Question 1

Which of the following would be subtracted from net income on a statement of cash flows prepared by the indirect method?

Accepted Answer

A)  An increase in accounts payable 
B)  A decrease in accounts receivable 
C)  A gain from the sale of equipment 
D)  Depreciation expense 
A)  An increase in accounts payable 
B)  A decrease in accounts receivable 
C)  A gain from the sale of equipment 
D)  Depreciation expense C

Question 2

In 2012, Paula Company's statement of cash flows displayed the following pattern:   Which one of the following statements BEST describes this cash flow pattern?

Accepted Answer

A)  Paula Company is using loans and operating cash flow in order to get the cash to purchase new buildings. 
B)  Paula Company is selling buildings in order to repay long-term loans. 
C)  Paula Company is using its operating cash flow in order to get the cash to purchase new buildings. 
D)  Paula Company is decreasing the balance in its cash account. 
A)  Paula Company is using loans and operating cash flow in order to get the cash to purchase new buildings. 
B)  Paula Company is selling buildings in order to repay long-term loans. 
C)  Paula Company is using its operating cash flow in order to get the cash to purchase new buildings. 
D)  Paula Company is decreasing the balance in its cash account. D

Question 3

Significant noncash financing transactions

Accepted Answer

A)  Are included parenthetically on a statement of cash flows 
B)  Should not be disclosed at all since they are irrelevant to actual performance 
C)  Should not be disclosed in the body of a statement of cash flows but should appear elsewhere 
D)  Are deducted from net income to determine cash provided by operating activities on a statement of cash flows 
A)  Are included parenthetically on a statement of cash flows 
B)  Should not be disclosed at all since they are irrelevant to actual performance 
C)  Should not be disclosed in the body of a statement of cash flows but should appear elsewhere 
D)  Are deducted from net income to determine cash provided by operating activities on a statement of cash flows C

Question 4

Chen Company's financial statements show a net income of $184,000. The following items also appear on Chen's balance sheet:   What is Chen's net cash flow from operating activities?

Accepted Answer

A)  $216,000 
B)  $136,000 
C)  $232,000 
D)  $272,000 
A)  $216,000 
B)  $136,000 
C)  $232,000 
D)  $272,000

Question 5

On December 31, 2012, Catron Company's ledger had the following information in its cash account:
  
The transactions that are represented in Catron's cash account are as follows:
   Using this information, prepare Catron's cash flow statement using the direct method.

Accepted Answer

The transactions that are repr

Question 6

The method by which cash flows are presented on a statement of cash flows as operating cash receipts and payments is the

Accepted Answer

A)  All financial resources method 
B)  Direct method 
C)  Indirect method 
D)  Working capital method 
A)  All financial resources method 
B)  Direct method 
C)  Indirect method 
D)  Working capital method

Question 7

A loss from the sale of a building would be reported on an indirect method statement of cash flows as

Accepted Answer

A)  An addition to net income 
B)  A deduction from net income 
C)  A cash inflow from financing activities 
D)  A cash outflow from investing activities 
A)  An addition to net income 
B)  A deduction from net income 
C)  A cash inflow from financing activities 
D)  A cash outflow from investing activities

Question 8

Durning Company loaned $1,000,000 at 8 percent interest to Silva Company. Silva Company would classify the loan as a(n)

Accepted Answer

A)  Operating activity 
B)  Investing activity 
C)  Financing activity 
D)  Noncash transaction 
A)  Operating activity 
B)  Investing activity 
C)  Financing activity 
D)  Noncash transaction

Question 9

The method that begins with net income or net loss and adjusts that number for items that did not affect cash is called the

Accepted Answer

A)  Direct method 
B)  Operating method 
C)  Indirect method 
D)  Cash-equivalent method 
A)  Direct method 
B)  Operating method 
C)  Indirect method 
D)  Cash-equivalent method

Question 10

Vandalia Company reports the following selected information at year-end:

Using the direct method, compute the amount of net cash flow provided (used) by operating activities for Vandalia Company.

Accepted Answer

Using the direct method, compu

Question 11

Which of the following would be subtracted from net income on a statement of cash flows prepared by the indirect method?

Accepted Answer

A)  An increase in accounts payable 
B)  An decrease in dividends payable 
C)  Depreciation expense 
D)  A decrease in accounts receivable 
A)  An increase in accounts payable 
B)  An decrease in dividends payable 
C)  Depreciation expense 
D)  A decrease in accounts receivable

Question 12

If insurance expense is $5,000 and the beginning and ending Prepaid Insurance balances are $1,000 and $1,500, respectively, cash paid for insurance is

Accepted Answer

A)  $4,500 
B)  $5,000 
C)  $5,500 
D)  Not determinable from the information given 
A)  $4,500 
B)  $5,000 
C)  $5,500 
D)  Not determinable from the information given

Question 13

Hee Jung Company had the following information available:   Using this information, compute Hee Jung's cash provided by (paid for) operating activities.

