Question 1

Transactions involving the purchase and sale of fixed assets would be considered:

Accepted Answer

A) buying and selling activities. 
B) financing activities. 
C) operating activities. 
D) investing activities. 
A) buying and selling activities. 
B) financing activities. 
C) operating activities. 
D) investing activities.

Question 2

Which of the following is not a cash flow from investing activities?

Accepted Answer

A) Loaning cash to borrowers 
B) Payment of cash dividends 
C) Sale or purchase of land 
D) Cash received from the sales of stock 
A) Loaning cash to borrowers 
B) Payment of cash dividends 
C) Sale or purchase of land 
D) Cash received from the sales of stock

Question 3

Collins Corporation reported net income of $35,000; depreciation expenses of $20,000; an increase in Accounts Payable of $2,000; and an increase in Accounts Receivable of $3,000.Net cash flow from operating activities using the indirect method is:

Accepted Answer

A) $55,000. 
B) $54,000. 
C) $50,000. 
D) $56,000. 
A) $55,000. 
B) $54,000. 
C) $50,000. 
D) $56,000.

Question 4

Carmen's Candies' Net Income was $40,000.Other accounts that changed included: Accounts Receivable decreased by $30,000; Merchandise Inventory increased by $20,000; Accounts Payable decreased by $4,000; and Salaries Payable increased by $1,000.The amount of Net Cash Flow from Operating Activities using the indirect method is:

Accepted Answer

A) $33,000. 
B) $47,000. 
C) $53,000. 
D) $61,000. 
A) $33,000. 
B) $47,000. 
C) $53,000. 
D) $61,000.

Question 5

When comparing net cash provided by operating activities using the indirect versus direct method:

Accepted Answer

A) net cash is higher using the indirect method 
B) net cash is lower using indirect method 
C) there is no difference between the two methods 
D) depreciation expense is used in the direct method. 
A) net cash is higher using the indirect method 
B) net cash is lower using indirect method 
C) there is no difference between the two methods 
D) depreciation expense is used in the direct method.

Question 6

The cash flows from operating activities are reported by the direct method on the statement of cash flow.Determine the following:
a.If sales for the current year were $600,000 and accounts receivable decreased $25,500 during the year,what was the amount of cash received from customers?
b.If sales salaries expense for the current years was $80,000 and sales salaries payable increased $25,000 during the year,what was the amount of cash payments for sales salaries?

Accepted Answer

a.$625,500

Question 7

The cash flow statement has all of the following sections except:

Accepted Answer

A) net cash flow from managing activities. 
B) net cash flow from operating activities. 
C) net cash flow from investing activities. 
D) net cash flow from financing activities. 
A) net cash flow from managing activities. 
B) net cash flow from operating activities. 
C) net cash flow from investing activities. 
D) net cash flow from financing activities.

Question 8

Which of the following adjustments would be in error if made to net income when computing cash from operations using the indirect method?

Accepted Answer

A) Add an increase in Accounts Payable 
B) Add Depreciation Expense 
C) Add an increase in Accounts Receivable 
D) None of the above 
A) Add an increase in Accounts Payable 
B) Add Depreciation Expense 
C) Add an increase in Accounts Receivable 
D) None of the above

Question 9

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col } 4 \
\text { Financing }
\end{array} \
\hline \begin{array} { l } 
\text { Cash paid for merchandise } \
\text { inventory }
\end{array} & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 10

Of the following,which has a negative effect on the computation of cash flow from operations using the indirect method?

Accepted Answer

A) Increase in Accounts Payable 
B) Increase in Inventory 
C) Increase in Notes Payable 
D) Depreciation Expense 
A) Increase in Accounts Payable 
B) Increase in Inventory 
C) Increase in Notes Payable 
D) Depreciation Expense

Question 11

If Accounts Receivable decreases on a comparative balance sheet,this means:

Accepted Answer

A) collections were more than sales. 
B) credit sales are decreasing. 
C) credit sales are increasing more than collections. 
D) None of these answers are correct. 
A) collections were more than sales. 
B) credit sales are decreasing. 
C) credit sales are increasing more than collections. 
D) None of these answers are correct.

Question 12

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Cash received from customers } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 13

Operating activities deal with which types of accounts?

