Question 1

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Accepted Answer

The answer of Using the indirect method, which of the...

Question 2

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Accepted Answer

A) True 
 B)False

Question 3

Bagley Company's accounts receivable arising from sales to customers amounted to $120,000 and $105,000 at the beginning and end of the year, respectively.Income reported on the income statement for the year was $457,000.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) $457,000. 
B) $472,000. 
C) $562,000. 
D) $442,000. 
A) $457,000. 
B) $472,000. 
C) $562,000. 
D) $442,000.

Question 4

Bradford Company reports a $48,000 increase in inventory and a $12,000 increase in accounts payable during the year.Cost of goods sold for the year was $285,000.Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Accepted Answer

A) $285,000. 
B) $321,000. 
C) $249,000. 
D) $237,000. 
A) $285,000. 
B) $321,000. 
C) $249,000. 
D) $237,000.

Question 5

In preparing a statement of cash flows, the issuance of debt should be reported separately from the retirement of debt.

Accepted Answer

A) True 
 B)False

Question 6

Investing activities include

Accepted Answer

A) collecting cash on loans made. 
B) obtaining cash from creditors. 
C) obtaining capital from owners. 
D) repaying money previously borrowed. 
A) collecting cash on loans made. 
B) obtaining cash from creditors. 
C) obtaining capital from owners. 
D) repaying money previously borrowed.

Question 7

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

Question 8

If $2,500,000 of bonds are issued during the year but $4,000,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Accepted Answer

A) net increase in cash of $1,500,000. 
B) net decrease in cash of $1,500,000. 
C) increase in cash of $2,500,000 and a decrease in cash of $4,000,000. 
D) net loss on retirement of bonds of $1,500,000. 
A) net increase in cash of $1,500,000. 
B) net decrease in cash of $1,500,000. 
C) increase in cash of $2,500,000 and a decrease in cash of $4,000,000. 
D) net loss on retirement of bonds of $1,500,000.

Question 9

Significant noncash transactions would not include

Accepted Answer

A) conversion of bonds into common stock. 
B) asset acquisition through bond issuance. 
C) treasury stock acquisition. 
D) exchange of plant assets. 
A) conversion of bonds into common stock. 
B) asset acquisition through bond issuance. 
C) treasury stock acquisition. 
D) exchange of plant assets.

Question 10

Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?

Accepted Answer

A) Cash receipts from customers. 
B) Cash paid for income taxes. 
C) Gain on sale of equipment. 
D) Cash paid to employees. 
A) Cash receipts from customers. 
B) Cash paid for income taxes. 
C) Gain on sale of equipment. 
D) Cash paid to employees.

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

When the T-account approach is used, an analysis of the changes in all of the noncash balance sheet accounts will explain the change in the Cash account.

Accepted Answer

A) True 
 B)False

Question 13

Catalina Company reported a net loss of $15,000 for the year ended December 31, 2022.During the year, accounts receivable decreased $7,500, inventory increased $12,000, accounts payable increased by $15,000, and depreciation expense of $9,000 was recorded.During 2022, operating activities

Accepted Answer

A) used net cash of $4,500. 
B) used net cash of $10,500. 
C) provided net cash of $4,500. 
D) provided net cash of $10,500. 
A) used net cash of $4,500. 
B) used net cash of $10,500. 
C) provided net cash of $4,500. 
D) provided net cash of $10,500.

Question 14

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.

Accepted Answer

A) True 
 B)False

Question 15

All of the following statements about free cash flow are false except

Accepted Answer

A) significant free cash flow indicates less potential to finance new investment. 
B) free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends. 
C) free cash flow is not reported on the statement of cash flows. 
D) significant free cash flow indicates less potential to pay additional dividends. 
A) significant free cash flow indicates less potential to finance new investment. 
B) free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends. 
C) free cash flow is not reported on the statement of cash flows. 
D) significant free cash flow indicates less potential to pay additional dividends.

Question 16

Authentic Exposure Company had the following transactions that took place during the year: I.Paid amount owing to suppliers $2,750.
II)Purchased new equipment for $5,000 by signing a long-term note payable.
III)Purchased a patent and paid $15,000 cash for the asset.
How 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 17

Assume that the Zahler Corporation uses the indirect method to depict cash flows.Indicate where, if at all, treasury stock purchased with cash 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.

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Bradford Company reports a $48,000 increase in inventory and a $12,000 increase in accounts payable during the year.Cost of goods sold for the year was $285,000.Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

In preparing a statement of cash flows, the issuance of debt should be reported separately from the retirement of debt.

Investing activities include

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

If $2,500,000 of bonds are issued during the year but $4,000,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Significant noncash transactions would not include

Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?

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

When the T-account approach is used, an analysis of the changes in all of the noncash balance sheet accounts will explain the change in the Cash account.

Catalina Company reported a net loss of $15,000 for the year ended December 31, 2022.During the year, accounts receivable decreased $7,500, inventory increased $12,000, accounts payable increased by $15,000, and depreciation expense of $9,000 was recorded.During 2022, operating activities

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.

All of the following statements about free cash flow are false except

Assume that the Zahler Corporation uses the indirect method to depict cash flows.Indicate where, if at all, treasury stock purchased with cash would be classified 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

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Bradford Company reports a $48,000 increase in inventory and a $12,000 increase in accounts payable during the year.Cost of goods sold for the year was $285,000.Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

In preparing a statement of cash flows, the issuance of debt should be reported separately from the retirement of debt.

Investing activities include

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

If $2,500,000 of bonds are issued during the year but $4,000,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Significant noncash transactions would not include

Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?

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

When the T-account approach is used, an analysis of the changes in all of the noncash balance sheet accounts will explain the change in the Cash account.

Catalina Company reported a net loss of $15,000 for the year ended December 31, 2022.During the year, accounts receivable decreased $7,500, inventory increased $12,000, accounts payable increased by $15,000, and depreciation expense of $9,000 was recorded.During 2022, operating activities

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.

All of the following statements about free cash flow are false except

Assume that the Zahler Corporation uses the indirect method to depict cash flows.Indicate where, if at all, treasury stock purchased with cash would be classified 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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