Question 1

Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

Accepted Answer

A) True 
 B)False

Question 2

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):

Accepted Answer

A)  Short-term marketable equity security. 
B)  Operating activity. 
C)  Common stock. 
D)  Cash equivalent. 
E)  Financing activity. 
A)  Short-term marketable equity security. 
B)  Operating activity. 
C)  Common stock. 
D)  Cash equivalent. 
E)  Financing activity.

Question 3

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.
-Issued bonds payable for cash.

Accepted Answer

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

Question 4

Use the information provided to calculate the missing cash paid for merchandise for the period.
 $\begin{array}{|l|c|}
\hline \text { Accounts payable, beginning-year} & \$ 60,000 \
\hline \text { Cost of goods sold. } & 244,000 \
\hline \text { Merchandise inventory, beginning-year } & 35,000 \
\hline \text { Merchandise inventory, year-end} & 40,500 \
\hline \text { Accounts payable, year-end. } & 64,800 \
\hline\text { Cash paid for merchandise }\
\hline
\end{array}$

Accepted Answer

None

Question 5

When preparing the operating activities section of the statement of cash flows using the indirect method,depreciation is added to net income.

Accepted Answer

A) True 
 B)False

Question 6

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.
-Issued stock for cash.

Accepted Answer

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

Question 7

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 8

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Accepted Answer

A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash investing or financing activity. 
E)  This is not reported on the statement of cash flows. 
A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash investing or financing activity. 
E)  This is not reported on the statement of cash flows.

Question 9

The payment of cash dividends never changes the balance of retained earnings.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Addams's statement of cash flows?

Accepted Answer

A)  In operating activities as a source of funds. 
B)  In investing activities as a source of funds. 
C)  In investing activities as a use of funds. 
D)  In financing activities as a source of funds. 
E)  In financing activities as a use of funds. 
A)  In operating activities as a source of funds. 
B)  In investing activities as a source of funds. 
C)  In investing activities as a use of funds. 
D)  In financing activities as a source of funds. 
E)  In financing activities as a use of funds.

Question 12

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 13

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
$$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 85,300 \
\hline \text { Depreciation expense } & 12,000 \
\hline &  \
\hline \text { Gain on sale of land } &7,500 \
\hline \text { Increase in merchandise inventory } & 2,050 \
\hline \text { Increase in accounts payable } & 6,150\
\hline
\end{array}$$

Accepted Answer

A)  $69,900. 
B)  $108,900. 
C)  $93,900. 
D)  $85,700. 
E)  $81,600. 
A)  $69,900. 
B)  $108,900. 
C)  $93,900. 
D)  $85,700. 
E)  $81,600.

Question 14

For each of the following independent cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

Accepted Answer

The answer of For each of the following independent cases,use...

Question 15

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

Accepted Answer

A)  $50,000. 
B)  $5,000. 
C)  $45,000. 
D)  Zero. This is an operating activity. 
E)  Zero. This is a financing activity. 
A)  $50,000. 
B)  $5,000. 
C)  $45,000. 
D)  Zero. This is an operating activity. 
E)  Zero. This is a financing activity.

Question 16

The reporting of investing and financing activities is ________ under the direct and indirect methods of preparing the statement of cash flows.

Accepted Answer

The answer of The reporting of investing and financing activities...

Question 17

When preparing a statement of cash flows using the indirect method,each of the following should be classified as an operating cash flow except:

Accepted Answer

A)  An increase in accounts receivable. 
B)  A decrease in accounts payable. 
C)  Proceeds from the disposal of a long-term asset with no gain or loss. 
D)  An increase in prepaid expenses. 
E)  A decrease in accrued expenses payable. 
A)  An increase in accounts receivable. 
B)  A decrease in accounts payable. 
C)  Proceeds from the disposal of a long-term asset with no gain or loss. 
D)  An increase in prepaid expenses. 
E)  A decrease in accrued expenses payable.

Question 18

In preparing a company's statement of cash flows for the year just ended,the following information is available:
$$\begin{array} { | l | r | } 
\hline \text { Loss on the sale of equipment } & \$ 14,000 \
\hline \text { Purchase of equipment } & 225,000 \
\hline \text { Proceeds from the sale of equipment } & 106,000 \
\hline \text { Repayment of outstanding bonds } & 87,000 \
\hline \text { Purchase of treasury stock } & 25,000 \
\hline \text { Issuance of common stock } & 96,000 \
\hline \text { Purchase of land } & 115,000 \
\hline \text { Increase in accounts receivable during the year } & 33,000 \
\hline \text { Decrease in accounts payable during the year } & 75,000 \
\hline \text { Payment of cash dividends } & 35,000 \
\hline
\end{array}$$
Net cash flows from financing activities for the year were:

Accepted Answer

A)  $147,000 of net cash used. 
B)  $26,000 of net cash used. 
C)  $347,000 of net cash used. 
D)  $51,000 of net cash used. 
E)  $340,000 of net cash used. 
A)  $147,000 of net cash used. 
B)  $26,000 of net cash used. 
C)  $347,000 of net cash used. 
D)  $51,000 of net cash used. 
E)  $340,000 of net cash used.

Question 19

When preparing the operating activities section of the statement of cash flows using the indirect method,decreases in current operating assets are subtracted from net income.

Accepted Answer

A) True 
 B)False

Question 20

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):

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. -Issued bonds payable for cash.

When preparing the operating activities section of the statement of cash flows using the indirect method,depreciation is added to net income.

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. -Issued stock for cash.

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

The payment of cash dividends never changes the balance of retained earnings.

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

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Addams's statement of cash flows?

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income \ 85,300 Depreciation expense 12,000 Gain on sale of land 7,500 Increase in merchandise inventory 2,050 Increase in accounts payable 6,150

For each of the following independent cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

The reporting of investing and financing activities is ________ under the direct and indirect methods of preparing the statement of cash flows.

When preparing a statement of cash flows using the indirect method,each of the following should be classified as an operating cash flow except:

When preparing the operating activities section of the statement of cash flows using the indirect method,decreases in current operating assets are subtracted from net income.

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

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

Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):

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. -Issued bonds payable for cash.

When preparing the operating activities section of the statement of cash flows using the indirect method,depreciation is added to net income.

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. -Issued stock for cash.

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

The payment of cash dividends never changes the balance of retained earnings.

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

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Addams's statement of cash flows?

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income \ 85,300 Depreciation expense 12,000 Gain on sale of land 7,500 Increase in merchandise inventory 2,050 Increase in accounts payable 6,150

For each of the following independent cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

The reporting of investing and financing activities is ________ under the direct and indirect methods of preparing the statement of cash flows.

When preparing a statement of cash flows using the indirect method,each of the following should be classified as an operating cash flow except:

When preparing the operating activities section of the statement of cash flows using the indirect method,decreases in current operating assets are subtracted from net income.

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

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