Question 1

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Accepted Answer

A) two cash effects must be netted and presented as one item 
B) cash inflow and cash outflow must be reported separately 
C) cash outflow is only is presented 
D) cash inflow and cash outflow can either be reported separately or presented as one item 
A) two cash effects must be netted and presented as one item 
B) cash inflow and cash outflow must be reported separately 
C) cash outflow is only is presented 
D) cash inflow and cash outflow can either be reported separately or presented as one item

Question 2

Authentic Exposure Company had the following transactions that took place during the year: I.Recorded credit sales of $2,500.
II)Collected $1,500 from customers.
III)Recorded sales returns of $500 and credited the customer's account.
What is the total effect of these transactions on free cash flow?

Accepted Answer

A) Increase 
B) Decrease 
C) No Effect 
D) Cannot be determined 
A) Increase 
B) Decrease 
C) No Effect 
D) Cannot be determined

Question 3

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 4

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

Accepted Answer

A) Write-off of an uncollectible account. 
B) Collection of accounts receivable. 
C) Sale of treasury stock. 
D) Redeeming bonds before maturity. 
A) Write-off of an uncollectible account. 
B) Collection of accounts receivable. 
C) Sale of treasury stock. 
D) Redeeming bonds before maturity.

Question 5

* 166.During 2022, Bronze Company had $130,000 in cash sales and $1,020,000 in credit sales.The accounts receivable balances were $180,000 and $212,000 at December 31, 2021, and 2022, respectively.Using the direct method of reporting cash flows from operating activities, what was the total cash collected from all customers during 2022?

Accepted Answer

A) $1,418,000. 
B) $1,642,000. 
C) $1,182,000. 
D) $1,118,000. 
A) $1,418,000. 
B) $1,642,000. 
C) $1,182,000. 
D) $1,118,000.

Question 6

If a loss of $108,000 is realized when selling (for cash) a building having a book value of $800,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A) $692,000. 
B) $800,000. 
C) $908,000. 
D) $108,000. 
A) $692,000. 
B) $800,000. 
C) $908,000. 
D) $108,000.

Question 7

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 8

Which of the following statements concerning the statement of cash flows is true?

Accepted Answer

A) The statement of cash flows is usually more accurate when using the indirect method. 
B) If the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided. 
C) The statement of cash flows reflects both earnings per share and cash per share. 
D) The statement of cash flows is an optional financial statement for external reporting purposes. 
A) The statement of cash flows is usually more accurate when using the indirect method. 
B) If the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided. 
C) The statement of cash flows reflects both earnings per share and cash per share. 
D) The statement of cash flows is an optional financial statement for external reporting purposes.

Question 9

A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would not create a cash flow?

Accepted Answer

A) Sale of equipment at book value. 
B) Purchase of a delivery truck. 
C) Payment of a cash dividend. 
D) The company converts bonds into common stock. 
A) Sale of equipment at book value. 
B) Purchase of a delivery truck. 
C) Payment of a cash dividend. 
D) The company converts bonds into common stock.

Question 11

Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of 2022, respectively.Income reported on the income statement for the year was $223,000.Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

Accepted Answer

A) $223,000. 
B) $228,000. 
C) $258,000. 
D) $218,000. 
A) $223,000. 
B) $228,000. 
C) $258,000. 
D) $218,000.

Question 12

Which of the following items does not appear in the statement of cash flows under the direct method?

Accepted Answer

A) Cash payments to suppliers. 
B) Cash collections from customers. 
C) Depreciation Expense. 
D) Cash from the sale of equipment. 
A) Cash payments to suppliers. 
B) Cash collections from customers. 
C) Depreciation Expense. 
D) Cash from the sale of equipment.

Question 13

The phase in the product life cycle when a company is purchasing fixed assets and beginning to produce and sell is the

Accepted Answer

A) introductory phase. 
B) growth phase. 
C) maturity phase. 
D) decline phase. 
A) introductory phase. 
B) growth phase. 
C) maturity phase. 
D) decline phase.

Question 14

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Accepted Answer

A) the financing section. 
B) the "extraordinary" section. 
C) a separate schedule or note to the financial statements. 
D) the stockholders' equity section. 
A) the financing section. 
B) the "extraordinary" section. 
C) a separate schedule or note to the financial statements. 
D) the stockholders' equity section.

Question 15

Free cash flow provides an indication of a company's ability to

Accepted Answer

A) generate cash to invest in capital expenditures. 
B) generate net income. 
C) generate cash to pay dividends. 
D) generate cash to invest in capital expenditures and to pay dividends. 
A) generate cash to invest in capital expenditures. 
B) generate net income. 
C) generate cash to pay dividends. 
D) generate cash to invest in capital expenditures and to pay dividends.

