Question 1

Which of the following is the first step in preparing the statement of cash flows?

Accepted Answer

A)  Determine the net cash provided by operating activities. 
B)  Determine the net income. 
C)  Determine net cash provided by investing and financing activities. 
D)  Determine the net increase (decrease) in cash. 
A)  Determine the net cash provided by operating activities. 
B)  Determine the net income. 
C)  Determine net cash provided by investing and financing activities. 
D)  Determine the net increase (decrease) in cash.

Question 2

Assume that the E-Zip 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.

Question 3

Land costing $125,000 was sold for $325,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Accepted Answer

A)  $125,000. 
B)  $325,000. 
C)  $280,000. 
D)  $200,000. 
A)  $125,000. 
B)  $325,000. 
C)  $280,000. 
D)  $200,000.

Question 4

A comparative balance sheet for the Beneteau Corporation is presented below:   Additional information:
1. Net loss for 2014 is $12,000. Net sales for 2014 are $250,000.
2. Cash dividends of $15,000 were declared and paid in 2014.
3. Land was sold for cash at a loss of $2,000. This was the only land transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
5. $12,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for common stock. The fair value of the stock at the time of the exchange was $25,000.
Instructions
1. Prepare a statement of cash flows for the year ended 2014 using the indirect method.
2. Compute the following cash based ratios:
a. Current cash debt coverage
b. Cash debt coverage

Accepted Answer

The answer of A comparative balance sheet for the Beneteau...

Question 5

Distinguish among the three activities reported in the statement of cash flows.

Accepted Answer

The three activities are:
Operating acti

Question 6

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using GAAP. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you prepare a schedule of predicted cash sources and cash needs at the end of each week for the following week.
Isabelle Alix, the company's president, has asked whether a statement of cash flows would also be useful.
Required:
Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing.

Accepted Answer

The answer of You are the accountant for a small...

Question 10

Which of the following transactions does not affect cash during a period?

Accepted Answer

A)  Write-off of an uncollectible account. 
B)  Collection of an accounts receivable. 
C)  Sale of treasury stock. 
D)  Redeeming bonds before maturity. 
A)  Write-off of an uncollectible account. 
B)  Collection of an accounts receivable. 
C)  Sale of treasury stock. 
D)  Redeeming bonds before maturity.

Question 11

Which one of the following affects cash during a period?

Accepted Answer

A)  Recording depreciation expense. 
B)  Declaration of a cash dividend. 
C)  Write-off of an uncollectible account receivable. 
D)  Payment of an accounts payable. 
A)  Recording depreciation expense. 
B)  Declaration of a cash dividend. 
C)  Write-off of an uncollectible account receivable. 
D)  Payment of an accounts payable.

Question 12

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash ________________________ and cash _________________________.

Accepted Answer

receipts from custom

Question 13

If accounts receivable have increased during the period

Accepted Answer

A)  revenues on an accrual basis are less than revenues on a cash basis. 
B)  revenues on an accrual basis are greater than revenues on a cash basis. 
C)  revenues on an accrual basis are the same as revenues on a cash basis. 
D)  expenses on an accrual basis are greater than expenses on a cash basis. 
A)  revenues on an accrual basis are less than revenues on a cash basis. 
B)  revenues on an accrual basis are greater than revenues on a cash basis. 
C)  revenues on an accrual basis are the same as revenues on a cash basis. 
D)  expenses on an accrual basis are greater than expenses on a cash basis.

Question 14

All of the following adjustments are added to net income in computing net cash provided by operating activities except

Accepted Answer

A)  amortization expense. 
B)  a decrease in accounts receivable. 
C)  an increase in accounts payable. 
D)  an increase in prepaid expenses. 
A)  amortization expense. 
B)  a decrease in accounts receivable. 
C)  an increase in accounts payable. 
D)  an increase in prepaid expenses.

Question 15

Zoum Corporation had the following transactions during 2014:
1) Issued $125,000 of par value common stock for cash.
2) Recorded and paid wages expense of $60,000.
3) Acquired land by issuing common stock of par value $50,000.
4) Declared and paid a cash dividend of $10,000.
5) Sold a long-term investment (cost $3,000) for cash of $3,000.
6) Recorded cash sales of $400,000.
7) Bought inventory for cash of $160,000.
8) Acquired an investment in Zynga stock for cash of $21,000.
9) Converted bonds payable to common stock in the amount of $500,000.
10) Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by operating activities?

Accepted Answer

A)  $305,000. 
B)  $290,000. 
C)  $240,000. 
D)  $180,000. 
A)  $305,000. 
B)  $290,000. 
C)  $240,000. 
D)  $180,000.

Question 16

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 17

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 18

Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate where, if at all, stock issued for equipment 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 19

Zoum Corporation had the following transactions during 2014:
1) Issued $125,000 of par value common stock for cash.
2) Recorded and paid wages expense of $60,000.
3) Acquired land by issuing common stock of par value $50,000.
4) Declared and paid a cash dividend of $10,000.
5) Sold a long-term investment (cost $3,000) for cash of $3,000.
6) Recorded cash sales of $400,000.
7) Bought inventory for cash of $160,000.
8) Acquired an investment in Zynga stock for cash of $21,000.
9) Converted bonds payable to common stock in the amount of $500,000.
10) Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by financing activities?

Accepted Answer

A)  $. 
B)  $395,000. 
C)  $. 
D)  $115,000. 
A)  $. 
B)  $395,000. 
C)  $. 
D)  $115,000.

Question 20

A company would be expected to generate small amounts of cash from operations 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.

Which of the following is the first step in preparing the statement of cash flows?

Assume that the E-Zip 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.

Land costing $125,000 was sold for $325,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Distinguish among the three activities reported in the statement of cash flows.

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

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

Which of the following transactions does not affect cash during a period?

Which one of the following affects cash during a period?

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash and cash _.

If accounts receivable have increased during the period

All of the following adjustments are added to net income in computing net cash provided by operating activities except

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

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

Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate where, if at all, stock issued for equipment would be classified on the statement of cash flows.

A company would be expected to generate small amounts of cash from operations during the

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 and Acquisitions in Accounting

Filters

Exam 12: Statement of Cash Flows

Which of the following is the first step in preparing the statement of cash flows?

Assume that the E-Zip 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.

Land costing $125,000 was sold for $325,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Distinguish among the three activities reported in the statement of cash flows.

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

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

Which of the following transactions does not affect cash during a period?

Which one of the following affects cash during a period?

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash ________________________ and cash _________________________.

If accounts receivable have increased during the period

All of the following adjustments are added to net income in computing net cash provided by operating activities except

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

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

Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate where, if at all, stock issued for equipment would be classified on the statement of cash flows.

A company would be expected to generate small amounts of cash from operations during the

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 and Acquisitions in Accounting

Filters

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash and cash _.