Question 1

When using the indirect method,how is the issuing of stock for cash shown on the statement of cash flows?

Accepted Answer

A) As an operating activity 
B) As an investing activity 
C) As a financing activity 
D) As a Noncash investing and financing activity 
A) As an operating activity 
B) As an investing activity 
C) As a financing activity 
D) As a Noncash investing and financing activity

Question 2

Which of the following items is not a cash equivalent?

Accepted Answer

A) Commercial paper 
B) A three-year Treasury note purchased two months before its maturity 
C) Money market funds 
D) A corporate bond investment that has five years until maturity when it is purchased 
A) Commercial paper 
B) A three-year Treasury note purchased two months before its maturity 
C) Money market funds 
D) A corporate bond investment that has five years until maturity when it is purchased

Question 3

Cash flows from borrowing and paying off a 90-day bank loan are classified as

Accepted Answer

A) operating activities. 
B) investing activities. 
C) financing activities. 
D) purchasing activities. 
A) operating activities. 
B) investing activities. 
C) financing activities. 
D) purchasing activities.

Question 4

When using the indirect method,how is the purchase of equipment for cash shown on the statement of cash flows?

Accepted Answer

A) As an operating activity 
B) As an investing activity 
C) As a financing activity 
D) As a noncash investing and financing activity 
A) As an operating activity 
B) As an investing activity 
C) As a financing activity 
D) As a noncash investing and financing activity

Question 5

Which of the following should be classified as an investing activity on the statement of cash flows?

Accepted Answer

A) Interest on notes payable 
B) Payment to suppliers for inventory 
C) Payment of dividends 
D) None of these are correct 
A) Interest on notes payable 
B) Payment to suppliers for inventory 
C) Payment of dividends 
D) None of these are correct

Question 6

Francetti Co.purchased $6,000 of napkins for its business.One-fourth of the bill is unpaid.A review of the napkins still on hand showed that 20% were still available.What combination of amounts would affect the income statement and statement of cash flows?  
$\begin{array}{ll}\text { Statement of Cash Flow }&\text { Income Statement }\
a.\$(6,000) & \$(6,000) \
b.\$(4,500) & \$(6,000) \
c.\$(4,500) & \$(4,800) \
d.\$(6,000) & \$(4,800)
\end{array}$

Accepted Answer

The answer of Francetti Co.purchased $6,000 of napkins for its...

Question 7

Which of the following financing activities results in a cash inflow?

Accepted Answer

A) Buying treasury stock 
B) Issuing bonds 
C) Repaying a bank loan 
D) Paying cash dividends 
A) Buying treasury stock 
B) Issuing bonds 
C) Repaying a bank loan 
D) Paying cash dividends

Question 8

When using the indirect method,how is depreciation expense shown on the statement of cash flows?

Accepted Answer

A) As an operating activity 
B) As an investing activity 
C) As a financing activity 
D) As a noncash investing and financing activity 
A) As an operating activity 
B) As an investing activity 
C) As a financing activity 
D) As a noncash investing and financing activity

Question 9

Which balance sheet accounts are most affected by operating activities?

Accepted Answer

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

Question 10

The statement of cash flows

Accepted Answer

A) along with the balance sheet and income statement is prepared on the accrual basis. 
B) along with the balance sheet and statement of retained earnings is dated as of a specific year-end date. 
C) along with the balance sheet is used to analyze liquidity. 
D) ties the balance sheet to the statement of retained earnings. 
A) along with the balance sheet and income statement is prepared on the accrual basis. 
B) along with the balance sheet and statement of retained earnings is dated as of a specific year-end date. 
C) along with the balance sheet is used to analyze liquidity. 
D) ties the balance sheet to the statement of retained earnings.

Question 11

Lincoln Company reported the following information in its annual report for 2017: $$\begin{array} { l r } 
\text { Cash flows from operating activities } & \$ 300,000 \
\text { Capital expenditures } & 225,000 \
\text { Average amount of debt maturing over the next } 5 \text { years } & 200,000
\end{array}$$What is the cash flow adequacy ratio for 2017 for Lincoln Company?

