Question 1

Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?

Accepted Answer

A) It should be disclosed in a supplemental schedule of noncash investing and financing activities or in a note. 
B) The acquisition of land should be reported as an investing activity and the issuance of the stock as a financing activity. 
C) It should be included in a printout of the general ledger Common Stock account with the statement of cash flows. 
D) The transaction does not need to be disclosed. 
A) It should be disclosed in a supplemental schedule of noncash investing and financing activities or in a note. 
B) The acquisition of land should be reported as an investing activity and the issuance of the stock as a financing activity. 
C) It should be included in a printout of the general ledger Common Stock account with the statement of cash flows. 
D) The transaction does not need to be disclosed. A

Question 2

Net income was $61,000 for the year.The accumulated depreciation balance increased by $14,000 over the year.There were no sales of fixed assets or changes in noncash current assets or liabilities.Under the indirect method,the cash flow from operations is $47,000.

Accepted Answer

A) True 
 B)False  False

Question 3

All the information needed to compute the cash flow adequacy ratio is found on the balance sheet.

Accepted Answer

A) True 
 B)False  False

Question 4

The purchase of merchandise is an important __________ activity for a retailer.

Accepted Answer

The answer of The purchase of merchandise is an important...

Question 5

The statement of cash flows emphasizes explanations for the change in net income.

Accepted Answer

A) True 
 B)False

Question 6

A work sheet is an alternative method to help in the preparation of a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 7

Use the selected data from the consolidated statements of cash flows for Vancouver Corporation for the years ended December 31,2018 and 2017,to answer the questions that follow.\(\begin{array}{lrr}
\text { (in thousands)}&\underline{2018}&\underline{2017}\
\text { Operating Activities:}\
\text { Net income}&\$ 6,328 & \$ 6,093 \ 
\text { Adjustments to reconcile net income to net cash provided by}\
\text {  operating activities:}\
\text { Depreci ation } & 4,475 & 4,018 \
\text { Amortization of so ftware } & 517 & 983 \
\text { Effect of restructuring charges } & (355) & (445) \
\text { Deferred income taxes } & (606) & 358 \
\text { Gain on the disposal of fixed assets and other assets } & (261) & (273) \
\text { Changes in assets and liabilities (net of businesses acquired) } & &\
\text { Accounts receivable } & (2,736) & (3,727) \
\text { Inventories } & 73 & 432 \
\text { Other assets } & 880 & (1,087) \
\text { Accounts payable and accrued li abilities } & 362 & 699 \
\text { Other liabilities } & \underline{596} & \underline{1,814} \
\text { Net cash provided by operating activities } & \underline{9,273} & \underline{\$ 8,865} \
\text { Net cash used by investing activities } & \underline{ \$(6,131) }&\underline{ \$(6,155)} \
\text { Net cash provided by financing activities } &  \$(4,993) & \$(3,090) \
\text { Cash and cash equival ents at end of year } & \underline{\$ 5,375 }&\underline{ \$ 7,106 }\
\end{array}\)

Required
(A)What method does Vancouver use to calculate the net cash provided by operating activities?
 (B)In 2018,why are depreciation and amortization expenses added back to net income in the Operating Activities section of the statement of cash flows?

Accepted Answer

(A)Indirect method
?
(B)These items are

Question 8

Which balance sheet accounts are most affected by financing activities?

Accepted Answer

A) Current assets 
B) Current liabilities 
C) Long-term assets 
D) Long-term liabilities and stockholders' equity 
A) Current assets 
B) Current liabilities 
C) Long-term assets 
D) Long-term liabilities and stockholders' equity

Question 9

During 2017,the accounts payable balance of Andreas Corp.decreased.Which of the following statements is true?

