Question 1

The statement of cash flows explains the difference between net income as shown on the income statement and the net cash flows generated from operations.

Accepted Answer

A) True 
 B)False

Question 2

Using the indirect method,calculate the amount of net cash flows from operating activities from the following data.Show your work.
 $\begin{array}{lrlr}
\text { Net Income } & \$ 63,000 & \text { Beginning Accounts Payable } & \$ 3,000 \
\text { Beginning Accounts } & & \text { Ending Accounts Payable } & 2,800 \
\text { Receivable } & 5,000 & \text { Depreciation Expense } & 10,200 \
\text { Ending Accounts Receivable } & 4,400 & \text { Amortization of Intangible } & \
\text { Beginning Prepaid Expenses } & 1,000 & \text { Assets } \
\text { Ending Prepaid Expenses } & 1,400 & \text { Dividends Declared and Paid } & 2,200
\end{array}$

Accepted Answer

The answer of Using the indirect method,calculate the amount of...

Question 3

Noncash investing and financing transactions

Accepted Answer

A)  appear as a separate schedule on the statement of cash flows. 
B)  appear in either the investing or financing activities section,but not both. 
C)  are excluded from the statement of cash flows. 
D)  appear in both the investing and financing activities sections. 
A)  appear as a separate schedule on the statement of cash flows. 
B)  appear in either the investing or financing activities section,but not both. 
C)  are excluded from the statement of cash flows. 
D)  appear in both the investing and financing activities sections.

Question 4

Use this information to answer the following question.

Oconee Corporation is preparing a statement of cash flows. The following transactions occurred during the year:

1. Sold machinery for $18,000 cash.
2. Purchased a building for $160,000 cash.
3. Issued $140,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $200,000 worth of stock.
5. Declared and paid a $20,000 cash dividend.

Transaction 5 would be found on the statement of cash flows in the

Accepted Answer

A)  noncash investing and financing transactions section. 
B)  cash flows from financing activities section. 
C)  cash flows from operating activities section. 
D)  cash flows from investing activities section. 
A)  noncash investing and financing transactions section. 
B)  cash flows from financing activities section. 
C)  cash flows from operating activities section. 
D)  cash flows from investing activities section.

Question 5

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

Accepted Answer

A)  Net income 
B)  Depreciation expense 
C)  Sale of a plant asset 
D)  Cash paid for wages 
A)  Net income 
B)  Depreciation expense 
C)  Sale of a plant asset 
D)  Cash paid for wages

Question 6

York Company's cash balance at December 31,2012,was $338,000.Calculate the company's cash balance at December 31,2013,given the following information for the year ended December 31,2013.Show your work.

Accepted Answer

The answer of York Company's cash balance at December 31,2012,was...

Question 7

Northbrook Corporation issued $60,000 bonds payable to acquire Machinery.The journal entry to record the transaction is:

Accepted Answer

A)  Machinery 60,000
Cash 60,000 
B)  Machinery 60,000
Bonds Payable 60,000 
C)  Bonds Payable 60,000
Machinery 60,000 
D)  Cash 60,000
Bonds Payable 60,000 
A)  Machinery 60,000
Cash 60,000 
B)  Machinery 60,000
Bonds Payable 60,000 
C)  Bonds Payable 60,000
Machinery 60,000 
D)  Cash 60,000
Bonds Payable 60,000

Question 8

The activity from the Long-Term Investments account for Rice Corporation appears below.In addition,the income statement shows a loss on the sale of investments of $16,000.
   Based on the information given,compute the amounts to be shown and indicate how they would appear on the statement of cash flows.Assume that the indirect method is being used and that the investments were purchased for cash.

Accepted Answer

@#IMG-DLM& *$101,000 cost - $16,000 loss

Question 9

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Income (assume that cash received is equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A)  Add to net income to arrive at net cash flows from operating activities 
B)  Subtract from net income to arrive at net cash flows from operating activities 
C)  Not used to adjust net income to calculate net cash flows from operating activities 
A)  Add to net income to arrive at net cash flows from operating activities 
B)  Subtract from net income to arrive at net cash flows from operating activities 
C)  Not used to adjust net income to calculate net cash flows from operating activities

