Question 1

An example of operating activities is the payment of dividends.

Accepted Answer

A) True 
 B)False

Question 2

Which is not a cash outflow from an operating activity?

Accepted Answer

A) Payment for interest on a loan 
B) Payment to the government for taxes 
C) Payment to buy merchandise inventory 
D) Paying dividends to stockholders 
A) Payment for interest on a loan 
B) Payment to the government for taxes 
C) Payment to buy merchandise inventory 
D) Paying dividends to stockholders

Question 3

The following information is given for Sunny Corporation:
   The indirect method is used. The beginning Cash balance is $23,000.
Required:
Answer the following questions with the information provided above.
a)The cash flow from operating activities is ________.
b)The cash flow from investing activities is ________.
c)The cash flow from financing activities is ________.
d)The net change in cash is ________.
e)The ending balance of cash is ________.

Accepted Answer

a)$45,000 + $8,000 + $3,000 -

Question 4

Which would not go into the operating activities section of a statement of cash flows using the direct method?

Accepted Answer

A) Depreciation expense 
B) Payment for dividends 
C) Selling of plant, property and equipment 
D) All of the above 
A) Depreciation expense 
B) Payment for dividends 
C) Selling of plant, property and equipment 
D) All of the above

Question 5

Land costing $60,000 was sold for $50,000. What was the effect on the investing activities?

Accepted Answer

A) Increase $50,000 
B) Decrease $10,000 
C) Decrease $70,000 
D) Increase $10,000 
A) Increase $50,000 
B) Decrease $10,000 
C) Decrease $70,000 
D) Increase $10,000

Question 6

Identify each of the following transactions as an operating activity (O), an investing activity (I), a financing activity (F), or a transaction that is not reported on the statement of cash flows (N).
a)________ Receipt of interest
b)________ Increase of accounts payable
c)________ Borrowed money from a bank
d)________ Purchase of building for cash
e)________ Declaration of cash dividends
f)________ Sold plant equipment for cash
g)________ Increase of accounts receivable
h)________ Payment on principal of a note

Accepted Answer

a)O, b)O,

Question 7

Dividends received on investments made in the stock of other companies is an example of a financing activity.

Accepted Answer

A) True 
 B)False

Question 8

According to GAAP, the statement of cash flows is an optional statement.

Accepted Answer

A) True 
 B)False

Question 9

Using the indirect method for cash flows, depreciation expense is added to net income to determine the:

Accepted Answer

A) cash flow from investing activities. 
B) cash flow from financing activities. 
C) cash flow from operating activities. 
D) cash flow from fixed asset activities. 
A) cash flow from investing activities. 
B) cash flow from financing activities. 
C) cash flow from operating activities. 
D) cash flow from fixed asset activities.

Question 10

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 11

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 12

Operating expenses other than depreciation for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

A) $335,000. 
B) $342,000. 
C) $328,000. 
D) $7,000. 
A) $335,000. 
B) $342,000. 
C) $328,000. 
D) $7,000.

Question 13

An increase in long-term note payable would mean:

Accepted Answer

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

Question 14

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 15

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 16

Cost of merchandise sold for the year was $850,000. Inventories were $60,000 and $90,000 at the beginning and end of the year, respectively. There were no changes in accounts payable from the beginning to the end of the year. Cash payment for merchandise to be reported on the cash flow statement using the direct method is:

Accepted Answer

A) $850,000. 
B) $910,000. 
C) $940,000. 
D) $880,000. 
A) $850,000. 
B) $910,000. 
C) $940,000. 
D) $880,000.

Question 17

When a corporation pays dividends it:

Accepted Answer

A) does not affect the cash flow statement. 
B) is shown as an investing activity. 
C) is shown as a financing activity. 
D) is shown as an operating activity. 
A) does not affect the cash flow statement. 
B) is shown as an investing activity. 
C) is shown as a financing activity. 
D) is shown as an operating activity.

Question 18

A statement of cash flows:

Accepted Answer

A) has three main sections: net cash flow from operating, investing, and financing activities. 
B) may be computed directly or indirectly. 
C) is a statement used to better understand the financing and investing activities. 
D) All of the above are correct. 
A) has three main sections: net cash flow from operating, investing, and financing activities. 
B) may be computed directly or indirectly. 
C) is a statement used to better understand the financing and investing activities. 
D) All of the above are correct.

Question 19

Payments of cash dividends to stockholders would result in:

Accepted Answer

A) a decrease 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) a decrease of cash flow from financing activities. 
A) a decrease 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) a decrease of cash flow from financing activities.

Question 20

To determine cash received from customers for the cash flow statement using the direct method, a decrease in accounts receivable is added to sales.

Accepted Answer

A) True 
 B)False

Exam 21: Statement of Cash Flows

An example of operating activities is the payment of dividends.

Which is not a cash outflow from an operating activity?

Which would not go into the operating activities section of a statement of cash flows using the direct method?

Land costing $60,000 was sold for $50,000. What was the effect on the investing activities?

Dividends received on investments made in the stock of other companies is an example of a financing activity.

According to GAAP, the statement of cash flows is an optional statement.

Using the indirect method for cash flows, depreciation expense is added to net income to determine the:

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:

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

Operating expenses other than depreciation for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

An increase in long-term note payable would mean:

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

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:

When a corporation pays dividends it:

A statement of cash flows:

Payments of cash dividends to stockholders would result in:

To determine cash received from customers for the cash flow statement using the direct method, a decrease in accounts receivable is added to sales.

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

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