Question 1

Depreciation Expense is reported on the statement of cash flows only when using the direct method of preparing a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 2

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:
a. If accrued expenses showed $60,000 on the income statement and payables increased from $10,000 to $19,400 on the balance sheet, what was the amount of cash paid?
b. If insurance expense showed $17,000 on the income statement and Prepaid Insurance increased from $5,000 to $9,000 on the balance sheet, what was the amount of cash paid for insurance?

Accepted Answer

a. $50,600

Question 3

Cash paid for insurance and rent would be reported in the statement of cash flows (direct method) in:

Accepted Answer

A)  a separate schedule. 
B)  operating activities. 
C)  financing activities. 
D)  investing activities. 
A)  a separate schedule. 
B)  operating activities. 
C)  financing activities. 
D)  investing activities.

Question 4

Which of the following adjustments would be in error when computing cash from investing using the indirect method?

Accepted Answer

A)  Increase cash when purchasing equipment 
B)  Increase cash when selling equipment 
C)  Decrease cash when purchasing land 
D)  None of the above 
A)  Increase cash when purchasing equipment 
B)  Increase cash when selling equipment 
C)  Decrease cash when purchasing land 
D)  None of the above

Question 5

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-

Accepted Answer

The answer of For each of the following items, indicate...

Question 6

The records of Lily's Landing showed a purchase of equipment in the amount of $17,100; sale of equipment in the amount of $41,200; a purchase of land in the amount of $10,400, and a loan to a borrower in the amount of $4,100. The amount of Net Cash Flow from Investing Activities using the indirect method is:

Accepted Answer

A)  $9,600. 
B)  ($9,600). 
C)  $52,000. 
D)  $72,800. 
A)  $9,600. 
B)  ($9,600). 
C)  $52,000. 
D)  $72,800.

Question 7

If Accounts Receivable decreases on a comparative balance sheet, this means:

Accepted Answer

A)  collections were more than credit sales. 
B)  credit sales are decreasing. 
C)  credit sales are increasing more than collections. 
D)  None of these answers is correct. 
A)  collections were more than credit sales. 
B)  credit sales are decreasing. 
C)  credit sales are increasing more than collections. 
D)  None of these answers is correct.

Question 8

Selling equipment is considered an investing activity.

Accepted Answer

A) True 
 B)False

Question 9

If there is an increase to Merchandise Inventory, the result is added to compute cash paid for merchandise.

Accepted Answer

A) True 
 B)False

Question 10

A cash inflow from a financing activity would be:

Accepted Answer

A)  paying cash dividends. 
B)  issuing stock or bonds. 
C)  paying interest on notes payable. 
D)  making payments for additional inventory. 
A)  paying cash dividends. 
B)  issuing stock or bonds. 
C)  paying interest on notes payable. 
D)  making payments for additional inventory.

Question 11

Activities relating to raising money from investors and creditors such as the issuance of common stock are classified as:

Accepted Answer

A)  Financing activities. 
B)  Investing activities. 
C)  Operating activities. 
D)  Management activities. 
A)  Financing activities. 
B)  Investing activities. 
C)  Operating activities. 
D)  Management activities.

Question 12

If Insurance Expense was $7,100, and there was a decrease in Prepaid Insurance of $4,700, what would be the cash amount paid for Insurance?

Accepted Answer

A)  $2,400 
B)  $11,800 
C)  $7,100 
D)  $4,700 
A)  $2,400 
B)  $11,800 
C)  $7,100 
D)  $4,700

Question 13

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-

Accepted Answer

The answer of For each of the following items, indicate...

Question 14

Orion Corporation reported net income of $31,000, depreciation expenses of $18,000, an increase in Accounts Payable of $3,000 and a decrease in Accounts Receivable of $2,500. Under the indirect method, net cash flow from operating activities is:

Accepted Answer

A)  $38,300 
B)  $54,500 
C)  $23,700 
D)  $35,300 
A)  $38,300 
B)  $54,500 
C)  $23,700 
D)  $35,300

Question 15

The final cash amount on the statement of cash flows needs to match the cash balance shown on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

This statement summarizes the sources and uses of cash by a company during an accounting period.

Accepted Answer

A)  Statement of Retained Earnings 
B)  Statement of Cash Flows 
C)  Income Statement 
D)  Balance Sheet 
A)  Statement of Retained Earnings 
B)  Statement of Cash Flows 
C)  Income Statement 
D)  Balance Sheet

Question 17

Activities such as selling merchandise and services to customers and paying salaries and other expenses needed to continue earning the operating revenue are classified as:

Accepted Answer

A)  Financing activities. 
B)  Investing activities. 
C)  Operating activities. 
D)  Management activities. 
A)  Financing activities. 
B)  Investing activities. 
C)  Operating activities. 
D)  Management activities.

