Question 1

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Accepted Answer

A)  two cash effects must be netted and presented as one item 
B)  cash inflow and cash outflow must be reported separately 
C)  cash outflow is only is presented 
D)  cash inflow and cash outflow can either be reported separately or presented as one item 
A)  two cash effects must be netted and presented as one item 
B)  cash inflow and cash outflow must be reported separately 
C)  cash outflow is only is presented 
D)  cash inflow and cash outflow can either be reported separately or presented as one item

Question 2

Using the indirect approach, noncash charges in the income statement are ___________ to net income and noncash credits are ______________ to compute cash provided by operations.

Accepted Answer

The answer of Using the indirect approach, noncash charges in...

Question 3

If accounts receivable increase during a period, revenues on an accrual basis are ______________ than revenues on a cash basis.

Accepted Answer

The answer of If accounts receivable increase during a period,...

Question 4

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 5

During the growth phase, a company will start to generate small amounts of cash _______________.

Accepted Answer

The answer of During the growth phase, a company will...

Question 6

The cash debt coverage ratio indicates a company's ability to repay its liabilities from cash generated from operations.

Accepted Answer

A) True 
 B)False

Question 7

Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.

Accepted Answer

The answer of Assume the indirect method is used to...

Question 8

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

Accepted Answer

A)  added to net income. 
B)  deducted from net income. 
C)  ignored because it does not affect cash. 
D)  not reported on a statement of cash flows. 
A)  added to net income. 
B)  deducted from net income. 
C)  ignored because it does not affect cash. 
D)  not reported on a statement of cash flows.

Question 9

Which of the following would not be an adjustment to net income using the indirect method?

Accepted Answer

A)  Depreciation Expense. 
B)  An increase in Prepaid Insurance. 
C)  Amortization Expense. 
D)  An increase in Land. 
A)  Depreciation Expense. 
B)  An increase in Prepaid Insurance. 
C)  Amortization Expense. 
D)  An increase in Land.

Question 10

In Jackson Jones Company, land decreased $180,000 because of a cash sale for $180,000, the equipment account increased $60,000 as a result of a cash purchase, and Bonds Payable increased $200,000 from issuance for cash at face value. The net cash provided by investing activities is

Accepted Answer

A)  $180,000. 
B)  $320,000. 
C)  $120,000. 
D)  $140,000. 
A)  $180,000. 
B)  $320,000. 
C)  $120,000. 
D)  $140,000.

Question 11

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

Accepted Answer

A)  Determine the change in cash. 
B)  Determine the cash provided by operations. 
C)  Determine cash from financing and investing activities. 
D)  Determine the cash in each of the bank accounts. 
A)  Determine the change in cash. 
B)  Determine the cash provided by operations. 
C)  Determine cash from financing and investing activities. 
D)  Determine the cash in each of the bank accounts.

Question 12

The information in the following table is from the statement of cash flows for a company at four different points in time (Period 1, Period 2, Period 3, and Period 4). Negative values are presented in parentheses. $$\begin{array} { | l | r | r | r | r | } 
\hline & \text { Period 1 } & \text { Period 2 } & \text { Period 3 } & \text { Period 4 } \
\hline \text { Cash provided by operations } & \$ & \$ 90,000 & \$ 360,000 & \$ 50,000 \
& ( 180,000 ) & & & \
\hline \text { Cash provided by investing } & ( 300,000 ) & 75,000 & 90,000 & ( 120,000 ) \
\hline \text { Cash provided by financing } & 290,000 & ( 220,000 ) & ( \$ 170,000 ) & \$ 420,000 \
\hline \text { Net income } & ( 120,000 ) & 30,000 & 300,000 & ( 15,000 ) \
\hline
\end{array}$$ Based on this information, which of the following answers most likely corresponds with the introductory phase, growth phase, maturity phase, or decline phase?

Accepted Answer

A)  Period 2, Period 1, Period 3, Period 4. 
B)  Period 1, Period 4, Period 3, Period 2. 
C)  Period 3, Period 4, Period 1, Period 2. 
D)  Period 4, Period 3, Period 2, Period 1. 
A)  Period 2, Period 1, Period 3, Period 4. 
B)  Period 1, Period 4, Period 3, Period 2. 
C)  Period 3, Period 4, Period 1, Period 2. 
D)  Period 4, Period 3, Period 2, Period 1.

Question 13

Lake Norman Company reported net income of $225,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: $\begin{array}{lrr}&\text { End of Year }&\text { Beginning of Year }\
\text { Cash } & \$ 20,000 & \$ 15,000 \
\text { Accounts receivable } & 22,000 & 32,000 \
\text { Inventory } & 50,000 & 60,000 \
\text { Accounts pavable } & 12,000 & 18,000
\end{array}$ Instructions
Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Accepted Answer

The answer of Lake Norman Company reported net income of...

Question 14

If $1,200,000 of bonds are issued during the year but $2,500,000 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 $1,300,000. 
B)  net decrease in cash of $1,200,000. 
C)  increase in cash of $1,200,000 and a decrease in cash of $2,500,000. 
D)  net loss on retirement of bonds of $1,300,000. 
A)  net increase in cash of $1,300,000. 
B)  net decrease in cash of $1,200,000. 
C)  increase in cash of $1,200,000 and a decrease in cash of $2,500,000. 
D)  net loss on retirement of bonds of $1,300,000.

Question 15

Which of the following activities is excluded from the statement of cash flows under IFRS?

Accepted Answer

A)  Financing activities 
B)  Investing activities 
C)  Noncash investing and financing activities 
D)  operating activities 
A)  Financing activities 
B)  Investing activities 
C)  Noncash investing and financing activities 
D)  operating activities

Question 16

Match between columns
                        Premises: Decrease in accounts payable during a period
Acquisition of land in exchange for common stock.
Loss on disposal of land.
Proceeds from sale of equipment at book value.
Declaration and payment of a cash dividend.
Issuance of common stock for cash.
Increase in inventory during a period.
Redemption of bonds for cash.
Decrease in accounts receivable during a period.
Purchase of a building for cash.

Accepted Answer

The Answer of Added to net income and Cash inflow—financing is...

Question 17

The change in cash is equal to the change in liabilities less the change in equity plus the change in noncash assets.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Which of the following would be added to net income using the indirect method?

Accepted Answer

A)  An increase in accounts receivable. 
B)  An increase in prepaid expenses. 
C)  Depreciation expense. 
D)  A decrease in accounts payable. 
A)  An increase in accounts receivable. 
B)  An increase in prepaid expenses. 
C)  Depreciation expense. 
D)  A decrease in accounts payable.

Question 20

If a company reports a net loss, it

Accepted Answer

A)  may still have a net increase in cash. 
B)  will not be able to pay cash dividends. 
C)  will not be able to get a loan. 
D)  will not be able to make capital expenditures. 
A)  may still have a net increase in cash. 
B)  will not be able to pay cash dividends. 
C)  will not be able to get a loan. 
D)  will not be able to make capital expenditures.

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Using the indirect approach, noncash charges in the income statement are _ to net income and noncash credits are ____ to compute cash provided by operations.

If accounts receivable increase during a period, revenues on an accrual basis are ______________ than revenues on a cash basis.

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

During the growth phase, a company will start to generate small amounts of cash _______________.

The cash debt coverage ratio indicates a company's ability to repay its liabilities from cash generated from operations.

Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

Which of the following would not be an adjustment to net income using the indirect method?

In Jackson Jones Company, land decreased $180,000 because of a cash sale for $180,000, the equipment account increased $60,000 as a result of a cash purchase, and Bonds Payable increased $200,000 from issuance for cash at face value. The net cash provided by investing activities is

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

If $1,200,000 of bonds are issued during the year but $2,500,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Which of the following activities is excluded from the statement of cash flows under IFRS?

The change in cash is equal to the change in liabilities less the change in equity plus the change in noncash assets.

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

Which of the following would be added to net income using the indirect method?

If a company reports a net loss, it

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

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Using the indirect approach, noncash charges in the income statement are ___________ to net income and noncash credits are ______________ to compute cash provided by operations.

If accounts receivable increase during a period, revenues on an accrual basis are ______________ than revenues on a cash basis.

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

During the growth phase, a company will start to generate small amounts of cash _______________.

The cash debt coverage ratio indicates a company's ability to repay its liabilities from cash generated from operations.

Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

Which of the following would not be an adjustment to net income using the indirect method?

In Jackson Jones Company, land decreased $180,000 because of a cash sale for $180,000, the equipment account increased $60,000 as a result of a cash purchase, and Bonds Payable increased $200,000 from issuance for cash at face value. The net cash provided by investing activities is

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

If $1,200,000 of bonds are issued during the year but $2,500,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Which of the following activities is excluded from the statement of cash flows under IFRS?

The change in cash is equal to the change in liabilities less the change in equity plus the change in noncash assets.

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

Which of the following would be added to net income using the indirect method?

If a company reports a net loss, it

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

Using the indirect approach, noncash charges in the income statement are _ to net income and noncash credits are ____ to compute cash provided by operations.