Accepted Answer

A) This decrease indicates that Andreas paid less during the period than it recognized as expenses on the income statement. 
B) This decrease is added to net income in the Operating Activities section of a statement of cash flows prepared under the indirect method. 
C) This decrease is deducted from net income in the Operating Activities section of a statement of cash flows prepared under the indirect method. 
D) This decrease is considered only when the Operating Activities section of a statement of cash flows is prepared under the direct method. 
A) This decrease indicates that Andreas paid less during the period than it recognized as expenses on the income statement. 
B) This decrease is added to net income in the Operating Activities section of a statement of cash flows prepared under the indirect method. 
C) This decrease is deducted from net income in the Operating Activities section of a statement of cash flows prepared under the indirect method. 
D) This decrease is considered only when the Operating Activities section of a statement of cash flows is prepared under the direct method.

Question 10

Occasionally,companies engage in important investing and financing activities that do not affect cash.If the amount of the transaction is significant,how should it be disclosed when financial statements are prepared?

Accepted Answer

A) It should be disclosed in the Investing section if the amount of investing activities is greater than the financing activities amount. 
B) It should be disclosed in the Financing section if the amount of financing activities is greater than the investing activities amount. 
C) It should be disclosed in a note to the financial statements or in a supplemental schedule. 
D) The transaction does not need to be disclosed. 
A) It should be disclosed in the Investing section if the amount of investing activities is greater than the financing activities amount. 
B) It should be disclosed in the Financing section if the amount of financing activities is greater than the investing activities amount. 
C) It should be disclosed in a note to the financial statements or in a supplemental schedule. 
D) The transaction does not need to be disclosed.

Question 11

Under the __________,the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments,and all accruals of future operating cash receipts or payments.

Accepted Answer

The answer of Under the __________,the net cash flow from...

Question 12

Selected data from the financial statements of Zayri Corporation for the years ended December 31,2017 and 2018,are presented below.
?$$\begin{array} { l r r } 
\text { (In thousands) } & \underline { \mathbf { 2 0 1 8 } } & \underline { \mathbf { 2 0 1 7 } } \
\text { Cash and cash equival ents }& { \text { ? } } & \$ 4,506 \
 \text { Total current assets (except cash) } & 149,978 & 132,335 \
\text { Income taxes paid }& 2,142 & 767 \
 \text { Interest paid }& 5,073 & 5,597 \
 \text { Net cash provided by operating activities } & 3,103 & 5,221 \
\text { Net cash used by investing activities } & 2,853 & 3,278 \
\text { Net cash provided by financing activities } & 1,323 & 6,891 \
\text { Depreciation and amortization }& 3,479 & 2,770 \
 \text { Total stockholders' equity } & 103,253 & 94,843 \
\text { Net income }& 1,877 & 1,223
\end{array}$$

Required 
What is the amount of cash and cash equivalents at the end of 2018?

Accepted Answer

\[\begin{array} { l r } 
\text { Net cas

Question 13

Which of the following measures can be used to evaluate a company's ability to meet future debt obligations after paying income taxes and interest and making capital expenditures?

Accepted Answer

A) Earnings per share 
B) Net income 
C) Cash flow adequacy ratio 
D) Net increase or decrease in cash and cash equivalents 
A) Earnings per share 
B) Net income 
C) Cash flow adequacy ratio 
D) Net increase or decrease in cash and cash equivalents

Question 14

Many companies report cash flow per common share on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 15

Most experts now agree that there has been a tendency to rely far too heavily on net income and its companion,earnings per share,and in many cases to ignore a company's cash flows.

Accepted Answer

A) True 
 B)False

Question 16

The amount of cash provided from operating activities is __________ under both the direct and indirect methods.

Accepted Answer

The answer of The amount of cash provided from operating...

Question 17

Carson City Saloon purchased a $25,000 truck for catering from its restaurant.It made a down payment of one-fourth of the price.What combination of amounts would affect the income statement and statement of cash flows for the purchase of the truck?  
$\begin{array}{ll}\text { Income Statement }&\text { Cash Flow Statement }\
a.\$ 25,000 & \$ 0 \
b.\$ 0 & \$(25,000) \
c.\$ 25,000 & \$(6,250) \
d.\$ 0 & \$(6,250)
\end{array}$

Accepted Answer

The answer of Carson City Saloon purchased a $25,000 truck...

