues on a cash basis. 
C) revenues on an accrual basis are the same as revenues on a cash basis. 
D) expenses on an accrual basis are greater than expenses on a cash basis.

Question 3

During a period, cost of goods sold plus an increase in inventory plus an increase in accounts payable equals cash paid to suppliers.

Accepted Answer

A) True 
 B)False

Question 4

Vanguard Company purchased treasury stock with a cost of $55,000 during 2022.During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $876,000.Cash flows from financing activities for 2022 total

Accepted Answer

A) $856,000 net cash inflow. 
B) $911,000 net cash inflow. 
C) $75,000 net cash outflow. 
D) $801,000 net cash inflow. 
A) $856,000 net cash inflow. 
B) $911,000 net cash inflow. 
C) $75,000 net cash outflow. 
D) $801,000 net cash inflow.

Question 5

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 6

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.

Question 7

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 8

During the year, Salaries Payable decreased by $12,000.Using the direct method of reporting cash flows from operating activities, if Salaries Expense amounted to $450,000 for the year, the cash paid to employees (including deductions from gross pay) is

Accepted Answer

A) $462,000. 
B) $438,000. 
C) $450,000. 
D) $454,000. 
A) $462,000. 
B) $438,000. 
C) $450,000. 
D) $454,000.

Question 9

Cash used in operations will exceed cash generated by operations in the maturity phase of the product lifecycle.

Accepted Answer

A) True 
 B)False

Question 10

In Jackson Jones Company, land decreased $270,000 because of a cash sale for $270,000, the equipment account increased $90,000 as a result of a cash purchase, and bonds payable increased $300,000 from issuance for cash at face value.The net cash provided by investing activities is

Accepted Answer

A) $270,000. 
B) $480,000. 
C) $180,000. 
D) $210,000. 
A) $270,000. 
B) $480,000. 
C) $180,000. 
D) $210,000.

Question 11

Which of the following activities would be classified as an investing activity?

Accepted Answer

A) Cash received from interest revenue. 
B) Cash paid (loaned) to a borrower as a loan. 
C) Cash received from dividend revenue. 
D) Cash paid to reacquire capital stock. 
A) Cash received from interest revenue. 
B) Cash paid (loaned) to a borrower as a loan. 
C) Cash received from dividend revenue. 
D) Cash paid to reacquire capital stock.

Question 12

During 2022, Lowes Company sold equipment with a book value of $120,000 for proceeds of $145,000.The company purchased new equipment for $320,000 by signing a long-term note payable.No other transactions impacted long-term asset accounts during 2022.The investing section of the statement of cash flows will report

Accepted Answer

A) net cash outflows of $295,000. 
B) net cash outflows of $175,000. 
C) net cash inflows of $145,000. 
D) net cash inflows of $25,000. 
A) net cash outflows of $295,000. 
B) net cash outflows of $175,000. 
C) net cash inflows of $145,000. 
D) net cash inflows of $25,000.

Question 13

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 14

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.

Question 15

Tito 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 $282,000.Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Accepted Answer

A) $282,000. 
B) $262,000. 
C) $307,000. 
D) $257,000. 
A) $282,000. 
B) $262,000. 
C) $307,000. 
D) $257,000.

Question 16

If a gain of $225,000 is realized in the cash sale of a building having a book value of $900,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A) $675,000. 
B) $900,000. 
C) $1,125,000. 
D) $225,000. 
A) $675,000. 
B) $900,000. 
C) $1,125,000. 
D) $225,000.

Question 17

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 18

Roberts Company had net income of $890,000 for the year ending 12/31/2022.Depreciation expense for 2022 is $110,000.During the year, accounts receivable and inventory increased by $60,000 and $160,000, respectively.Prepaid expenses and accounts payable decreased $8,000 and $16,000, respectively.There was also a loss on the sale of equipment of $12,000.How much cash was provided by operating activities in 2022?

Accepted Answer

A) $760,000. 
B) $784,000. 
C) $1,080,000. 
D) $1,128,000. 
A) $760,000. 
B) $784,000. 
C) $1,080,000. 
D) $1,128,000.

Question 19

The information in the following table is from the statement of cash flows for a company at four different points in time (Period 1, Period 2, Period 3, and Period 4).Negative values are presented in parentheses.   Based on this information, which of the following answers most likely corresponds with the introductory phase, growth phase, maturity phase, or decline phase?

Accepted Answer

A) Period 2, Period 1, Period 3, Period 4. 
B) Period 1, Period 4, Period 3, Period 2. 
C) Period 3, Period 4, Period 1, Period 2. 
D) Period 4, Period 3, Period 2, Period 1. 
A) Period 2, Period 1, Period 3, Period 4. 
B) Period 1, Period 4, Period 3, Period 2. 
C) Period 3, Period 4, Period 1, Period 2. 
D) Period 4, Period 3, Period 2, Period 1.

Question 20

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

Which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle?

If accounts receivable have increased during the period,

During a period, cost of goods sold plus an increase in inventory plus an increase in accounts payable equals cash paid to suppliers.

Vanguard Company purchased treasury stock with a cost of $55,000 during 2022.During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $876,000.Cash flows from financing activities for 2022 total

The primary purpose of the statement of cash flows is to

If a company reports a net loss, it

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

During the year, Salaries Payable decreased by $12,000.Using the direct method of reporting cash flows from operating activities, if Salaries Expense amounted to $450,000 for the year, the cash paid to employees (including deductions from gross pay) is

Cash used in operations will exceed cash generated by operations in the maturity phase of the product lifecycle.

In Jackson Jones Company, land decreased $270,000 because of a cash sale for $270,000, the equipment account increased $90,000 as a result of a cash purchase, and bonds payable increased $300,000 from issuance for cash at face value.The net cash provided by investing activities is

Which of the following activities would be classified as an investing activity?

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

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

Tito 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 $282,000.Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

If a gain of $225,000 is realized in the cash sale of a building having a book value of $900,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

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.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 12: Statement of Cash Flows

Which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle?

If accounts receivable have increased during the period,

During a period, cost of goods sold plus an increase in inventory plus an increase in accounts payable equals cash paid to suppliers.

Vanguard Company purchased treasury stock with a cost of $55,000 during 2022.During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $876,000.Cash flows from financing activities for 2022 total

The primary purpose of the statement of cash flows is to

If a company reports a net loss, it

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

During the year, Salaries Payable decreased by $12,000.Using the direct method of reporting cash flows from operating activities, if Salaries Expense amounted to $450,000 for the year, the cash paid to employees (including deductions from gross pay) is

Cash used in operations will exceed cash generated by operations in the maturity phase of the product lifecycle.

In Jackson Jones Company, land decreased $270,000 because of a cash sale for $270,000, the equipment account increased $90,000 as a result of a cash purchase, and bonds payable increased $300,000 from issuance for cash at face value.The net cash provided by investing activities is

Which of the following activities would be classified as an investing activity?

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

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

Tito 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 $282,000.Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

If a gain of $225,000 is realized in the cash sale of a building having a book value of $900,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

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.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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