Question 1

Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

Accepted Answer

A) True 
 B)False

Question 2

The statement of cash flows cannot help address questions such as:

Accepted Answer

A)  How is the increase in investments financed? 
B)  What is the source of cash for new plant assets? 
C)  How much cash is generated from or used in operations? 
D)  How much of the company's revenues have been retained as profit? 
E)  Why is cash flow from operations different from income? 
A)  How is the increase in investments financed? 
B)  What is the source of cash for new plant assets? 
C)  How much cash is generated from or used in operations? 
D)  How much of the company's revenues have been retained as profit? 
E)  Why is cash flow from operations different from income?

Question 3

A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The total amount that should be reported in the operating section of the statement of cash flow as per indirect method is:

Accepted Answer

A)  $17,000. 
B)  $4,000. 
C)  $57,000. 
D)  $21,000. 
E)  $22,000. 
A)  $17,000. 
B)  $4,000. 
C)  $57,000. 
D)  $21,000. 
E)  $22,000.

Question 4

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 182,000 \
\hline \text { Gain on the sale of equipment } & 12,300 \
\hline \text { Proceeds from the sale of equipment } & 92,300 \
\hline \text { Depreciation expense- equipment } & 50,000 \
\hline \text { Payment of bonds at maturity } & 100,000 \
\hline \text { Purchase of land } & 200,000 \
\hline \text { Issuance of common stock } & 300,000 \
\hline \text { Increase in merchandise inventory } & 35,400 \
\hline \text { Decrease in accountsreceivable } & 28,800 \
\hline \text { Increase in accounts payable } & 23,700 \
\hline \text { Payment of cash dividends } & 32,000\
\hline 
\end{array}$$

Accepted Answer

A)  $332,200. 
B)  $236,800. 
C)  $261,400. 
D)  $186,800. 
E)  $189,400. 
A)  $332,200. 
B)  $236,800. 
C)  $261,400. 
D)  $186,800. 
E)  $189,400.

Question 5

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Accepted Answer

A) True 
 B)False

Question 6

Use the information provided to calculate the missing cash received for interest for the period.
 $\begin{array}{|l|lcc|}
 \hline \text {Interest receivable, beginning-year\ldots \ldots \ldots \ldots \ldots \ldots \ldots  } & \$800 \
 \text { Interest revenue.\ldots \ldots \ldots \ldots \ldots \ldots \ldots } &12,600\
 \hline\text {  Interest receivable, year-end.\ldots \ldots \ldots \ldots \ldots \ldots \ldots} &1,200\
\hline \text { Cash received for interest.\ldots \ldots \ldots \ldots \ldots \ldots \ldots } &\
\hline\
\hline
\end{array}$

Accepted Answer

The answer of Use the information provided to calculate the...

Question 7

A company reported average total assets of $501,000 in Year 1 and $611,000 in Year 2. Its net operating cash flow in Year 1 was $41,500 and $55,250 in Year 2. Calculate its cash flow on total assets ratio for both years. Comment on the results.

Accepted Answer

@#IMG-DLM& The company had an increase in net oper

Question 8

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

Accepted Answer

A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash financing and investing activities. 
E)  Reconciliation of cash balance. 
A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash financing and investing activities. 
E)  Reconciliation of cash balance.

Question 9

Alvez reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, a $75,000 increase in equipment, and a $100,000 decrease in notes payable. Calculate the net increase in cash for the year.

Accepted Answer

A)  $216,400. 
B)  $281,400. 
C)  $381,400. 
D)  $206,400. 
E)  $406,400. 
A)  $216,400. 
B)  $281,400. 
C)  $381,400. 
D)  $206,400. 
E)  $406,400.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $233,000
Cash dividends declared for the year 50,000
Proceeds from the sale of equipment 85,000
Gain on the sale of equipment 4,500
Cash dividends payable at the beginning of the year 22,000
Cash dividends payable at the end of the year 30,000
Net income for the year 110,000
The amount of cash paid for dividends was:

Accepted Answer

A)  $52,000. 
B)  $60,000. 
C)  $58,000. 
D)  $50,000. 
E)  $42,000. 
A)  $52,000. 
B)  $60,000. 
C)  $58,000. 
D)  $50,000. 
E)  $42,000.

Question 12

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 13

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users in the financing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 14

A company's income statement showed the following: net income, $134,000; depreciation expense, $30,000; and gain on sale of plant assets, $4,000. 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 increased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

Accepted Answer

A)  $156,600. 
B)  $141,000. 
C)  $96,600. 
D)  $148,600. 
E)  $88,600. 
A)  $156,600. 
B)  $141,000. 
C)  $96,600. 
D)  $148,600. 
E)  $88,600.

Question 15

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Accepted Answer

A) True 
 B)False

Question 16

A purchase of land in exchange for shares of stock is disclosed at the bottom of the statement of cash flows or in a note to the statement.

Accepted Answer

A) True 
 B)False

Question 17

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

Accepted Answer

A)  $(3,000). 
B)  $(60,000). 
C)  $(57,000). 
D)  $7,000. 
E)  $(7,000). 
A)  $(3,000). 
B)  $(60,000). 
C)  $(57,000). 
D)  $7,000. 
E)  $(7,000).

Question 18

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

Accepted Answer

A) True 
 B)False

Question 19

Cash flows are essentially the same as net income because they are both measured using accrual accounting principles.

Accepted Answer

A) True 
 B)False

Question 20

The use of a spreadsheet for analysis is especially useful when preparing the statement of cash flows using the ________ method.

Accepted Answer

The answer of The use of a spreadsheet for analysis...

Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

The statement of cash flows cannot help address questions such as:

A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The total amount that should be reported in the operating section of the statement of cash flow as per indirect method is:

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

A company reported average total assets of $501,000 in Year 1 and $611,000 in Year 2. Its net operating cash flow in Year 1 was $41,500 and $55,250 in Year 2. Calculate its cash flow on total assets ratio for both years. Comment on the results.

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

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

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users in the financing section of the statement of cash flows.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

A purchase of land in exchange for shares of stock is disclosed at the bottom of the statement of cash flows or in a note to the statement.

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

Cash flows are essentially the same as net income because they are both measured using accrual accounting principles.

The use of a spreadsheet for analysis is especially useful when preparing the statement of cash flows using the ________ method.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

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Exam 12: Reporting Cash Flows

Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

The statement of cash flows cannot help address questions such as:

A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The total amount that should be reported in the operating section of the statement of cash flow as per indirect method is:

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

A company reported average total assets of $501,000 in Year 1 and $611,000 in Year 2. Its net operating cash flow in Year 1 was $41,500 and $55,250 in Year 2. Calculate its cash flow on total assets ratio for both years. Comment on the results.

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

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

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users in the financing section of the statement of cash flows.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

A purchase of land in exchange for shares of stock is disclosed at the bottom of the statement of cash flows or in a note to the statement.

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

Cash flows are essentially the same as net income because they are both measured using accrual accounting principles.

The use of a spreadsheet for analysis is especially useful when preparing the statement of cash flows using the ________ method.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters