Question 1

The direct method of reporting cash flows from operating activities involves reconciling net income and cash flow from operations.

Accepted Answer

A) True 
 B)False

Question 2

The following items were reported on the balance sheets and income statement for Bezos Corp.: $\begin{array}{lr}
\text { Accounts payable, December } 31,2016 & \$ 4,000 \
\text { Accounts payable, December } 31,2017 & 48,000 \
\text { Operating expenses } & 286,000
\end{array}$ How would the change in accounts payable be reported in the operating activities section of the statement of cash flows under the indirect method?

Accepted Answer

A)  As an addition to operating expenses 
B)  As a deduction from operating expenses 
C)  As an addition to net income 
D)  As a deduction from net income 
A)  As an addition to operating expenses 
B)  As a deduction from operating expenses 
C)  As an addition to net income 
D)  As a deduction from net income

Question 3

__________________________ are items which are readily convertible into a known amount of cash and have an original maturity to the investor of three months or less.

Accepted Answer

The answer of __________________________ are items which are readily convertible...

Question 4

Because the cash received from the sale of long-term assets is reported in the investing activities section of the statement of cash flows, any gain or loss is built into the cash received under the direct method.

Accepted Answer

A) True 
 B)False

Question 5

Many companies report cash flow per common share on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 6

The investment in stock of another company is considered a significant activity and thus is reported on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 7

Flannery Company uses a worksheet to prepare its statement of cash flows.The company also uses the indirect method for the Operating Activities section of its statement.For each of the following changes in the balance sheet, indicate what activity it affects and whether it is an addition or deduction.
-Income taxes payable increased

Accepted Answer

A) Deducted from Operating activity 
B) Added to Operating activity 
C) Deducted from Investing activity 
D) Added to Investing activity 
E) Deducted from Financing activity
F)Added to Financing activity 
A) Deducted from Operating activity 
B) Added to Operating activity 
C) Deducted from Investing activity 
D) Added to Investing activity 
E) Deducted from Financing activity
F)Added to Financing activity

Question 8

Use the information below for Focal Point Corp.for 2016 and 2017 to answer the following question. $\begin{array}{lr}
\text { Retained earnings, December } 31,2016 & \$ 300,000 \
\text { Retained earnings, December } 31,2017 & 345,000 \
\text { Dividends payable, December } 31,2016 & 19,000 \
\text { Dividends payable, December } 31,2017 & 29,000 \
\text { Net income-2017 } & 150,000
\end{array}$ ? Assume that there were no retained earnings transactions other than those dealing with dividends and net income.How much dividends did Focal Point declare during 2017?

Accepted Answer

A)  $95,000 
B)  $105,000 
C)  $140,000 
D)  $150,000 
A)  $95,000 
B)  $105,000 
C)  $140,000 
D)  $150,000

Question 9

Which of the following financing activities results in a cash inflow?

Accepted Answer

A)  Buying treasury stock 
B)  Issuing bonds 
C)  Repaying a bank loan 
D)  Paying cash dividends 
A)  Buying treasury stock 
B)  Issuing bonds 
C)  Repaying a bank loan 
D)  Paying cash dividends

Question 10

Pilot Company reported the following information for 2016 and 2017. ? $\begin{array}{lr}
\text { Prepaid insurance, December } 31,2016 & \$ 2,400 \
\text { Prepaid insurance, December } 31,2017 & 1,500 \
\text { Insurance expense-2017 } & 14,200
\end{array}$ How much cash was paid for insurance during 2017?

Accepted Answer

A)  $13,300 
B)  $14,200 
C)  $15,100 
D)  $15,700 
A)  $13,300 
B)  $14,200 
C)  $15,100 
D)  $15,700

Question 11

Which of the following operating activities results in a cash outflow?

Accepted Answer

A)  Paying creditors for merchandise 
B)  Collecting accounts receivable 
C)  Making cash sales 
D)  Receiving deposits recorded as unearned revenue 
A)  Paying creditors for merchandise 
B)  Collecting accounts receivable 
C)  Making cash sales 
D)  Receiving deposits recorded as unearned revenue

Question 12

Use the equation presented below to answer the question that follows: $$\begin{array} { l l } 
\text { Cash } = \mathrm { CL } + & \mathrm { LTL } + \mathrm { CS } + \mathrm { RE } - \mathrm { NCCA } - \mathrm { LTA } \
\text { where: } & \mathrm { CL } = \text { Current liabilities } \
& \mathrm { LTL } = \text { Long-term liabilities } \
& \mathrm { CS } = \text { Common stock } \
& \mathrm { RE } = \text { Retained earnings } \
& \mathrm { NCCA } = \text { Noncash current assets } \
& \mathrm { LTA } = \text { Long-term assets }
\end{array}$$ ? Which of the following activities results in a cash inflow?

Accepted Answer

A)  Increases in noncash current assets (NCC
A)  
B)  Decreases in current liabilities (CL) 
C)  Increases in common stock (CS) 
D)  Decreases in retained earnings (R
E)  
A)  Increases in noncash current assets (NCC
A)  
B)  Decreases in current liabilities (CL) 
C)  Increases in common stock (CS) 
D)  Decreases in retained earnings (R
E)

Question 13

Which of the following is not an investing activity?

Accepted Answer

A)  Purchase of investments for cash. 
B)  Purchase of equipment for cash. 
C)  Sale of merchandise for cash. 
D)  Sale of land for cash. 
A)  Purchase of investments for cash. 
B)  Purchase of equipment for cash. 
C)  Sale of merchandise for cash. 
D)  Sale of land for cash.