Accepted Answer

A)  $15,500 
B)  $14,500 
C)  $13,000 
D)  $12,000 
A)  $15,500 
B)  $14,500 
C)  $13,000 
D)  $12,000

Question 14

Which of the following items would be reported on a statement of cash flows prepared by the indirect method but NOT by the direct method?

Accepted Answer

A)  Depreciation expense 
B)  Cash received from the sale of a building 
C)  Cash received from issuance of stock 
D)  Cash paid for dividends 
A)  Depreciation expense 
B)  Cash received from the sale of a building 
C)  Cash received from issuance of stock 
D)  Cash paid for dividends

Question 15

From the following data for Vargas Company, determine the net cash flow provided (used) by operating activities.

Accepted Answer

The answer of From the following data for Vargas Company,...

Question 16

Which of the following would be added to net income on a statement of cash flows prepared using the indirect method?

Accepted Answer

A)  A gain from the sale of equipment 
B)  A decrease in accounts receivable 
C)  A decrease in accounts payable 
D)  Dividends received 
A)  A gain from the sale of equipment 
B)  A decrease in accounts receivable 
C)  A decrease in accounts payable 
D)  Dividends received

Question 17

From the following information for Epperson Company, prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method.

Accepted Answer

The answer of From the following information for Epperson Company,...

Question 18

The following financial information is available for Ligutti Company:
  
-Refer to Exhibit 13-6. Additional information for Ligutti Company:
  What was the net cash provided by (used in) financing activities?

Accepted Answer

A)  $25,000 
B)  $35,000 
C)  $10,000 
D)  $45,000 
A)  $25,000 
B)  $35,000 
C)  $10,000 
D)  $45,000

Question 19

Selected balance sheet and income statement data for Fowler Inc. are presented below. The company uses the direct method in preparing its statement of cash flows.
 
- Refer to Exhibit 13-4. Given the information above, cash paid for inventory is

Accepted Answer

A)  $58,000 
B)  $60,000 
C)  $62,000 
D)  $64,000 
A)  $58,000 
B)  $60,000 
C)  $62,000 
D)  $64,000

Question 20

Which of the following is NOT a purpose of the statement of cash flows?

Accepted Answer

A)  It provides information about an entity's cash receipts and payments over a period of time. 
B)  It provides investors with information about the investing and financing activities of an entity. 
C)  It highlights changes in managerial strategy regarding investments and finances. 
D)  It measures the profitability of an entity. 
A)  It provides information about an entity's cash receipts and payments over a period of time. 
B)  It provides investors with information about the investing and financing activities of an entity. 
C)  It highlights changes in managerial strategy regarding investments and finances. 
D)  It measures the profitability of an entity.

Exam 13: Statement of Cash Flows

Which of the following would be subtracted from net income on a statement of cash flows prepared by the indirect method?

In 2012, Paula Company's statement of cash flows displayed the following pattern: Which one of the following statements BEST describes this cash flow pattern?

Significant noncash financing transactions

Chen Company's financial statements show a net income of $184,000. The following items also appear on Chen's balance sheet: What is Chen's net cash flow from operating activities?

On December 31, 2012, Catron Company's ledger had the following information in its cash account: The transactions that are represented in Catron's cash account are as follows: Using this information, prepare Catron's cash flow statement using the direct method.

The method by which cash flows are presented on a statement of cash flows as operating cash receipts and payments is the

A loss from the sale of a building would be reported on an indirect method statement of cash flows as

Durning Company loaned $1,000,000 at 8 percent interest to Silva Company. Silva Company would classify the loan as a(n)

The method that begins with net income or net loss and adjusts that number for items that did not affect cash is called the

Vandalia Company reports the following selected information at year-end: Using the direct method, compute the amount of net cash flow provided (used) by operating activities for Vandalia Company.

Which of the following would be subtracted from net income on a statement of cash flows prepared by the indirect method?

If insurance expense is $5,000 and the beginning and ending Prepaid Insurance balances are $1,000 and $1,500, respectively, cash paid for insurance is

Hee Jung Company had the following information available: Using this information, compute Hee Jung's cash provided by (paid for) operating activities.

Which of the following items would be reported on a statement of cash flows prepared by the indirect method but NOT by the direct method?

From the following data for Vargas Company, determine the net cash flow provided (used) by operating activities.

Which of the following would be added to net income on a statement of cash flows prepared using the indirect method?

From the following information for Epperson Company, prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method.

The following financial information is available for Ligutti Company: -Refer to Exhibit 13-6. Additional information for Ligutti Company: What was the net cash provided by (used in) financing activities?

Selected balance sheet and income statement data for Fowler Inc. are presented below. The company uses the direct method in preparing its statement of cash flows. - Refer to Exhibit 13-4. Given the information above, cash paid for inventory is

Which of the following is NOT a purpose of the statement of cash flows?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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