Question 1

The statement of cash flows

Accepted Answer

A) is prepared instead of an income statement under generally accepted accounting principles. 
B) is used to assess an entity's ability to pay dividends and meet obligations. 
C) is prepared from comparative income statements. 
D) reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement. 
A) is prepared instead of an income statement under generally accepted accounting principles. 
B) is used to assess an entity's ability to pay dividends and meet obligations. 
C) is prepared from comparative income statements. 
D) reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement.

Question 2

The cost of goods sold during the year was $380,000.Inventory increased by $12,000 during the year and accounts payable decreased by $19,000 during the year.Using the direct method of reporting cash flows from operating activities, cash payments for inventory total

Accepted Answer

A) $399,000. 
B) $361,000. 
C) $387,000. 
D) $411,000. 
A) $399,000. 
B) $361,000. 
C) $387,000. 
D) $411,000.

Question 3

Restricted cash should be excluded from the beginning and ending balances of cash in preparing a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

Accepted Answer

A) the direct method only. 
B) the indirect method only. 
C) both the direct method and the indirect method. 
D) neither the direct nor the indirect method. 
A) the direct method only. 
B) the indirect method only. 
C) both the direct method and the indirect method. 
D) neither the direct nor the indirect method.

Question 5

The statement of cash flows will not provide insight into

Accepted Answer

A) why dividends were not increased. 
B) whether cash flow is greater than net income. 
C) the exact proceeds of a future bond issue. 
D) how the retirement of debt was accomplished. 
A) why dividends were not increased. 
B) whether cash flow is greater than net income. 
C) the exact proceeds of a future bond issue. 
D) how the retirement of debt was accomplished.

Question 6

The sale of land for cash would be classified as a cash inflow from an investing activity.

Accepted Answer

A) True 
 B)False

Question 7

Assume that the Kelly Company uses the indirect method to depict cash flows.Indicate where, if at all, land and building purchased with a mortgage would be classified 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 8

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 9

Cash generated from operations exceeds investing needs, and the company can begin retiring debt 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 10

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

Accepted Answer

A) True 
 B)False

Question 11

An increase in inventory would be added to cost of goods sold to determine net purchases for the period.

Accepted Answer

A) True 
 B)False

Question 12

Minette Company reported net income of $200,000 for the year ended December 31, 2022.During the year, inventories decreased by $40,000, accounts payable decreased by $60,000, depreciation expense was $45,000 and a gain on disposal of equipment of $15,000 was recorded.Net cash provided by operating activities in 2022 using the indirect method was

Accepted Answer

A) $280,000. 
B) $210,000. 
C) $245,000. 
D) $240.000. 
A) $280,000. 
B) $210,000. 
C) $245,000. 
D) $240.000.

Question 13

The measurement of free cash flow provides additional insight regarding a company's cash-generating ability.

Accepted Answer

A) True 
 B)False

Question 14

The statement of cash flows will not report the

Accepted Answer

A) amount of checks outstanding at the end of the period. 
B) sources of cash in the current period. 
C) uses of cash in the current period. 
D) change in the cash balance for the current period. 
A) amount of checks outstanding at the end of the period. 
B) sources of cash in the current period. 
C) uses of cash in the current period. 
D) change in the cash balance for the current period.

Question 15

A company had net income of $282,000.Depreciation expense is $26,000.During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively.Prepaid expenses and accounts payable decreased $2,000 and $14,000, respectively.There was also a loss on the sale of equipment of $17,000.How much cash was provided by operating activities?

Accepted Answer

A) $258,000. 
B) $241,000. 
C) $318,000. 
D) $339,000. 
A) $258,000. 
B) $241,000. 
C) $318,000. 
D) $339,000.

Question 16

The issuance of debt to purchase assets would be classified as a(n)

Accepted Answer

A) operating activity. 
B) investing activity. 
C) financing activity. 
D) none of these answers are correct. 
A) operating activity. 
B) investing activity. 
C) financing activity. 
D) none of these answers are correct.

Question 17

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Accepted Answer

A) subtraction from net income. 
B) addition to net income. 
C) addition to cash flow from investing activities. 
D) subtraction from cash flow from investing activities. 
A) subtraction from net income. 
B) addition to net income. 
C) addition to cash flow from investing activities. 
D) subtraction from cash flow from investing activities.

Question 18

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 19

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 20

Westwind Corporation shows income tax expense of $270,000.There has been a $30,000 decrease in federal income taxes payable and a $42,000 increase in state income taxes payable during the year.Using the direct method of reporting cash flows from operating activities, what was Westwind 's cash payment for income taxes?

Accepted Answer

A) $270,000. 
B) $258,000. 
C) $198,000. 
D) $342,000. 
A) $270,000. 
B) $258,000. 
C) $198,000. 
D) $342,000.

The statement of cash flows

The cost of goods sold during the year was $380,000.Inventory increased by $12,000 during the year and accounts payable decreased by $19,000 during the year.Using the direct method of reporting cash flows from operating activities, cash payments for inventory total

Restricted cash should be excluded from the beginning and ending balances of cash in preparing a statement of cash flows.

In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

The statement of cash flows will not provide insight into

The sale of land for cash would be classified as a cash inflow from an investing activity.

Assume that the Kelly Company uses the indirect method to depict cash flows.Indicate where, if at all, land and building purchased with a mortgage would be classified on the statement of cash flows.

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

Cash generated from operations exceeds investing needs, and the company can begin retiring debt during the

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

An increase in inventory would be added to cost of goods sold to determine net purchases for the period.

The measurement of free cash flow provides additional insight regarding a company's cash-generating ability.

The statement of cash flows will not report the

The issuance of debt to purchase assets would be classified as a(n)

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Financing activities involve

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

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

The statement of cash flows

The cost of goods sold during the year was $380,000.Inventory increased by $12,000 during the year and accounts payable decreased by $19,000 during the year.Using the direct method of reporting cash flows from operating activities, cash payments for inventory total

Restricted cash should be excluded from the beginning and ending balances of cash in preparing a statement of cash flows.

In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

The statement of cash flows will not provide insight into

The sale of land for cash would be classified as a cash inflow from an investing activity.

Assume that the Kelly Company uses the indirect method to depict cash flows.Indicate where, if at all, land and building purchased with a mortgage would be classified on the statement of cash flows.

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

Cash generated from operations exceeds investing needs, and the company can begin retiring debt during the

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

An increase in inventory would be added to cost of goods sold to determine net purchases for the period.

The measurement of free cash flow provides additional insight regarding a company's cash-generating ability.

The statement of cash flows will not report the

The issuance of debt to purchase assets would be classified as a(n)

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Financing activities involve

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

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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