Question 18

The following items were reported on the balance sheets and income statement for Centerton Inc. ,a service company: $\begin{array}{lr}
\text { Accounts payable, December } 31,2017 & \$ 64,000 \
\text { Accounts payable, December } 31,2018 & 48,000 \
\text { Operating expenses-2018 } & 170,000
\end{array}$What amount would be reported in the Operating Activities section of the statement of cash flows for payments for operating expenses under the direct method?

Accepted Answer

A) $186,000 
B) $154,000 
C) $180,000 
D) $170,000 
A) $186,000 
B) $154,000 
C) $180,000 
D) $170,000

Question 19

In terms of the statement of cash flows,cash includes actual cash items plus certain cash equivalents such as commercial paper,money market funds,and Treasury bills.

Accepted Answer

A) True 
 B)False

Question 20

For the statement of cash flows,companies are required to classify their cash activities into three categories: operating,investing,and borrowing.

Accepted Answer

A) True 
 B)False

Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?

Net income was $61,000 for the year.The accumulated depreciation balance increased by $14,000 over the year.There were no sales of fixed assets or changes in noncash current assets or liabilities.Under the indirect method,the cash flow from operations is $47,000.

All the information needed to compute the cash flow adequacy ratio is found on the balance sheet.

The purchase of merchandise is an important __________ activity for a retailer.

The statement of cash flows emphasizes explanations for the change in net income.

A work sheet is an alternative method to help in the preparation of a statement of cash flows.

Which balance sheet accounts are most affected by financing activities?

During 2017,the accounts payable balance of Andreas Corp.decreased.Which of the following statements is true?

Occasionally,companies engage in important investing and financing activities that do not affect cash.If the amount of the transaction is significant,how should it be disclosed when financial statements are prepared?

Under the __________,the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments,and all accruals of future operating cash receipts or payments.

Which of the following measures can be used to evaluate a company's ability to meet future debt obligations after paying income taxes and interest and making capital expenditures?

Many companies report cash flow per common share on the statement of cash flows.

Most experts now agree that there has been a tendency to rely far too heavily on net income and its companion,earnings per share,and in many cases to ignore a company's cash flows.

The amount of cash provided from operating activities is __________ under both the direct and indirect methods.

In terms of the statement of cash flows,cash includes actual cash items plus certain cash equivalents such as commercial paper,money market funds,and Treasury bills.

For the statement of cash flows,companies are required to classify their cash activities into three categories: operating,investing,and borrowing.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 12: The Statement of Cash Flows

Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?

Net income was $61,000 for the year.The accumulated depreciation balance increased by $14,000 over the year.There were no sales of fixed assets or changes in noncash current assets or liabilities.Under the indirect method,the cash flow from operations is $47,000.

All the information needed to compute the cash flow adequacy ratio is found on the balance sheet.

The purchase of merchandise is an important __________ activity for a retailer.

The statement of cash flows emphasizes explanations for the change in net income.

A work sheet is an alternative method to help in the preparation of a statement of cash flows.

Which balance sheet accounts are most affected by financing activities?

During 2017,the accounts payable balance of Andreas Corp.decreased.Which of the following statements is true?

Occasionally,companies engage in important investing and financing activities that do not affect cash.If the amount of the transaction is significant,how should it be disclosed when financial statements are prepared?

Under the __________,the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments,and all accruals of future operating cash receipts or payments.

Which of the following measures can be used to evaluate a company's ability to meet future debt obligations after paying income taxes and interest and making capital expenditures?

Many companies report cash flow per common share on the statement of cash flows.

Most experts now agree that there has been a tendency to rely far too heavily on net income and its companion,earnings per share,and in many cases to ignore a company's cash flows.

The amount of cash provided from operating activities is __________ under both the direct and indirect methods.

In terms of the statement of cash flows,cash includes actual cash items plus certain cash equivalents such as commercial paper,money market funds,and Treasury bills.

For the statement of cash flows,companies are required to classify their cash activities into three categories: operating,investing,and borrowing.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

International Financial Reporting Standards

Filters