Accepted Answer

A) 0.38 
B) 1.50 
C) 1.88 
D) 7.50 
A) 0.38 
B) 1.50 
C) 1.88 
D) 7.50

Question 12

Pilot Company reported the following information for 2017 and 2018: $$\begin{array} { l r } 
\text { Prepaid insurance, December } 31,2017 & \$ 2,400 \
\text { Prepaid insurance, December } 31,2018 & 1,500 \
\text { Insurance expense-2018 } & 14,200
\end{array}$$
How much cash was paid for insurance during 2018?

Accepted Answer

A) $13,300 
B) $14,200 
C) $15,100 
D) $15,700 
A) $13,300 
B) $14,200 
C) $15,100 
D) $15,700

Question 13

Which of the following statements is false?

Accepted Answer

A) Cash equivalents are included in cash on the balance sheet and on the statement of cash flows. 
B) Investments in cash equivalents and investments in stock have the same economic effect-assets increase and decrease by the same amount. 
C) An investment is a cash equivalent if it is convertible into a known amount of cash and has an original maturity of three months or less when purchased. 
D) Investments in stock are reported as a financing activity on the statement of cash flows. 
A) Cash equivalents are included in cash on the balance sheet and on the statement of cash flows. 
B) Investments in cash equivalents and investments in stock have the same economic effect-assets increase and decrease by the same amount. 
C) An investment is a cash equivalent if it is convertible into a known amount of cash and has an original maturity of three months or less when purchased. 
D) Investments in stock are reported as a financing activity on the statement of cash flows.

Question 14

Use the information below for Soho Inc.for 2017 and 2018 to answer the following question: $\begin{array}{lr}
\text { Equipment, December } 31,2017 & \$ 65,000 \
\text { Equipment, December 31,2018 } & 72,000 \
\text { Accumulated depreciation, December 31,2017 } & 39,000 \
\text { Accumulated depreciation, December 31,2018 } & 30,000
\end{array}$During 2017,Soho Inc.sold equipment with a cost of $30,000 and accumulated depreciation of $25,000 for cash.A gain of $3,000 was recognized on the sale of the equipment.This was the only equipment sale during the year.
What amount would be reported as the cash proceeds from the sale of equipment?

Accepted Answer

A) $2,000 
B) $3,000 
C) $5,000 
D) $8,000 
A) $2,000 
B) $3,000 
C) $5,000 
D) $8,000

Question 15

Operating,investing,and financing activities affect certain balance sheet accounts.Which of the following statements is true?

Accepted Answer

A) Operating activities primarily involve transactions that affect noncurrent assets. 
B) Investing activities primarily involve U.S.government securities and long-term productive assets. 
C) Financing activities primarily involve transactions that affect current liabilities. 
D) Different balance sheet accounts are affected depending on whether the direct or indirect method is used. 
A) Operating activities primarily involve transactions that affect noncurrent assets. 
B) Investing activities primarily involve U.S.government securities and long-term productive assets. 
C) Financing activities primarily involve transactions that affect current liabilities. 
D) Different balance sheet accounts are affected depending on whether the direct or indirect method is used.

Question 16

Which method of preparing the Operating Activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?

Accepted Answer

A) The direct method 
B) The indirect method 
C) Both the direct method and indirect methods 
D) Neither the direct method nor the indirect method 
A) The direct method 
B) The indirect method 
C) Both the direct method and indirect methods 
D) Neither the direct method nor the indirect method

Question 17

Columbus Company prepays the rent on various office facilities.The beginning balance in Prepaid Rent was $9,500,and the ending balance was $7,200.The income statement reports Rent Expense of $45,800.
​
Required
Under the direct method,what amount would appear for cash paid in rent in the Operating Activities section of the statement of cash flows? Show your work.

Accepted Answer

An analysis of the Prepaid Ren

Question 18

Which of the following items is treated as a cash equivalent?

Accepted Answer

A) Commercial paper with a six-month maturity when purchased and four months until maturity at the balance sheet date 
B) Investment in corporate stocks that management intends to sell within three months after the balance sheet date 
C) Money market funds that can be obtained overnight from a bank or brokerage firm 
D) Investments in corporate bonds that have five years until maturity when they are purchased 
A) Commercial paper with a six-month maturity when purchased and four months until maturity at the balance sheet date 
B) Investment in corporate stocks that management intends to sell within three months after the balance sheet date 
C) Money market funds that can be obtained overnight from a bank or brokerage firm 
D) Investments in corporate bonds that have five years until maturity when they are purchased

Question 19

__________ is a noncash expense related to plant assets.

Accepted Answer

The answer of __________ is a noncash expense related to...

