Question 1

Generating positive cash flows from operations is one of the most important cash flow activities of a company.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method?

Accepted Answer

A)  gain on sale of noncurrent assets and amortization of discount on investment in bonds. 
B)  amortization of bonds payable premium and amortization of intangibles. 
C)  loss on sale of noncurrent assets and amortization of discount on investment in bonds. 
D)  gain on sale of noncurrent assets and amortization of premium on investment in bonds. 
A)  gain on sale of noncurrent assets and amortization of discount on investment in bonds. 
B)  amortization of bonds payable premium and amortization of intangibles. 
C)  loss on sale of noncurrent assets and amortization of discount on investment in bonds. 
D)  gain on sale of noncurrent assets and amortization of premium on investment in bonds.

Question 3

On its January 1, 2016, balance sheet, Calvin Company reported equipment of $60,000 and accumulated depreciation of $20,000. During 2016, Calvin sold equipment with an original cost of $5,000. Selected information from Calvin's
2016 statement of cash flows follows:   
Required:
Compute the amount of equipment and accumulated depreciation that should appear on Calvin's December 31, 2016, balance sheet.

Accepted Answer

Equipment: $73,000 $60,000 + $18,000 ? $

Question 4

In a statement of cash flows, which of the following events would be classified as a financing activity?

Accepted Answer

A)  the purchase of a trading security 
B)  the payment of interest on a loan 
C)  the payment of cash dividends to shareholders 
D)  all of these answer choices are correct 
A)  the purchase of a trading security 
B)  the payment of interest on a loan 
C)  the payment of cash dividends to shareholders 
D)  all of these answer choices are correct

Question 5

Exhibit 21-3
The Travis Company uses the spreadsheet method for completing the statement of cash flows. The balance sheet accounts and other information related to those accounts are presented below for Travis Company:   Additional information related to 2017 activities:
Additional information related to 2017 activities:
1. Net loss for 2017 was $40,000.
2. Cash dividends of $12,000 were declared and paid in 2017.
3. 4,000 shares of common stock were issued to bondholders converting bonds payable into common stock.
4. A long-term investment was sold for $100,000 cash.
5. Equipment costing $100,000 and having accumulated depreciation of $30,000 was sold for
$50,000 cash.
-Refer to Exhibit 21-3. Net cash provided used) in the operating activities section of Travis's 2017 statement of cash flows was

Accepted Answer

A)  $(40,000). 
B)  $ 50,000. 
C)  $ 52,000. 
D)  $ 56,000. 
A)  $(40,000). 
B)  $ 50,000. 
C)  $ 52,000. 
D)  $ 56,000.

Question 6

Under the direct method of reporting operating cash flows, a company deducts its operating cash outflows from its operating cash inflows to determine its net cash provided by or used) in operating activities.

Accepted Answer

A) True 
 B)False

Question 7

In a statement of cash flows prepared by the indirect method, an increase in accounts receivable should be

Accepted Answer

A)  deducted from net income in the operating activities section. 
B)  added to net income in the operating activities section. 
C)  reported as an inflow in the investing activities section. 
D)  reported as an inflow in the financing activities section. 
A)  deducted from net income in the operating activities section. 
B)  added to net income in the operating activities section. 
C)  reported as an inflow in the investing activities section. 
D)  reported as an inflow in the financing activities section.

Question 8

Monty Corporation reported the following income statement in condensed for 2016:

During 2016, the following changes occurred in the company's current assets and current liabilities:
  
 Required:
By visual the inspection method prepare the net cash flows from the operating activities using the following methods
note: headings are not necessary):
1) Indirect method
2) Direct method

Accepted Answer

@#IMG-DLM& @#IMG-DLM& * $500,000 + $6,75

Question 9

A company sold equipment for $5,000. The equipment originally cost $16,000 and had accumulated depreciation of $12,000. Which of the following statements is correct regarding the statement of cash flows prepared using the indirect method to report operating activities?

Accepted Answer

A)  $5,000 will be added to net income. 
B)  Investing activities will reflect proceeds of $4,000 from the sale. 
C)  $1,000 will be added to net income. 
D)  $1,000 will be deducted from net income. 
A)  $5,000 will be added to net income. 
B)  Investing activities will reflect proceeds of $4,000 from the sale. 
C)  $1,000 will be added to net income. 
D)  $1,000 will be deducted from net income.

Question 10

When employees exercise share options, the company records the gross proceeds received from the employees exercising options as cash inflows from investing activities.

Accepted Answer

A) True 
 B)False

Question 11

What are the five categories of operating cash outflows under the direct method of reporting cash flows?

Accepted Answer

1) payment to suppliers
2) pay

Question 12

Rhonda Company reported $70,000 of net income for 2016. During the year, machinery costing $10,000 and with accumulated depreciation of $8,000 was sold at a loss of $500. Land and machinery were purchased during the year for cash. Selected account information follows:  
 Required:
Compute the net cash from investing activities for 2016 using the visual inspection method.

Accepted Answer

The answer of Rhonda Company reported $70,000 of net income...

Question 13

Treatments of items in the cash flow statement that differ between IFRS and GAAP include all of the following except the allowed treatment of

Accepted Answer

A)  any cash outflows for development costs that were capitalized as intangible assets. 
B)  losses on the early retirement of bonds. 
C)  bank overdrafts. 
D)  income taxes related to financing and investing activities. 
A)  any cash outflows for development costs that were capitalized as intangible assets. 
B)  losses on the early retirement of bonds. 
C)  bank overdrafts. 
D)  income taxes related to financing and investing activities.

Question 14

The adjusted trial balance is used in the preparation of the statement of cash flows because it contains the balance sheet, income statement, and retained earnings statements for the current period.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 21-1
The Raymond Corporation reported $11,000 of net income for the current year and also uses the visual inspection method for completing the statement of cash flows. The following additional information relates to Raymond for the year:
Subsidiary gain included in investment income under the  
-Refer to Exhibit 21-1. What is Raymond's net cash used by financing activities?

Accepted Answer

A)  $1,240) 
B)  $1,650) 
C)  $1,860) 
D)  $2,150) 
A)  $1,240) 
B)  $1,650) 
C)  $1,860) 
D)  $2,150)

Question 16

The account balance information for Miller Company at the end of 2016 and 2017 and related 2017 activities are presented below:   
Additional information for 2017 activities:
  Bonds payable in the amount of $125,000 were converted into 12,000 shares of common stock.
· Additional common stock was issued for cash of $11 per share.
· The only changes in retained earnings in 2017 were a result of net income and cash dividends.
· Other than the bond conversion, the only transaction affecting bonds payable during 2017 was the issue for cash at face value of new bonds payable.
· Net income for the year 2017 was $200,000.
Required:
Compute the net cash provided by financing activities for the Miller Company using the visual inspection method.

Accepted Answer

The answer of The account balance information for Miller Company...

Question 17

In a statement of cash flows, the payment of a cash dividend on common stock outstanding should be classified as cash outflows for

Accepted Answer

A)  operating activities. 
B)  investing activities. 
C)  credit activities. 
D)  financing activities. 
A)  operating activities. 
B)  investing activities. 
C)  credit activities. 
D)  financing activities.

Question 18

Selected accounting information regarding the Chime Corporation in 2016 follows:  
 In 2016, Chime should report a net increase in cash of

Accepted Answer

A)  $1,100,000. 
B)  $1,200,000. 
C)  $1,600,000. 
D)  $1,700,000. 
A)  $1,100,000. 
B)  $1,200,000. 
C)  $1,600,000. 
D)  $1,700,000.

Question 19

Exhibit 21-1
The Raymond Corporation reported $11,000 of net income for the current year and also uses the visual inspection method for completing the statement of cash flows. The following additional information relates to Raymond for the year:
Subsidiary gain included in investment income under the  
-Refer to Exhibit 21-1. What is Raymond's net cash provided by investing activities?

Accepted Answer

A)  $ 250 
B)  $ 900 
C)  $2,170 
D)  $3,370 
A)  $ 250 
B)  $ 900 
C)  $2,170 
D)  $3,370

Question 20

Which of the following items would be deducted from net income to determine net cash provided by operating activities using the direct method?

Accepted Answer

A)  loss on sale of plant assets and amortization of bond payable discount 
B)  amortization of bond payable premium and gain on sale of equipment 
C)  amortization expense and gain on sale of equipment 
D)  None of these choices would be deducted from net income 
A)  loss on sale of plant assets and amortization of bond payable discount 
B)  amortization of bond payable premium and gain on sale of equipment 
C)  amortization expense and gain on sale of equipment 
D)  None of these choices would be deducted from net income

Generating positive cash flows from operations is one of the most important cash flow activities of a company.

Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method?

In a statement of cash flows, which of the following events would be classified as a financing activity?

Under the direct method of reporting operating cash flows, a company deducts its operating cash outflows from its operating cash inflows to determine its net cash provided by or used) in operating activities.

In a statement of cash flows prepared by the indirect method, an increase in accounts receivable should be

A company sold equipment for $5,000. The equipment originally cost $16,000 and had accumulated depreciation of $12,000. Which of the following statements is correct regarding the statement of cash flows prepared using the indirect method to report operating activities?

When employees exercise share options, the company records the gross proceeds received from the employees exercising options as cash inflows from investing activities.

What are the five categories of operating cash outflows under the direct method of reporting cash flows?

Treatments of items in the cash flow statement that differ between IFRS and GAAP include all of the following except the allowed treatment of

The adjusted trial balance is used in the preparation of the statement of cash flows because it contains the balance sheet, income statement, and retained earnings statements for the current period.

In a statement of cash flows, the payment of a cash dividend on common stock outstanding should be classified as cash outflows for

Selected accounting information regarding the Chime Corporation in 2016 follows: In 2016, Chime should report a net increase in cash of

Which of the following items would be deducted from net income to determine net cash provided by operating activities using the direct method?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Company S Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Post-Retirement Benefits

Accounting for Leases

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

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Exam 21: The Statement of Cash Flows

Generating positive cash flows from operations is one of the most important cash flow activities of a company.

Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method?

In a statement of cash flows, which of the following events would be classified as a financing activity?

Under the direct method of reporting operating cash flows, a company deducts its operating cash outflows from its operating cash inflows to determine its net cash provided by or used) in operating activities.

In a statement of cash flows prepared by the indirect method, an increase in accounts receivable should be

A company sold equipment for $5,000. The equipment originally cost $16,000 and had accumulated depreciation of $12,000. Which of the following statements is correct regarding the statement of cash flows prepared using the indirect method to report operating activities?

When employees exercise share options, the company records the gross proceeds received from the employees exercising options as cash inflows from investing activities.

What are the five categories of operating cash outflows under the direct method of reporting cash flows?

Treatments of items in the cash flow statement that differ between IFRS and GAAP include all of the following except the allowed treatment of

The adjusted trial balance is used in the preparation of the statement of cash flows because it contains the balance sheet, income statement, and retained earnings statements for the current period.

In a statement of cash flows, the payment of a cash dividend on common stock outstanding should be classified as cash outflows for

Selected accounting information regarding the Chime Corporation in 2016 follows: In 2016, Chime should report a net increase in cash of

Which of the following items would be deducted from net income to determine net cash provided by operating activities using the direct method?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Company S Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Post-Retirement Benefits

Accounting for Leases

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

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