Question 1

In computing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

Accepted Answer

A) True 
 B)False

Question 2

A worksheet can be prepared in place of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 3

When using the indirect method to compute cash provided by operating activities

Accepted Answer

A) income taxes payable may be ignored. 
B) amortization expense is added to net income. 
C) decreases in inventory are subtracted from net income. 
D) increases in accounts receivable are added to net income. 
A) income taxes payable may be ignored. 
B) amortization expense is added to net income. 
C) decreases in inventory are subtracted from net income. 
D) increases in accounts receivable are added to net income.

Question 4

During the introductory phase, cash from operations and cash from investing activities are expected to be negative.

Accepted Answer

A) True 
 B)False

Question 5

All of the following adjustments would be deducted in determining net cash provided by operating activities except a(n)

Accepted Answer

A) increase in inventories. 
B) depreciation expense. 
C) gain on disposal of plant assets. 
D) decrease in accrued expenses payable. 
A) increase in inventories. 
B) depreciation expense. 
C) gain on disposal of plant assets. 
D) decrease in accrued expenses payable.

Question 6

The activity from the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.

Accepted Answer

A) True 
 B)False

Question 9

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Accepted Answer

A) True 
 B)False

Question 10

During the year, Income Tax Expense amounted to $12,500 and Income Taxes Payable increased by $1,500; therefore, the cash paid for income taxes was $11,000.

Accepted Answer

A) True 
 B)False

Question 11

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Accepted Answer

A) the adjusted trial balance. 
B) the current period's retained earnings statement. 
C) a comparative balance sheet. 
D) a comparative income statement. 
A) the adjusted trial balance. 
B) the current period's retained earnings statement. 
C) a comparative balance sheet. 
D) a comparative income statement.

Question 12

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

Accepted Answer

A) True 
 B)False

Question 13

Boisclair Corporation's accounts receivable decreased $130,000 between the end of 2021 and the end of 2022.If Boisclair uses a worksheet is to facilitate the preparation of the statement of cash flows.The entry in the reconciling columns of the worksheet would be

Accepted Answer

A) Operating- Decrease in Accounts Receivable (debit column), Accounts Receivable (credit column). 
B) Accounts Receivable (debit column), Cash (credit column). 
C) Accounts Receivable (debit column) Operating- Decrease in Accounts Receivable (credit column). 
D) Cash (debit column), Accounts Receivable (credit column). 
A) Operating- Decrease in Accounts Receivable (debit column), Accounts Receivable (credit column). 
B) Accounts Receivable (debit column), Cash (credit column). 
C) Accounts Receivable (debit column) Operating- Decrease in Accounts Receivable (credit column). 
D) Cash (debit column), Accounts Receivable (credit column).

Question 14

Seachest Company reports the following:   If cost of goods sold for the year is $240,000, the amount of cash paid to suppliers using the direct method is

Accepted Answer

A) $245,000. 
B) $235,000. 
C) $205,000. 
D) $280,000. 
A) $245,000. 
B) $235,000. 
C) $205,000. 
D) $280,000.

Question 15

Assume that the Safferstein Corporation uses the indirect method to depict cash flows.Indicate where, if at all, long-term debt retired with cash 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 16

Cash from operations and net income are approximately the same during 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 17

In developing the cash flows from operating activities, most companies in the United States

Accepted Answer

A) use the direct method. 
B) use the indirect method. 
C) present both the indirect and direct methods in their financial reports. 
D) prepare the operating activities section on the accrual basis. 
A) use the direct method. 
B) use the indirect method. 
C) present both the indirect and direct methods in their financial reports. 
D) prepare the operating activities section on the accrual basis.

Question 18

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 19

North Company has other operating expenses of $360,000.There has been a decrease in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 larger than in the prior period.Using the direct method of reporting cash flows from operating activities, what were North's cash payments for operating expenses?

Accepted Answer

A) $368,000. 
B) $352,000. 
C) $320,000. 
D) $400,000. 
A) $368,000. 
B) $352,000. 
C) $320,000. 
D) $400,000.

Question 20

Each of the following is an adjustment to convert net income to net cash provided by operating activities except

Accepted Answer

A) adding back noncash expenses. 
B) adding gains and deducting losses. 
C) analyzing changes to noncash current asset and current liability accounts. 
D) All of these answer choices are adjustments. 
A) adding back noncash expenses. 
B) adding gains and deducting losses. 
C) analyzing changes to noncash current asset and current liability accounts. 
D) All of these answer choices are adjustments.

In computing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

A worksheet can be prepared in place of the statement of cash flows.

When using the indirect method to compute cash provided by operating activities

During the introductory phase, cash from operations and cash from investing activities are expected to be negative.

All of the following adjustments would be deducted in determining net cash provided by operating activities except a(n)

The activity from the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.

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

The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

During the year, Income Tax Expense amounted to $12,500 and Income Taxes Payable increased by $1,500; therefore, the cash paid for income taxes was $11,000.

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

Boisclair Corporation's accounts receivable decreased $130,000 between the end of 2021 and the end of 2022.If Boisclair uses a worksheet is to facilitate the preparation of the statement of cash flows.The entry in the reconciling columns of the worksheet would be

Seachest Company reports the following: If cost of goods sold for the year is $240,000, the amount of cash paid to suppliers using the direct method is

Assume that the Safferstein Corporation uses the indirect method to depict cash flows.Indicate where, if at all, long-term debt retired with cash would be reported on the statement of cash flows.

Cash from operations and net income are approximately the same during the

In developing the cash flows from operating activities, most companies in the United States

Using the indirect method, patent amortization expense for the period

Each of the following is an adjustment to convert net income to net cash provided by operating activities except

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

In computing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

A worksheet can be prepared in place of the statement of cash flows.

When using the indirect method to compute cash provided by operating activities

During the introductory phase, cash from operations and cash from investing activities are expected to be negative.

All of the following adjustments would be deducted in determining net cash provided by operating activities except a(n)

The activity from the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.

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

The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

During the year, Income Tax Expense amounted to $12,500 and Income Taxes Payable increased by $1,500; therefore, the cash paid for income taxes was $11,000.

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

Boisclair Corporation's accounts receivable decreased $130,000 between the end of 2021 and the end of 2022.If Boisclair uses a worksheet is to facilitate the preparation of the statement of cash flows.The entry in the reconciling columns of the worksheet would be

Seachest Company reports the following: If cost of goods sold for the year is $240,000, the amount of cash paid to suppliers using the direct method is

Assume that the Safferstein Corporation uses the indirect method to depict cash flows.Indicate where, if at all, long-term debt retired with cash would be reported on the statement of cash flows.

Cash from operations and net income are approximately the same during the

In developing the cash flows from operating activities, most companies in the United States

Using the indirect method, patent amortization expense for the period

Each of the following is an adjustment to convert net income to net cash provided by operating activities except

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

Filters