Accepted Answer

A) Current liabilities and owner's equity 
B) Current and intangible assets 
C) Current assets and current liabilities 
D) Current assets and owner's equity 
A) Current liabilities and owner's equity 
B) Current and intangible assets 
C) Current assets and current liabilities 
D) Current assets and owner's equity

Question 14

Which of the following,under the indirect method,is not a proper adjustment to net income to arrive at cash flow from operations?

Accepted Answer

A) Adding a decrease in inventory 
B) Adding an increase in salaries payable 
C) Deducting a increase in prepaid expense 
D) All are proper adjustments to net income. 
A) Adding a decrease in inventory 
B) Adding an increase in salaries payable 
C) Deducting a increase in prepaid expense 
D) All are proper adjustments to net income.

Question 15

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Increase in inventory } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 16

The income statement shows the results of the operations of the business.

Accepted Answer

A) True 
 B)False

Question 17

Issuance of common stock for cash would result in:

Accepted Answer

A) an increase of cash flow from operating activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) an increase of cash flow from investing activities. 
A) an increase of cash flow from operating activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) an increase of cash flow from investing activities.

Question 18

The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the:

Accepted Answer

A) direct method. 
B) indirect method. 
C) combination method. 
D) adjustment method. 
A) direct method. 
B) indirect method. 
C) combination method. 
D) adjustment method.

Question 19

Which of the following items would be added to Net Income to compute Net Cash Flow from Operating Activities under the indirect method?

Accepted Answer

A) A decrease in Merchandise Inventory 
B) A decrease in Accrued Payables 
C) A decrease in Accounts Payable 
D) An increase in Prepaid Insurance 
A) A decrease in Merchandise Inventory 
B) A decrease in Accrued Payables 
C) A decrease in Accounts Payable 
D) An increase in Prepaid Insurance

Question 20

Identify where each of the following transactions would be shown on the statement of cash flows when it is prepared by the indirect method.Identify each transaction as an operating activity (O),an investing activity (I),a financing activity (F),or transaction that is not reported on the statement of cash flows (N).
a)________ Paid for fire insurance in advance
b)________ Cash used to purchase new computers
c)________ Cash used to retire bonds outstanding
d)________ Depreciation expense
e)________ Cash used to purchase fixed assets
f)________ Cash proceeds from sale of the company's own stock
g)________ Bought back own stock
h)________ Received cash dividends

Accepted Answer

a)O,b)I,c)

Transactions involving the purchase and sale of fixed assets would be considered:

Which of the following is not a cash flow from investing activities?

Collins Corporation reported net income of $35,000; depreciation expenses of $20,000; an increase in Accounts Payable of $2,000; and an increase in Accounts Receivable of $3,000.Net cash flow from operating activities using the indirect method is:

When comparing net cash provided by operating activities using the indirect versus direct method:

The cash flow statement has all of the following sections except:

Which of the following adjustments would be in error if made to net income when computing cash from operations using the indirect method?

Of the following,which has a negative effect on the computation of cash flow from operations using the indirect method?

If Accounts Receivable decreases on a comparative balance sheet,this means:

Operating activities deal with which types of accounts?

Which of the following,under the indirect method,is not a proper adjustment to net income to arrive at cash flow from operations?

The income statement shows the results of the operations of the business.

Issuance of common stock for cash would result in:

The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the:

Which of the following items would be added to Net Income to compute Net Cash Flow from Operating Activities under the indirect method?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Exam 21: Statement of Cash Flows

Transactions involving the purchase and sale of fixed assets would be considered:

Which of the following is not a cash flow from investing activities?

Collins Corporation reported net income of $35,000; depreciation expenses of $20,000; an increase in Accounts Payable of $2,000; and an increase in Accounts Receivable of $3,000.Net cash flow from operating activities using the indirect method is:

When comparing net cash provided by operating activities using the indirect versus direct method:

The cash flow statement has all of the following sections except:

Which of the following adjustments would be in error if made to net income when computing cash from operations using the indirect method?

Of the following,which has a negative effect on the computation of cash flow from operations using the indirect method?

If Accounts Receivable decreases on a comparative balance sheet,this means:

Operating activities deal with which types of accounts?

Which of the following,under the indirect method,is not a proper adjustment to net income to arrive at cash flow from operations?

The income statement shows the results of the operations of the business.

Issuance of common stock for cash would result in:

The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the:

Which of the following items would be added to Net Income to compute Net Cash Flow from Operating Activities under the indirect method?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters