Question 1

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from investing 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

Use the information provided to calculate the cash paid for insurance for the period
 $\begin{array}{|l|c|}
\hline \text { Prepaid insurance, beginning-year. }& \$7,000 \
\hline \text { Interest expense. } &16,800 \
\hline \text {Prepaid insurance, year-end } & 3,400 \
\hline\text { Cash paid for interest }\
\hline
\end{array}$

Accepted Answer

None

Question 3

A company had net cash flows from operations of $341,000,net income of $286,000 and average total assets of $1,850,000.The cash flow on total assets ratio equals:

Accepted Answer

A)  83.9% 
B)  542.5% 
C)  15.5% 
D)  18.4% 
E)  646.9% 
A)  83.9% 
B)  542.5% 
C)  15.5% 
D)  18.4% 
E)  646.9%

Question 4

Use the following income statement and information about changes in noncash current assets and liabilities to (1)prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method and (2)compute the company's cash flow on total assets ratio for the year assuming that average total assets are $525,250.
   
Changes in current asset and current liability accounts for the year that relate to operations follow.
 $$\begin{array} { | l | r | } 
\hline \text { Increase in accounts receivable } & \$ 32,000 \
\hline \text { Increase in accounts payable (all accounts } &  \
\hline \text { payable transactions are for inventory) } &13,500\
\hline \text { Decrease in prepaid expenses } &  9,200  \
\hline \text { Decrease in merchandise inventory } &14,000\
\hline \text { Decrease in long-term notes payable } & 20,000 \
\hline
\end{array}$$

Accepted Answer

(1)
 @#IMG-DLM& (2)$

Question 5

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity.
-Received cash dividends from investments in trading securities.

Accepted Answer

A) F 
B) O 
C) N 
D) I 
A) F 
B) O 
C) N 
D) I

Question 6

Match each of the following items with the appropriate definitions.
-Activities that involve the production or purchase of merchandise and the sale of goods or services to customers,including expenditures related to administering the business.

Accepted Answer

A) Indirect method 
B) Direct method 
C) Statement of cash flows 
D) Financing activities 
E) Operating activities
F)Investing activities 
A) Indirect method 
B) Direct method 
C) Statement of cash flows 
D) Financing activities 
E) Operating activities
F)Investing activities

Question 7

A company reported net income of $318,000,operating cash flows of $218,000,total cash flows of $184,000,and average total assets of $898,000.Calculate its cash flow on total assets ratio.

Accepted Answer

Cash Flow on Total A

Question 8

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Typical cash flows from investing activities include each of the following except:

Accepted Answer

A)  Payments to purchase property, plant and equipment or other productive assets (excluding inventory). 
B)  Proceeds from collecting the principal amount of accounts receivable arising from customer sales. 
C)  Payments to buy intangible assets. 
D)  Payments to acquire held-to maturity securities of other entities, except cash equivalents. 
E)  Proceeds from the sale of equipment. 
A)  Payments to purchase property, plant and equipment or other productive assets (excluding inventory). 
B)  Proceeds from collecting the principal amount of accounts receivable arising from customer sales. 
C)  Payments to buy intangible assets. 
D)  Payments to acquire held-to maturity securities of other entities, except cash equivalents. 
E)  Proceeds from the sale of equipment.

Question 11

Preparation of the statement of cash flows does not involve:

Accepted Answer

A)  Computing the net increase or decrease in cash. 
B)  Computing and reporting net cash provided or used by operations. 
C)  Computing the profit compared to the net increase or decrease in cash. 
D)  Computing and reporting net cash provided or used by financing activities. 
E)  Computing and reporting net cash provided or used by investing activities. 
A)  Computing the net increase or decrease in cash. 
B)  Computing and reporting net cash provided or used by operations. 
C)  Computing the profit compared to the net increase or decrease in cash. 
D)  Computing and reporting net cash provided or used by financing activities. 
E)  Computing and reporting net cash provided or used by investing activities.

Question 12

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity.
-Collected accounts receivable from customers.

Accepted Answer

A) F 
B) O 
C) N 
D) I 
A) F 
B) O 
C) N 
D) I

Question 13

Use the following income statement and information about selected current assets and current liabilities for Kimberline Industries to calculate the net cash provided or used by operating activities using the indirect method.
 $\begin{array}{c}
\text {KIMBERLINE INDUSTRIES}\
\text {Income Statement}\
\text {For Year Ended December $ 31,20 \mathrm{X} 1 $}\
\begin{array}{|l|l|l|}
\hline \text { Sales } & & \$ 280,000 \
\hline \text { Cost of goods sold } & & 124,000 \
\hline \text { Gross profit from sales } & & \$ 156,000 \
\hline \text { Operating expenses: } & \
\hline \text { Salaries and wages expense } & \$ 35,000 \
\hline \text { Depreciation expense } & 11,00 \
\hline \text { Rent expense } & 27,200 \
\hline \text { Interest expense } & 3,900&77,100 \
\hline \text { Income from operations } & & \$ 78,900 \
\hline \text { Loss on sale of land } & & 4,700 \
\hline \text { Net income } & & \$ 74,200\
\hline
\end{array}\end{array}$ 
Increases and decreases of current asset and current liability accounts,all of which relate to operating activities,are as follows:
 $$\begin{array} { | l | r | } 
\hline & \text { Change } \
\hline \text { Accounts receivable increase } & \$ 3,600 \
\hline \text { Merchandise inventory decrease } & 1,700 \
\hline \text { Accounts payable increase } & 1,100 \
\hline \text { Salaries and wages payable decrease } & 2,600 \
\hline
\end{array}$$

