Question 1

Accrual based accounting allows investors to better evaluate a company's ability to generate cash flow.

Accepted Answer

A) True 
 B)False

Question 2

Free cash flow is a measure of discretionary cash flow of a company.

Accepted Answer

A) True 
 B)False

Question 3

To calculate the net cash provided by operating activities under the indirect method, profit is adjusted for items which do not affect cash.

Accepted Answer

A) True 
 B)False

Question 4

Free cash flow is the amount of cash provided by investing activities reduced by the amount of cash provided by operating activities.

Accepted Answer

A) True 
 B)False

Question 5

Boone Inc. reports the following: $\begin{array}{lrr}&\text { End of Year }&\text { Beginning of Year }\
\text { Inventory } & \$ 25,000 & \$ 40,000 \
\text { Accounts Payable } & 30,000 & 10,000
\end{array}$ If cost of goods sold for the year is $150,000, the amount of cash paid to suppliers is

Accepted Answer

A)  $155,000. 
B)  $145,000. 
C)  $115,000. 
D)  $185,000. 
A)  $155,000. 
B)  $145,000. 
C)  $115,000. 
D)  $185,000.

Question 6

When equipment is sold for cash, the amount received is reflected as a cash

Accepted Answer

A)  inflow in the operating section. 
B)  inflow in the financing section. 
C)  inflow in the investing section. 
D)  outflow in the operating section. 
A)  inflow in the operating section. 
B)  inflow in the financing section. 
C)  inflow in the investing section. 
D)  outflow in the operating section.

Question 7

During 2014, McBride Distributors Inc. had the following transactions and events:   Instructions
Prepare McBride's cash flow statement for the year ended December 31, 2014, using the direct method.

Accepted Answer

The answer of During 2014, McBride Distributors Inc. had the...

Question 8

Which of the following would be subtracted from profit using the indirect method?

Accepted Answer

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

Question 9

The following information is available for Malson Corporation for the year ended December 31, 2014:   
In addition, the following information is available from the comparative balance sheet for Malson at the end of 2013 and 2014:   Instructions
Prepare Malson's cash flow statement for the year ended December 31, 2014, using the indirect method.

Accepted Answer

The answer of The following information is available for Malson...

Question 10

All of the following are examples of significant noncash activities EXCEPT

Accepted Answer

A)  the issue of common shares to purchase an asset. 
B)  the write-off of an uncollectible account receivable. 
C)  the issue of debt to purchase an asset. 
D)  the conversion of bonds into common shares. 
A)  the issue of common shares to purchase an asset. 
B)  the write-off of an uncollectible account receivable. 
C)  the issue of debt to purchase an asset. 
D)  the conversion of bonds into common shares.

Question 11

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

Accepted Answer

A)  added to profit. 
B)  deducted from profit. 
C)  ignored because it does not affect cash. 
D)  not reported on a cash flow statement. 
A)  added to profit. 
B)  deducted from profit. 
C)  ignored because it does not affect cash. 
D)  not reported on a cash flow statement.

Question 12

Jankowski Corporation reports a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of goods sold for the year was $150,000. The cash payments made to suppliers were

Accepted Answer

A)  $150,000. 
B)  $160,000. 
C)  $130,000. 
D)  $145,000. 
A)  $150,000. 
B)  $160,000. 
C)  $130,000. 
D)  $145,000.

Question 13

Mobile Corp. has other operating expenses of $60,000. There has been a decrease in prepaid expenses of $4,000 during the year, and accrued liabilities are $6,000 larger than in the prior period. What were Mobile's cash payments for operating expenses?

Accepted Answer

A)  $62,000 
B)  $58,000 
C)  $50,000 
D)  $70,000 
A)  $62,000 
B)  $58,000 
C)  $50,000 
D)  $70,000

Question 14

In the direct method, cash payments for interest would include the interest expense minus a decrease in interest payable during the period.

Accepted Answer

A) True 
 B)False

Question 15

Free cash flow is equal to

Accepted Answer

A)  cash flow from operating activities. 
B)  cash flow from financing activities. 
C)  cash flow from investing activities. 
D)  cash flow from operating activities less cash flow from investing activities. 
A)  cash flow from operating activities. 
B)  cash flow from financing activities. 
C)  cash flow from investing activities. 
D)  cash flow from operating activities less cash flow from investing activities.

Question 16

The cash flow statement is an optional statement when preparing the financial statements of a company.

Accepted Answer

A) True 
 B)False

Question 17

Condensed financial data of Shannon Corporation appear below:   Additional information:
1. New equipment costing $85,000 was purchased for cash in 2014.
2. Old equipment costing $25,000 was sold for $10,000 cash when carrying amount was $13,000.
3. Bonds with a face value of $20,000 were converted into $20,000 of common shares.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Instructions
a. Prepare a cash flow statement for the year, using the direct method.
b. Calculate free cash flow.

Accepted Answer

a.
 @#IMG-DLM& b. Free cash flow = Cash

Question 18

Cash outflows from operating activities of a private company reporting under ASPE include all of the following EXCEPT payments to

Accepted Answer

A)  suppliers for inventory. 
B)  employees for services. 
C)  lenders for interest. 
D)  shareholders for dividends. 
A)  suppliers for inventory. 
B)  employees for services. 
C)  lenders for interest. 
D)  shareholders for dividends.

Question 19

Operating activities do not include cash flows

Accepted Answer

A)  from revenue 
B)  from sale of equipment 
C)  for income tax 
D)  for wages. 
A)  from revenue 
B)  from sale of equipment 
C)  for income tax 
D)  for wages.

Question 20

A company had profit of $230,000. Depreciation expense is $26,000. During the year, Accounts Receivable and Inventory increased $15,000 and $40,000, respectively. Prepaid Expenses and Accounts Payable decreased $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much cash was provided by operating activities?

Accepted Answer

A)  $196,000 
B)  $202,000 
C)  $276,000 
D)  $288,000 
A)  $196,000 
B)  $202,000 
C)  $276,000 
D)  $288,000

Accrual based accounting allows investors to better evaluate a company's ability to generate cash flow.

Free cash flow is a measure of discretionary cash flow of a company.

To calculate the net cash provided by operating activities under the indirect method, profit is adjusted for items which do not affect cash.

Free cash flow is the amount of cash provided by investing activities reduced by the amount of cash provided by operating activities.

Boone Inc. reports the following: End of Year Beginning of Year Inventory \ 25,000 \ 40,000 Accounts Payable 30,000 10,000 If cost of goods sold for the year is $150,000, the amount of cash paid to suppliers is

When equipment is sold for cash, the amount received is reflected as a cash

During 2014, McBride Distributors Inc. had the following transactions and events: Instructions Prepare McBride's cash flow statement for the year ended December 31, 2014, using the direct method.

Which of the following would be subtracted from profit using the indirect method?

All of the following are examples of significant noncash activities EXCEPT

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

Jankowski Corporation reports a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of goods sold for the year was $150,000. The cash payments made to suppliers were

Mobile Corp. has other operating expenses of $60,000. There has been a decrease in prepaid expenses of $4,000 during the year, and accrued liabilities are $6,000 larger than in the prior period. What were Mobile's cash payments for operating expenses?

In the direct method, cash payments for interest would include the interest expense minus a decrease in interest payable during the period.

Free cash flow is equal to

The cash flow statement is an optional statement when preparing the financial statements of a company.

Cash outflows from operating activities of a private company reporting under ASPE include all of the following EXCEPT payments to

Operating activities do not include cash flows

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

Financial Statement Analysis

Investments

Filters

Exam 16: The Cash Flow Statement

Accrual based accounting allows investors to better evaluate a company's ability to generate cash flow.

Free cash flow is a measure of discretionary cash flow of a company.

To calculate the net cash provided by operating activities under the indirect method, profit is adjusted for items which do not affect cash.

Free cash flow is the amount of cash provided by investing activities reduced by the amount of cash provided by operating activities.

Boone Inc. reports the following: End of Year Beginning of Year Inventory \ 25,000 \ 40,000 Accounts Payable 30,000 10,000 If cost of goods sold for the year is $150,000, the amount of cash paid to suppliers is

When equipment is sold for cash, the amount received is reflected as a cash

During 2014, McBride Distributors Inc. had the following transactions and events: Instructions Prepare McBride's cash flow statement for the year ended December 31, 2014, using the direct method.

Which of the following would be subtracted from profit using the indirect method?

All of the following are examples of significant noncash activities EXCEPT

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

Jankowski Corporation reports a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of goods sold for the year was $150,000. The cash payments made to suppliers were

Mobile Corp. has other operating expenses of $60,000. There has been a decrease in prepaid expenses of $4,000 during the year, and accrued liabilities are $6,000 larger than in the prior period. What were Mobile's cash payments for operating expenses?

In the direct method, cash payments for interest would include the interest expense minus a decrease in interest payable during the period.

Free cash flow is equal to

The cash flow statement is an optional statement when preparing the financial statements of a company.

Cash outflows from operating activities of a private company reporting under ASPE include all of the following EXCEPT payments to

Operating activities do not include cash flows

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

Financial Statement Analysis

Investments

Filters