Question 20

A review of Jerry's Canoe Gallery's statement of cash flows showed the following: $\begin{array}{lc}
\text { Cash flows from operating activities } & 75,000 \
\text { Cash flows from investing activities } & (135,000) \
\text { Cash flows from financing activities } & 125,000
\end{array}$From this information,the most likely explanation is that Jerry's is

Accepted Answer

A) using cash from operations and selling long-term assets to pay back debt. 
B) using cash from operations and borrowing to purchase long-term assets. 
C) using its profits to expand growth. 
D) using cash from investors to provide for operations. 
A) using cash from operations and selling long-term assets to pay back debt. 
B) using cash from operations and borrowing to purchase long-term assets. 
C) using its profits to expand growth. 
D) using cash from investors to provide for operations.

When using the indirect method,how is the issuing of stock for cash shown on the statement of cash flows?

Which of the following items is not a cash equivalent?

Cash flows from borrowing and paying off a 90-day bank loan are classified as

When using the indirect method,how is the purchase of equipment for cash shown on the statement of cash flows?

Which of the following should be classified as an investing activity on the statement of cash flows?

Which of the following financing activities results in a cash inflow?

When using the indirect method,how is depreciation expense shown on the statement of cash flows?

Which balance sheet accounts are most affected by operating activities?

The statement of cash flows

Lincoln Company reported the following information in its annual report for 2017: Cash flows from operating activities \ 300,000 Capital expenditures 225,000 Average amount of debt maturing over the next 5 years 200,000 What is the cash flow adequacy ratio for 2017 for Lincoln Company?

Pilot Company reported the following information for 2017 and 2018: Prepaid insurance, December 31,2017 \ 2,400 Prepaid insurance, December 31,2018 1,500 Insurance expense-2018 14,200 How much cash was paid for insurance during 2018?

Which of the following statements is false?

Operating,investing,and financing activities affect certain balance sheet accounts.Which of the following statements is true?

Which method of preparing the Operating Activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?

Which of the following items is treated as a cash equivalent?

__________ is a noncash expense related to plant assets.

A review of Jerry's Canoe Gallery's statement of cash flows showed the following: Cash flows from operating activities 75,000 Cash flows from investing activities (135,000) Cash flows from financing activities 125,000 From this information,the most likely explanation is that Jerry's is

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

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Exam 12: The Statement of Cash Flows

When using the indirect method,how is the issuing of stock for cash shown on the statement of cash flows?

Which of the following items is not a cash equivalent?

Cash flows from borrowing and paying off a 90-day bank loan are classified as

When using the indirect method,how is the purchase of equipment for cash shown on the statement of cash flows?

Which of the following should be classified as an investing activity on the statement of cash flows?

Which of the following financing activities results in a cash inflow?

When using the indirect method,how is depreciation expense shown on the statement of cash flows?

Which balance sheet accounts are most affected by operating activities?

The statement of cash flows

Lincoln Company reported the following information in its annual report for 2017: Cash flows from operating activities \ 300,000 Capital expenditures 225,000 Average amount of debt maturing over the next 5 years 200,000 What is the cash flow adequacy ratio for 2017 for Lincoln Company?

Pilot Company reported the following information for 2017 and 2018: Prepaid insurance, December 31,2017 \ 2,400 Prepaid insurance, December 31,2018 1,500 Insurance expense-2018 14,200 How much cash was paid for insurance during 2018?

Which of the following statements is false?

Operating,investing,and financing activities affect certain balance sheet accounts.Which of the following statements is true?

Which method of preparing the Operating Activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?

Which of the following items is treated as a cash equivalent?

__________ is a noncash expense related to plant assets.

A review of Jerry's Canoe Gallery's statement of cash flows showed the following: Cash flows from operating activities 75,000 Cash flows from investing activities (135,000) Cash flows from financing activities 125,000 From this information,the most likely explanation is that Jerry's is

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