Question 10

Match each definition with the correct term below.
-Indirect method

Accepted Answer

A) The method of preparing the operating section of the statement of cash flows that adjusts each item on the income statement from the accrual basis to the cash basis. 
B) The amount of cash that remains after deducting the funds a company must commit to continue operating at its planned level. 
C) Activities of a business that involve obtaining resources from stockholders and creditors,providing stockholders with a return on their investments,and repaying the amounts borrowed from creditors. 
D) Investments that can be quickly converted into cash. 
E) Activities of a business that involve the purchase and sale of property,plant,and equipment and other long-term assets.
F)The ratio of net cash flow from operating activities to average total assets.
G)Activities of a business that involve the cash inflows and outflows that enter into the determination of net income.
H)The ratio of net cash flow from operating activities to net income.
I)The method of preparing the operating section of the statement of cash flows that does not require the adjustment of each item on the income statement.
J)The ratio of net cash flow from operating activities to net sales. 
A) The method of preparing the operating section of the statement of cash flows that adjusts each item on the income statement from the accrual basis to the cash basis. 
B) The amount of cash that remains after deducting the funds a company must commit to continue operating at its planned level. 
C) Activities of a business that involve obtaining resources from stockholders and creditors,providing stockholders with a return on their investments,and repaying the amounts borrowed from creditors. 
D) Investments that can be quickly converted into cash. 
E) Activities of a business that involve the purchase and sale of property,plant,and equipment and other long-term assets.
F)The ratio of net cash flow from operating activities to average total assets.
G)Activities of a business that involve the cash inflows and outflows that enter into the determination of net income.
H)The ratio of net cash flow from operating activities to net income.
I)The method of preparing the operating section of the statement of cash flows that does not require the adjustment of each item on the income statement.
J)The ratio of net cash flow from operating activities to net sales.

Question 11

Royer Corporation engaged in this transaction:
 Abandoned fully depreciated equipment.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

A)  Investing activities section 
B)  Operating activities section 
C)  Does not represent a cash flow 
D)  Financing activities section 
A)  Investing activities section 
B)  Operating activities section 
C)  Does not represent a cash flow 
D)  Financing activities section

Question 12

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Rent Income (assume that cash received is equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A)  Add to net income to arrive at net cash flows from operating activities 
B)  Subtract from net income to arrive at net cash flows from operating activities 
C)  Not used to adjust net income to calculate net cash flows from operating activities 
A)  Add to net income to arrive at net cash flows from operating activities 
B)  Subtract from net income to arrive at net cash flows from operating activities 
C)  Not used to adjust net income to calculate net cash flows from operating activities

Question 13

Cash flows to sales is a measure of free cash flow.

Accepted Answer

A) True 
 B)False

Question 14

The statement of cash flows shows the effects on cash of a company's operating,investing,and financing activities for an accounting period.

Accepted Answer

A) True 
 B)False

Question 15

Match each definition with the correct term below.
-Investing activities

Accepted Answer

A) The method of preparing the operating section of the statement of cash flows that adjusts each item on the income statement from the accrual basis to the cash basis. 
B) The amount of cash that remains after deducting the funds a company must commit to continue operating at its planned level. 
C) Activities of a business that involve obtaining resources from stockholders and creditors,providing stockholders with a return on their investments,and repaying the amounts borrowed from creditors. 
D) Investments that can be quickly converted into cash. 
E) Activities of a business that involve the purchase and sale of property,plant,and equipment and other long-term assets.
F)The ratio of net cash flow from operating activities to average total assets.
G)Activities of a business that involve the cash inflows and outflows that enter into the determination of net income.
H)The ratio of net cash flow from operating activities to net income.
I)The method of preparing the operating section of the statement of cash flows that does not require the adjustment of each item on the income statement.
J)The ratio of net cash flow from operating activities to net sales. 
A) The method of preparing the operating section of the statement of cash flows that adjusts each item on the income statement from the accrual basis to the cash basis. 
B) The amount of cash that remains after deducting the funds a company must commit to continue operating at its planned level. 
C) Activities of a business that involve obtaining resources from stockholders and creditors,providing stockholders with a return on their investments,and repaying the amounts borrowed from creditors. 
D) Investments that can be quickly converted into cash. 
E) Activities of a business that involve the purchase and sale of property,plant,and equipment and other long-term assets.
F)The ratio of net cash flow from operating activities to average total assets.
G)Activities of a business that involve the cash inflows and outflows that enter into the determination of net income.
H)The ratio of net cash flow from operating activities to net income.
I)The method of preparing the operating section of the statement of cash flows that does not require the adjustment of each item on the income statement.
J)The ratio of net cash flow from operating activities to net sales.

Question 16

Bamberg Corporation purchased land and building with a mortgage.Indicate which section,if any,this transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

A)  Financing activities section 
B)  Operating activities section 
C)  Investing activities section 
D)  Schedule of noncash investing and financing transactions 
A)  Financing activities section 
B)  Operating activities section 
C)  Investing activities section 
D)  Schedule of noncash investing and financing transactions

Question 17

Dillon Corporation purchased investments for $240,000 cash.The journal entry to record the outflow of cash is:

Accepted Answer

A)  Investments 240,000
Cash 240,000 
B)  Cash 240,000
Investments 240,000 
C)  Investments 240,000
Purchases 240,000 
D)  Purchases 240,000
Investments 240,000 
A)  Investments 240,000
Cash 240,000 
B)  Cash 240,000
Investments 240,000 
C)  Investments 240,000
Purchases 240,000 
D)  Purchases 240,000
Investments 240,000

Question 18

Union Corporation issued 40,000 shares of $10 par value common stock for $600,000,purchased 10,000 shares of treasury stock with a par value of $20 for $150,000,and paid $20,000 in cash dividends.Net cash flows from financing activities totaled

Accepted Answer

A)  $0. 
B)  $430,000. 
C)  $280,000. 
D)  ($470,000). 
A)  $0. 
B)  $430,000. 
C)  $280,000. 
D)  ($470,000).

Question 19

In preparing a statement of cash flows using the indirect method,a decrease in an unearned revenue account should

Accepted Answer

A)  be shown as a financing activity. 
B)  be shown as a deduction from net income in computing net cash flows from operating activities. 
C)  not be shown on the statement of cash flows. 
D)  be shown as an addition to net income in computing net cash flows from operating activities. 
A)  be shown as a financing activity. 
B)  be shown as a deduction from net income in computing net cash flows from operating activities. 
C)  not be shown on the statement of cash flows. 
D)  be shown as an addition to net income in computing net cash flows from operating activities.

Question 20

Interest paid would be included in the investing activities category on the statement of cash flows.

Accepted Answer

A) True 
 B)False

The statement of cash flows explains the difference between net income as shown on the income statement and the net cash flows generated from operations.

Noncash investing and financing transactions

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

York Company's cash balance at December 31,2012,was $338,000.Calculate the company's cash balance at December 31,2013,given the following information for the year ended December 31,2013.Show your work.

Northbrook Corporation issued $60,000 bonds payable to acquire Machinery.The journal entry to record the transaction is:

Match each definition with the correct term below. -Indirect method

Royer Corporation engaged in this transaction: Abandoned fully depreciated equipment. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Cash flows to sales is a measure of free cash flow.

The statement of cash flows shows the effects on cash of a company's operating,investing,and financing activities for an accounting period.

Match each definition with the correct term below. -Investing activities

Bamberg Corporation purchased land and building with a mortgage.Indicate which section,if any,this transaction would appear in,or relate to,on a statement of cash flows.

Dillon Corporation purchased investments for $240,000 cash.The journal entry to record the outflow of cash is:

Union Corporation issued 40,000 shares of $10 par value common stock for $600,000,purchased 10,000 shares of treasury stock with a par value of $20 for $150,000,and paid $20,000 in cash dividends.Net cash flows from financing activities totaled

In preparing a statement of cash flows using the indirect method,a decrease in an unearned revenue account should

Interest paid would be included in the investing activities category on the statement of cash flows.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

Financial Performance Measurement

Investments

Filters

Exam 13: The Statement of Cash Flows

The statement of cash flows explains the difference between net income as shown on the income statement and the net cash flows generated from operations.

Noncash investing and financing transactions

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

York Company's cash balance at December 31,2012,was $338,000.Calculate the company's cash balance at December 31,2013,given the following information for the year ended December 31,2013.Show your work.

Northbrook Corporation issued $60,000 bonds payable to acquire Machinery.The journal entry to record the transaction is:

Match each definition with the correct term below. -Indirect method

Royer Corporation engaged in this transaction: Abandoned fully depreciated equipment. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Cash flows to sales is a measure of free cash flow.

The statement of cash flows shows the effects on cash of a company's operating,investing,and financing activities for an accounting period.

Match each definition with the correct term below. -Investing activities

Bamberg Corporation purchased land and building with a mortgage.Indicate which section,if any,this transaction would appear in,or relate to,on a statement of cash flows.

Dillon Corporation purchased investments for $240,000 cash.The journal entry to record the outflow of cash is:

Union Corporation issued 40,000 shares of $10 par value common stock for $600,000,purchased 10,000 shares of treasury stock with a par value of $20 for $150,000,and paid $20,000 in cash dividends.Net cash flows from financing activities totaled

In preparing a statement of cash flows using the indirect method,a decrease in an unearned revenue account should

Interest paid would be included in the investing activities category on the statement of cash flows.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

Financial Performance Measurement

Investments

Filters