Question 16

Colie Company had an increase in inventory of $120,000.The cost of goods sold was $560,000.There was a $30,000 decrease in accounts payable from the prior period.Using the direct method of reporting cash flows from operating activities, what were Colie's cash payments to suppliers?

Accepted Answer

A) $710,000. 
B) $650,000. 
C) $440,000. 
D) $380,000. 
A) $710,000. 
B) $650,000. 
C) $440,000. 
D) $380,000.

Question 17

Assume that the Romanus Company uses the indirect method to depict cash flows.Indicate where, if at all, income taxes paid would be reported on the statement of cash flows.

Accepted Answer

A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow. 
A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow.

Question 18

The statement of cash flows explains the difference between net income, as shown on the income statement, and the net cash flows generated from operations.

Accepted Answer

A) True 
 B)False

Question 19

APS Company issued 20,000 shares of $1 par common stock for $40 per share during 2022.The company paid dividends of $48,000 and issued long-term notes payable of $440,000 during the year.What amount of cash flows from financing activities will be reported on the statement of cash flows?

Accepted Answer

A) $12,000 net cash inflow. 
B) $352,000 net cash inflow. 
C) $705,000 net cash outflow. 
D) $1,192,000 net cash inflow. 
A) $12,000 net cash inflow. 
B) $352,000 net cash inflow. 
C) $705,000 net cash outflow. 
D) $1,192,000 net cash inflow.

Question 20

Under the indirect method, gains and losses from the sale of equipment used in operations would be included in the cash flows from operating activities section on the statement of cash flows.

Accepted Answer

A) True 
 B)False

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Authentic Exposure Company had the following transactions that took place during the year: I.Recorded credit sales of $2,500. II)Collected $1,500 from customers. III)Recorded sales returns of $500 and credited the customer's account. What is the total effect of these transactions on free cash flow?

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

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

If a loss of $108,000 is realized when selling (for cash) a building having a book value of $800,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

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

Which of the following statements concerning the statement of cash flows is true?

A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.

Which of the following would not create a cash flow?

Which of the following items does not appear in the statement of cash flows under the direct method?

The phase in the product life cycle when a company is purchasing fixed assets and beginning to produce and sell is the

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Free cash flow provides an indication of a company's ability to

Colie Company had an increase in inventory of $120,000.The cost of goods sold was $560,000.There was a $30,000 decrease in accounts payable from the prior period.Using the direct method of reporting cash flows from operating activities, what were Colie's cash payments to suppliers?

Assume that the Romanus Company uses the indirect method to depict cash flows.Indicate where, if at all, income taxes paid would be reported on the statement of cash flows.

The statement of cash flows explains the difference between net income, as shown on the income statement, and the net cash flows generated from operations.

APS Company issued 20,000 shares of $1 par common stock for $40 per share during 2022.The company paid dividends of $48,000 and issued long-term notes payable of $440,000 during the year.What amount of cash flows from financing activities will be reported on the statement of cash flows?

Under the indirect method, gains and losses from the sale of equipment used in operations would be included in the cash flows from operating activities section on the statement of cash flows.

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

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Authentic Exposure Company had the following transactions that took place during the year: I.Recorded credit sales of $2,500. II)Collected $1,500 from customers. III)Recorded sales returns of $500 and credited the customer's account. What is the total effect of these transactions on free cash flow?

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

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

If a loss of $108,000 is realized when selling (for cash) a building having a book value of $800,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

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

Which of the following statements concerning the statement of cash flows is true?

A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.

Which of the following would not create a cash flow?

Which of the following items does not appear in the statement of cash flows under the direct method?

The phase in the product life cycle when a company is purchasing fixed assets and beginning to produce and sell is the

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Free cash flow provides an indication of a company's ability to

Colie Company had an increase in inventory of $120,000.The cost of goods sold was $560,000.There was a $30,000 decrease in accounts payable from the prior period.Using the direct method of reporting cash flows from operating activities, what were Colie's cash payments to suppliers?

Assume that the Romanus Company uses the indirect method to depict cash flows.Indicate where, if at all, income taxes paid would be reported on the statement of cash flows.

The statement of cash flows explains the difference between net income, as shown on the income statement, and the net cash flows generated from operations.

APS Company issued 20,000 shares of $1 par common stock for $40 per share during 2022.The company paid dividends of $48,000 and issued long-term notes payable of $440,000 during the year.What amount of cash flows from financing activities will be reported on the statement of cash flows?

Under the indirect method, gains and losses from the sale of equipment used in operations would be included in the cash flows from operating activities section on the statement of cash flows.

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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