Question 14

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

Accepted Answer

A)  Operating activities primarily involve transactions which affect noncurrent assets. 
B)  Investing activities primarily involve U.S.government securities and long-term productive assets. 
C)  Financing activities primarily involve transactions which affect current liabilities. 
D)  Different balance sheet accounts are affected depending on whether the direct or indirect method is used. 
A)  Operating activities primarily involve transactions which affect noncurrent assets. 
B)  Investing activities primarily involve U.S.government securities and long-term productive assets. 
C)  Financing activities primarily involve transactions which affect current liabilities. 
D)  Different balance sheet accounts are affected depending on whether the direct or indirect method is used.

Question 15

A decrease in retained earnings represents dividends that were ___________________ during the period, not necessarily those that were paid.

Accepted Answer

The answer of A decrease in retained earnings represents dividends...

Question 16

Determining the cash flows from operating activities generally requires analyzing each item on the income statement as well as the current asset (except cash) and current liability accounts.

Accepted Answer

A) True 
 B)False

Question 17

For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the Direct method (a) or the Indirect method (b).
-Payments on accounts payable

Accepted Answer

A) Direct 
B) Indirect 
A) Direct 
B) Indirect

Question 18

Use the information below for Barton Shipping Corp.for 2016 and 2017 to answer the following question. $\begin{array}{lr}
\text { Retained earnings, December } 31,2016 & \$ 300,000 \
\text { Retained earnings, December } 31,2017 & 345,000 \
\text { Dividends payable, December } 31,2016 & 19,000 \
\text { Dividends payable, December } 31,2017 & 29,000 \
\text { Net income-2017 } & 150,000
\end{array}$ How much cash did Barton Shipping pay for dividends during 2017?

Accepted Answer

A)  $95,000 
B)  $105,000 
C)  $115,000 
D)  $140,000 
A)  $95,000 
B)  $105,000 
C)  $115,000 
D)  $140,000

Question 19

Companies can use two different methods to report the amount of cash flow from their investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 20

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

Accepted Answer

A)  the cash flows from financing activities section 
B)  the cash flows from investing activities section 
C)  a separate schedule 
D)  the cash flows from operating activities section 
A)  the cash flows from financing activities section 
B)  the cash flows from investing activities section 
C)  a separate schedule 
D)  the cash flows from operating activities section

The direct method of reporting cash flows from operating activities involves reconciling net income and cash flow from operations.

__________________________ are items which are readily convertible into a known amount of cash and have an original maturity to the investor of three months or less.

Because the cash received from the sale of long-term assets is reported in the investing activities section of the statement of cash flows, any gain or loss is built into the cash received under the direct method.

Many companies report cash flow per common share on the statement of cash flows.

The investment in stock of another company is considered a significant activity and thus is reported on the statement of cash flows.

Which of the following financing activities results in a cash inflow?

Pilot Company reported the following information for 2016 and 2017. ? Prepaid insurance, December 31,2016 \ 2,400 Prepaid insurance, December 31,2017 1,500 Insurance expense-2017 14,200 How much cash was paid for insurance during 2017?

Which of the following operating activities results in a cash outflow?

Use the equation presented below to answer the question that follows: Cash =+ ++-- where: = Current liabilities = Long-term liabilities = Common stock = Retained earnings = Noncash current assets = Long-term assets ? Which of the following activities results in a cash inflow?

Which of the following is not an investing activity?

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

A decrease in retained earnings represents dividends that were ___________________ during the period, not necessarily those that were paid.

Determining the cash flows from operating activities generally requires analyzing each item on the income statement as well as the current asset (except cash) and current liability accounts.

For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the Direct method (a) or the Indirect method (b). -Payments on accounts payable

Companies can use two different methods to report the amount of cash flow from their investing and financing activities.

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

Exam 12: The Statement of Cash Flows

The direct method of reporting cash flows from operating activities involves reconciling net income and cash flow from operations.

__________________________ are items which are readily convertible into a known amount of cash and have an original maturity to the investor of three months or less.

Because the cash received from the sale of long-term assets is reported in the investing activities section of the statement of cash flows, any gain or loss is built into the cash received under the direct method.

Many companies report cash flow per common share on the statement of cash flows.

The investment in stock of another company is considered a significant activity and thus is reported on the statement of cash flows.

Which of the following financing activities results in a cash inflow?

Pilot Company reported the following information for 2016 and 2017. ? Prepaid insurance, December 31,2016 \ 2,400 Prepaid insurance, December 31,2017 1,500 Insurance expense-2017 14,200 How much cash was paid for insurance during 2017?

Which of the following operating activities results in a cash outflow?

Use the equation presented below to answer the question that follows: Cash =+ ++-- where: = Current liabilities = Long-term liabilities = Common stock = Retained earnings = Noncash current assets = Long-term assets ? Which of the following activities results in a cash inflow?

Which of the following is not an investing activity?

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

A decrease in retained earnings represents dividends that were ___________________ during the period, not necessarily those that were paid.

Determining the cash flows from operating activities generally requires analyzing each item on the income statement as well as the current asset (except cash) and current liability accounts.

For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the Direct method (a) or the Indirect method (b). -Payments on accounts payable

Companies can use two different methods to report the amount of cash flow from their investing and financing activities.

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities, Contingencies, and the True Value of Money

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters