Question 1

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from financing activities generally affect

Accepted Answer

A) Net income, current assets, and current liabilities. 
B) Noncurrent assets. 
C) Noncurrent liability and equity accounts. 
D) Both noncurrent assets and noncurrent liabilities. 
E) Equity accounts only. 
A) Net income, current assets, and current liabilities. 
B) Noncurrent assets. 
C) Noncurrent liability and equity accounts. 
D) Both noncurrent assets and noncurrent liabilities. 
E) Equity accounts only.

Question 2

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

Accepted Answer

A) True 
 B)False

Question 3

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used (which can be reported in the notes).

Accepted Answer

A) True 
 B)False

Question 4

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

Accepted Answer

A) Credit sales. 
B) Cash collections from customers. 
C) Depreciation expense. 
D) Cash received from the sale of a building. 
E) Cash received from the sale of treasury stock. 
A) Credit sales. 
B) Cash collections from customers. 
C) Depreciation expense. 
D) Cash received from the sale of a building. 
E) Cash received from the sale of treasury stock.

Question 5

A cash equivalent is an investment that:

Accepted Answer

A) Is readily convertible to a known amount of cash. 
B) Is sufficiently close to its maturity date so its market value is unaffected by interest rate changes. 
C) Generally is within 3 months of its maturity date. 
D) Is highly liquid. 
E) All of the choices are correct. 
A) Is readily convertible to a known amount of cash. 
B) Is sufficiently close to its maturity date so its market value is unaffected by interest rate changes. 
C) Generally is within 3 months of its maturity date. 
D) Is highly liquid. 
E) All of the choices are correct.

Question 6

Financing activities include receiving cash dividends from investments in other companies' stocks.

Accepted Answer

A) True 
 B)False

Question 7

A cash coverage ratio of less than 1 indicates cash inadequacy to meet asset growth.

Accepted Answer

A) True 
 B)False

Question 8

The following transactions and events occurred during the year.Assuming that this company uses the indirect method to report cash provided by operating activities,indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column.

Accepted Answer

The answer of The following transactions and events occurred during...

Question 9

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers,including expenditures related to administering the business,are classified as:

Accepted Answer

A) Financing activities. 
B) Investing activities. 
C) Operating activities. 
D) Direct activities. 
E) Indirect activities. 
A) Financing activities. 
B) Investing activities. 
C) Operating activities. 
D) Direct activities. 
E) Indirect activities.

Question 10

A company's income statement showed the following: net income,$124,000; depreciation expense,$30,000; and gain on sale of plant assets,$14,000.An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities:
Accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses decreased $6,200; accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.

Accepted Answer

A) $139,000. 
B) $141,000. 
C) $145,800. 
D) $155,000. 
E) $167,000. 
A) $139,000. 
B) $141,000. 
C) $145,800. 
D) $155,000. 
E) $167,000.

Question 11

Analysis reveals that a company had a net decrease in cash of $4,000 for the current year.Net cash provided by operating activities was $18,000; net cash used in investing activities was $10,000 and net cash used in financing activities was $12,000.If the year-end cash balance is $21,000,the beginning cash balance was:

Accepted Answer

A) $ 3,000. 
B) $ 7,000. 
C) $17,000. 
D) $25,000. 
E) $39,000. 
A) $ 3,000. 
B) $ 7,000. 
C) $17,000. 
D) $25,000. 
E) $39,000.

Question 12

Use the following company information to prepare a schedule of significant noncash investing and financing activities:
(a)Sold a building with a book value of $125,000 for $195,000 cash and land with a book value of $32,000 for $65,000 cash.
(b)Issued 10,000 shares of $10 par value common stock in exchange for equipment with a market value of $135,000.
(c)Retired a $100,000,10% bond by issuing another $100,000,12% bond issue.
(d)Acquired land by issuing a ten-year,9%,$44,000 note payable.

Accepted Answer

The answer of Use the following company information to prepare...

Question 13

All cash transactions eventually affect noncash ___________ accounts.

Accepted Answer

The answer of All cash transactions eventually affect noncash ___________...

Question 14

A corporation reported average total assets in Year 1 of $397,350 and $440,800 in Year 2.Its net operating cash flow for Year 1 was $35,667 and $35,790 for Year 2.Calculate the cash flow on total assets ratio for both years.Comment on the results.

Accepted Answer

@#IMG-DLM& Comment: Despite the increase

Question 15

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Accepted Answer

A) True 
 B)False

Question 16

Martin,Inc.'s,income statement is shown below.Based on this income statement and the other information provided,calculate the net cash provided by operations using the indirect method.
   Additional information:

Accepted Answer

The answer of Martin,Inc.'s,income statement is shown below.Based on this...

Question 17

A company had net cash flows from operations of $120,000,cash flows from financing of $330,000,total cash flows of $500,000,and average total assets of $2,500,000.The cash flow on total assets ratio equals:

Accepted Answer

A) 4.8%. 
B) 5.0%. 
C) 20.0%. 
D) 20.8%. 
E) 24.0%. 
A) 4.8%. 
B) 5.0%. 
C) 20.0%. 
D) 20.8%. 
E) 24.0%.

Question 18

Financing activities include (a)the purchase and sale of long-term assets,(b)the purchase and sale of short-term investments,and (c)lending and collecting on loans.

Accepted Answer

A) True 
 B)False

Question 19

When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are _____________ net income.

Accepted Answer

The answer of When preparing the operating section of the...

Question 20

In preparing a company's statement of cash flows for the year just ended,the following information is available:
  Net cash flows from financing activities for the year were:

Accepted Answer

A) $130,000 of net cash used by financing activities. 
B) $165,000 of net cash used by financing activities. 
C) $222,000 of net cash used by financing activities. 
D) $88,000 of net cash used by financing activities. 
E) $206,000 of net cash used by financing activities. 
A) $130,000 of net cash used by financing activities. 
B) $165,000 of net cash used by financing activities. 
C) $222,000 of net cash used by financing activities. 
D) $88,000 of net cash used by financing activities. 
E) $206,000 of net cash used by financing activities.

Exam 16: Reporting the Statement of Cash Flows

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from financing activities generally affect

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used (which can be reported in the notes).

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

A cash equivalent is an investment that:

Financing activities include receiving cash dividends from investments in other companies' stocks.

A cash coverage ratio of less than 1 indicates cash inadequacy to meet asset growth.

The following transactions and events occurred during the year.Assuming that this company uses the indirect method to report cash provided by operating activities,indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column.

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers,including expenditures related to administering the business,are classified as:

All cash transactions eventually affect noncash ___________ accounts.

A corporation reported average total assets in Year 1 of $397,350 and $440,800 in Year 2.Its net operating cash flow for Year 1 was $35,667 and $35,790 for Year 2.Calculate the cash flow on total assets ratio for both years.Comment on the results.

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Martin,Inc.'s,income statement is shown below.Based on this income statement and the other information provided,calculate the net cash provided by operations using the indirect method. Additional information:

A company had net cash flows from operations of $120,000,cash flows from financing of $330,000,total cash flows of $500,000,and average total assets of $2,500,000.The cash flow on total assets ratio equals:

Financing activities include (a)the purchase and sale of long-term assets,(b)the purchase and sale of short-term investments,and (c)lending and collecting on loans.

When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are _____________ net income.

In preparing a company's statement of cash flows for the year just ended,the following information is available: Net cash flows from financing activities for the year were:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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