Question 1

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

Accepted Answer

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

Question 2

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 Assets = Op

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

All cash transactions eventually affect noncash ________ accounts.

Accepted Answer

The answer of All cash transactions eventually affect noncash ________...

Question 5

Match between columns
                        Premises:  Received cash dividends from investments in trading securities.
 Collected accounts receivable from customers.
 Issued bonds payable for cash.
 Paid wages to employees.
 Issued stock for cash.
 Sold equipment for cash.
 Purchased land in exchange for a note payable.
 Paid cash dividends.
 Received interest from investments in trading securities.
 Purchases of land for cash.

Accepted Answer

The Answer of (O) operating activity and (I) investing activity is...

Question 6

A cash coverage of growth ratio of less than 1 indicates cash inadequacy to meet asset growth.

Accepted Answer

A) True 
 B)False

Question 7

Investing activities do not include the:

Accepted Answer

A)  Sale of short-term investments other than cash equivalents. 
B)  Sale of plant assets. 
C)  Lending and collecting on notes receivable. 
D)  Issuance of common stock. 
E)  Purchase of plant assets. 
A)  Sale of short-term investments other than cash equivalents. 
B)  Sale of plant assets. 
C)  Lending and collecting on notes receivable. 
D)  Issuance of common stock. 
E)  Purchase of plant assets.

Question 8

The cash flow on total assets ratio compared to the total assets ratio can be used as an indicator of earnings quality.

Accepted Answer

A) True 
 B)False

Question 9

A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

Accepted Answer

A)  20.0%. 
B)  24.0%. 
C)  5.0%. 
D)  20.8%. 
E)  4.8%. 
A)  20.0%. 
B)  24.0%. 
C)  5.0%. 
D)  20.8%. 
E)  4.8%.

Question 10

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $$\begin{array} { l l | l } 
\text { Cost d goods sold } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 226,000 \
\hline \text { Merchandise inventory. January } 1 \ldots \ldots \ldots \ldots \ldots \ldots & 54,800 \
\hline \text { Mer chandise inventory. December } 31 \ldots \ldots \ldots \ldots \ldots & 57,400 \
\hline \text { Accounts payable, January } 1 \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 54,400 \
\hline \text { Accounts payable, December } 31 \ldots \ldots \ldots \ldots \ldots \ldots & 59,800
\end{array}$$

Accepted Answer

A)  $234,000. 
B)  $220,000. 
C)  $223,200. 
D)  $218,000. 
E)  $228,800. 
A)  $234,000. 
B)  $220,000. 
C)  $223,200. 
D)  $218,000. 
E)  $228,800.

Question 11

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,...

Question 12

The cash flow on total assets ratio is calculated by:

Accepted Answer

A)  Dividing cash flows from operations by average total assets. 
B)  Dividing total cash flows by average total assets. 
C)  Dividing average total assets by cash flows from investing activities. 
D)  Total cash flows divided by average total assets times 365. 
E)  Dividing average total assets by total cash flows. 
A)  Dividing cash flows from operations by average total assets. 
B)  Dividing total cash flows by average total assets. 
C)  Dividing average total assets by cash flows from investing activities. 
D)  Total cash flows divided by average total assets times 365. 
E)  Dividing average total assets by total cash flows.

Question 13

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the indirect method.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:
 $\begin{array}{ll}
\text { Cash dividends declared for the year }&\$40,000\
\text { Cash dividends payable at the beginning of the year } & 17,000 \
\text { Cash dividends payable at the end of the year } & 13,000
\end{array}$

$\text { The amount of cash paid for dividends was: }$

A) $\$ 57,000$.
B) $\$ 53,000$.
C) $\$ 36,000$.
D) $\$ 40,000$.
E) $\$ 44,000$

Accepted Answer

The answer of Marshland Company is preparing the company's statement...

Question 16

Describe the format of the statement of cash flows, including the reporting of significant noncash investing and financing activities.

Accepted Answer

The statement of cash flows involves rep

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

When using a spreadsheet to prepare the statement of cash flows, an increase in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Accepted Answer

A) True 
 B)False

Question 19

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 16: Reporting the Statement of Cash Flows

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

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.

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

All cash transactions eventually affect noncash ________ accounts.

A cash coverage of growth ratio of less than 1 indicates cash inadequacy to meet asset growth.

Investing activities do not include the:

The cash flow on total assets ratio compared to the total assets ratio can be used as an indicator of earnings quality.

A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

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

The cash flow on total assets ratio is calculated by:

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the indirect method.

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

Describe the format of the statement of cash flows, including the reporting of significant noncash investing and financing activities.

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

When using a spreadsheet to prepare the statement of cash flows, an increase in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

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

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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