Accepted Answer

Cash flows from operating activities
 @#LAT-DLM& A

Question 14

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.
$$\begin{array} { | l | r | } 
\hline \text { Cost of goods sold } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 735,000 \
\hline \text { Merchandise inventory, January } 1 \ldots \ldots \ldots \ldots \ldots \ldots & 84,700 \
\hline \text { Merchandise inventory, December } 31 \ldots \ldots \ldots \ldots \ldots & 82,400 \
\hline \text { Accounts payable, January } 1 \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 54,500 \
\hline \text { Accounts payable, December } 31 \ldots \ldots \ldots \ldots \ldots \ldots & 60,200 \
\hline
\end{array}$$

Accepted Answer

A)  $727,000. 
B)  $726,300. 
C)  $732,700. 
D)  $737,300. 
E)  $737,700. 
A)  $727,000. 
B)  $726,300. 
C)  $732,700. 
D)  $737,300. 
E)  $737,700.

Question 15

A company reported net income of $132,000,operating cash flows of $87,000,total cash flows of $112,000,and average total assets of $1,053,000.Calculate its cash flow on total assets ratio.

Accepted Answer

Cash Flow on Total Assets = Op

Question 16

When preparing the operating activities section of the statement of cash flows using the indirect method,non-operating gains are added to net income.

Accepted Answer

A) True 
 B)False

Question 17

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

Accepted Answer

The cash flow on total assets ratio is d

Question 18

A company's income statement showed the following: net income,$124,000 and depreciation expense,$30,000.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; and accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.

Accepted Answer

A)  $118,000. 
B)  $159,200. 
C)  $123,200. 
D)  $148,800. 
E)  $178,000. 
A)  $118,000. 
B)  $159,200. 
C)  $123,200. 
D)  $148,800. 
E)  $178,000.

Question 19

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 financing activities:
$\begin{array}{|l|r|}
\hline \text { Net income } & \$ 182,000 \
\hline \text { Gain on the sale of equipment } & 12,300 \
\hline \text { Proceeds from the sale of equipment } & 92,300 \
\hline \text { Depreciation expense }- \text { equipment } & 50,000 \
\hline \text { Payment of bonds at maturity } & 100,000 \
\hline \text { Purchase of land } & 200,000 \
\hline \text { Issuance of common stock } & 300,000 \
\hline \text { Increase in merchandise inventory } & 35,400 \
\hline \text { Decrease in accounts receivable } & 28,800 \
\hline \text { Increase in accounts payable } & 23,700 \
\hline \text { Payment of cash dividends } & 32,000\
\hline
\end{array}$

Accepted Answer

A)  ($168,000). 
B)  $200,000. 
C)  $168,000. 
D)  ($191,700). 
E)  $191,700. 
A)  ($168,000). 
B)  $200,000. 
C)  $168,000. 
D)  ($191,700). 
E)  $191,700.

Question 20

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Accepted Answer

A) True 
 B)False

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

Use the information provided to calculate the cash paid for insurance for the period Prepaid insurance, beginning-year. \7 ,000 Interest expense. 16,800 Prepaid insurance, year-end 3,400 Cash paid for interest

A company had net cash flows from operations of $341,000,net income of $286,000 and average total assets of $1,850,000.The cash flow on total assets ratio equals:

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity. -Received cash dividends from investments in trading securities.

Match each of the following items with the appropriate definitions. -Activities that involve the production or purchase of merchandise and the sale of goods or services to customers,including expenditures related to administering the business.

A company reported net income of $318,000,operating cash flows of $218,000,total cash flows of $184,000,and average total assets of $898,000.Calculate its cash flow on total assets ratio.

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

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:

Typical cash flows from investing activities include each of the following except:

Preparation of the statement of cash flows does not involve:

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity. -Collected accounts receivable from customers.

A company reported net income of $132,000,operating cash flows of $87,000,total cash flows of $112,000,and average total assets of $1,053,000.Calculate its cash flow on total assets ratio.

When preparing the operating activities section of the statement of cash flows using the indirect method,non-operating gains are added to net income.

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 12: Reporting Cash Flows

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

Use the information provided to calculate the cash paid for insurance for the period Prepaid insurance, beginning-year. \7 ,000 Interest expense. 16,800 Prepaid insurance, year-end 3,400 Cash paid for interest

A company had net cash flows from operations of $341,000,net income of $286,000 and average total assets of $1,850,000.The cash flow on total assets ratio equals:

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity. -Received cash dividends from investments in trading securities.

Match each of the following items with the appropriate definitions. -Activities that involve the production or purchase of merchandise and the sale of goods or services to customers,including expenditures related to administering the business.

A company reported net income of $318,000,operating cash flows of $218,000,total cash flows of $184,000,and average total assets of $898,000.Calculate its cash flow on total assets ratio.

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

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:

Typical cash flows from investing activities include each of the following except:

Preparation of the statement of cash flows does not involve:

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity. -Collected accounts receivable from customers.

A company reported net income of $132,000,operating cash flows of $87,000,total cash flows of $112,000,and average total assets of $1,053,000.Calculate its cash flow on total assets ratio.

When preparing the operating activities section of the statement of cash flows using the indirect method,non-operating gains are added to net income.

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Accounting in Business

Analyzing for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters