Question 1

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

Match each of the following items with the appropriate definitions.
-A method of computing and reporting the net cash provided (used)by operating activities that lists the major items of operating cash receipts,and then subtracts the major items of operating cash payments.

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 3

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

Accepted Answer

A)  Credit sales. 
B)  Cash collections from customers. 
C)  Depreciation expense. 
D)  Cash received from the sale of a building. 
E)  Cash received from the sale of treasury stock. 
A)  Credit sales. 
B)  Cash collections from customers. 
C)  Depreciation expense. 
D)  Cash received from the sale of a building. 
E)  Cash received from the sale of treasury stock.

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 investing 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)  ($107,700). 
B)  $107,700. 
C)  ($200,000). 
D)  ($139,700). 
E)  ($207,700). 
A)  ($107,700). 
B)  $107,700. 
C)  ($200,000). 
D)  ($139,700). 
E)  ($207,700).

Question 5

A company had average total assets of $1,660,000,total cash flows of $1,320,000,cash flows from operations of $205,000,and cash flows from financing of $750,000.The cash flow on total assets ratio equals:

Accepted Answer

A)  45.2%. 
B)  22.0%. 
C)  11.65%. 
D)  12.3%. 
E)  79.5%. 
A)  45.2%. 
B)  22.0%. 
C)  11.65%. 
D)  12.3%. 
E)  79.5%.

Question 6

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Accepted Answer

A) True 
 B)False

Question 7

Babson reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year.Babson's net cash flows from operations were $2,204 million.Calculate the cash flow on total assets ratio for Babson.

Accepted Answer

Cash Flow on Total Assets = Ca

Question 8

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Accepted Answer

A) True 
 B)False

Question 9

Based on the information provided below for Krackle Corp.,complete the following worksheet to be used to prepare the statement of cash flows using the indirect method.
(a)Net income for the year was $30,000.
(b)Dividends of $10,000 were declared and paid.
(c)Krackle's only noncash expense was depreciation which totaled $50,000.
(d)The company purchased plant assets for $70,000.
(e)Notes payable in the amount of $40,000 were issued during the year for cash.

Accepted Answer

The answer of Based on the information provided below for...

Question 10

Investing activities include receiving cash dividends from investments in other companies' stocks.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

Accepted Answer

A) True 
 B)False

Question 13

Bagwell's net income for the year ended December 31,Year 2 was $175,000.Information from Bagwell's comparative balance sheets is given below.Compute the cash paid for dividends during Year 2.
$$\begin{array} { | l | r | r | } 
\hline \text { At December 31 } & \text { Year 2 } & \text { Year 1 } \
\hline \text { Common Stock, \$5 par value } & \$ 500,000& \$ 450,000\
\hline \text { Paid-in capital in excess of par } & 948,000 & 853,000 \
\hline \text { Retained earnings } & 688,000 & 582,000 \
\hline
\end{array}$$

Accepted Answer

A)  $79,000. 
B)  $201,000. 
C)  $95,000. 
D)  $50,000. 
E)  $69,000. 
A)  $79,000. 
B)  $201,000. 
C)  $95,000. 
D)  $50,000. 
E)  $69,000.

Question 14

The payment of cash dividends to shareholders is classified as a financing activity.

Accepted Answer

A) True 
 B)False

Question 15

If a company borrows money from a bank,the interest paid on this loan should be reported on the statement of cash flows as a(n):

Accepted Answer

A)  Operating activity. 
B)  Investing activity. 
C)  Financing activity. 
D)  Noncash investing and financing activity. 
E)  This is not reported in the statement of cash flows. 
A)  Operating activity. 
B)  Investing activity. 
C)  Financing activity. 
D)  Noncash investing and financing activity. 
E)  This is not reported in the statement of cash flows.

Question 16

The indirect 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

Question 17

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 18

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

Accepted Answer

The direct method for reporting cash flo

Question 19

The indirect method separately lists each major item of operating cash receipts and cash payments.

Accepted Answer

A) True 
 B)False

Question 20

In preparing a company's statement of cash flows for the most recent year,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 investing activities for the year were:

Accepted Answer

A)  $234,000 of net cash used. 
B)  $120,000 of net cash provided. 
C)  $340,000 of net cash used. 
D)  $259,000 of net cash used. 
E)  $280,000 of net cash provided. 
A)  $234,000 of net cash used. 
B)  $120,000 of net cash provided. 
C)  $340,000 of net cash used. 
D)  $259,000 of net cash used. 
E)  $280,000 of net cash provided.

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

Match each of the following items with the appropriate definitions. -A method of computing and reporting the net cash provided (used)by operating activities that lists the major items of operating cash receipts,and then subtracts the major items of operating cash payments.

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

A company had average total assets of $1,660,000,total cash flows of $1,320,000,cash flows from operations of $205,000,and cash flows from financing of $750,000.The cash flow on total assets ratio equals:

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Babson reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year.Babson's net cash flows from operations were $2,204 million.Calculate the cash flow on total assets ratio for Babson.

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Investing activities include receiving cash dividends from investments in other companies' stocks.

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.

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

The payment of cash dividends to shareholders is classified as a financing activity.

If a company borrows money from a bank,the interest paid on this loan should be reported on the statement of cash flows as a(n):

The indirect 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.

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

The indirect method separately lists each major item of operating cash receipts and cash payments.

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 financing activities generally affect:

Match each of the following items with the appropriate definitions. -A method of computing and reporting the net cash provided (used)by operating activities that lists the major items of operating cash receipts,and then subtracts the major items of operating cash payments.

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

A company had average total assets of $1,660,000,total cash flows of $1,320,000,cash flows from operations of $205,000,and cash flows from financing of $750,000.The cash flow on total assets ratio equals:

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Babson reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year.Babson's net cash flows from operations were $2,204 million.Calculate the cash flow on total assets ratio for Babson.

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Investing activities include receiving cash dividends from investments in other companies' stocks.

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.

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

The payment of cash dividends to shareholders is classified as a financing activity.

If a company borrows money from a bank,the interest paid on this loan should be reported on the statement of cash flows as a(n):

The indirect 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.

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

The indirect method separately lists each major item of operating cash receipts and cash payments.

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