Question 18

Of the following, which has a positive effect on the computation of cash flow from investing using the indirect method?

Accepted Answer

A)  Decrease in Inventory 
B)  Increase in Accounts Payable 
C)  Purchase of Equipment 
D)  Sale of Equipment 
A)  Decrease in Inventory 
B)  Increase in Accounts Payable 
C)  Purchase of Equipment 
D)  Sale of Equipment

Question 19

Indicate the effect that each of the following transactions has on the cash balance. Use (I) for increase, (D) for decrease, and (N) for no change.
a) ________ Increase in inventory, paid with cash
b) ________ Sale of common stock for cash
c) ________ Payment of cash dividends
d) ________ Depreciation expense for the period
e) ________ Payment of long-term debt
f) ________ Loan of money to another company
g) ________ Increase in Accounts Payable
h) ________ Purchase of equipment on account

Accepted Answer

a) D, b) I

Question 20

The net income reported on the income statement for the current year was $70,000. Depreciation Expense recorded on fixed assets was $18,000. What is the net cash flow from operations that would appear on a cash flow statement using the indirect method?

Accepted Answer

A)  $70,000 
B)  $88,000 
C)  $18,000 
D)  $52,000 
A)  $70,000 
B)  $88,000 
C)  $18,000 
D)  $52,000

Depreciation Expense is reported on the statement of cash flows only when using the direct method of preparing a statement of cash flows.

Cash paid for insurance and rent would be reported in the statement of cash flows (direct method) in:

Which of the following adjustments would be in error when computing cash from investing using the indirect method?

If Accounts Receivable decreases on a comparative balance sheet, this means:

Selling equipment is considered an investing activity.

If there is an increase to Merchandise Inventory, the result is added to compute cash paid for merchandise.

A cash inflow from a financing activity would be:

Activities relating to raising money from investors and creditors such as the issuance of common stock are classified as:

If Insurance Expense was $7,100, and there was a decrease in Prepaid Insurance of $4,700, what would be the cash amount paid for Insurance?

Orion Corporation reported net income of $31,000, depreciation expenses of $18,000, an increase in Accounts Payable of $3,000 and a decrease in Accounts Receivable of $2,500. Under the indirect method, net cash flow from operating activities is:

The final cash amount on the statement of cash flows needs to match the cash balance shown on the balance sheet.

This statement summarizes the sources and uses of cash by a company during an accounting period.

Activities such as selling merchandise and services to customers and paying salaries and other expenses needed to continue earning the operating revenue are classified as:

Of the following, which has a positive effect on the computation of cash flow from investing using the indirect method?

The net income reported on the income statement for the current year was $70,000. Depreciation Expense recorded on fixed assets was $18,000. What is the net cash flow from operations that would appear on a cash flow statement using the indirect method?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Exam 21: Statement of Cash Flows

Depreciation Expense is reported on the statement of cash flows only when using the direct method of preparing a statement of cash flows.

Cash paid for insurance and rent would be reported in the statement of cash flows (direct method) in:

Which of the following adjustments would be in error when computing cash from investing using the indirect method?

If Accounts Receivable decreases on a comparative balance sheet, this means:

Selling equipment is considered an investing activity.

If there is an increase to Merchandise Inventory, the result is added to compute cash paid for merchandise.

A cash inflow from a financing activity would be:

Activities relating to raising money from investors and creditors such as the issuance of common stock are classified as:

If Insurance Expense was $7,100, and there was a decrease in Prepaid Insurance of $4,700, what would be the cash amount paid for Insurance?

Orion Corporation reported net income of $31,000, depreciation expenses of $18,000, an increase in Accounts Payable of $3,000 and a decrease in Accounts Receivable of $2,500. Under the indirect method, net cash flow from operating activities is:

The final cash amount on the statement of cash flows needs to match the cash balance shown on the balance sheet.

This statement summarizes the sources and uses of cash by a company during an accounting period.

Activities such as selling merchandise and services to customers and paying salaries and other expenses needed to continue earning the operating revenue are classified as:

Of the following, which has a positive effect on the computation of cash flow from investing using the indirect method?

The net income reported on the income statement for the current year was $70,000. Depreciation Expense recorded on fixed assets was $18,000. What is the net cash flow from operations that would appear on a cash flow statement using the indirect method?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters