Question 1

The cash proceeds from the sale of a building will be the book value plus any loss or minus any gain.

Accepted Answer

A) True 
 B)False

Question 2

Erie Company began the accounting period with $27,000 in accounts receivable.The ending balance in accounts receivable was $10,000.If the credit sales during the period were $44,000,what is the amount of cash received from customers?

Accepted Answer

A)  $27,000 
B)  $44,000 
C)  $81,000 
D)  $61,000 
A)  $27,000 
B)  $44,000 
C)  $81,000 
D)  $61,000

Question 3

When the indirect method is used to prepare the statement of cash flows,what is the starting point of the operating activities section?

Accepted Answer

A)  Net income as reported on the income statement 
B)  Total assets as reported on the balance sheet 
C)  Sales as reported on the income statement 
D)  Cash collections from customers 
A)  Net income as reported on the income statement 
B)  Total assets as reported on the balance sheet 
C)  Sales as reported on the income statement 
D)  Cash collections from customers

Question 4

Dennis Corporation prepared the following data (in dollars)for the current year: $\begin{array}{lrr}
  \text { Increase in accounts receivable } &\$6,000\
 \text { Decrease in inventory  } &2,400\
 \text {  Increase in prepaid expenses} &1,600\
 \text { Depreciation expense, equipment } &7,000\
 \text { Loss on sale of equipment } &1,500\
 \text {  Net income} &130,000\
\end{array}$
 Using the indirect method,what is the net cash flow from operating activities?

Accepted Answer

A)  $146,800 
B)  $133,300 
C)  $101,200 
D)  $118,000 
A)  $146,800 
B)  $133,300 
C)  $101,200 
D)  $118,000

Question 5

Joyce Company began the year with a $21,000 balance in its Accounts Receivable account.During the accounting period,Joyce earned revenue on account amounting to $35,000.At the end of the accounting period,the Accounts Receivable account had a balance of $8,500.Using the above information,determine the amount of cash collected from accounts receivable during the current accounting period.

Accepted Answer

$21,000 −

Question 6

During the year,the Property,Plant,and Equipment account increased by $25,000 and the Accumulated Depreciation account increased by $2,000.In addition,the company sold equipment that originally cost $12,000 and had $9,000 of accumulated depreciation for $4,500.What was the cash inflow from the sale of property,plant,and equipment?

Accepted Answer

A)  $1,500 
B)  $4,500 
C)  $15,500 
D)  $12,000 
A)  $1,500 
B)  $4,500 
C)  $15,500 
D)  $12,000

Question 7

During the year,the Abbot Company had the following changes in account balances:
1)The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000.The increase was due to depreciation expense.
2)The long-term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000.The decrease was due to repayment of debt.
3)The Accounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.
4)The Equipment account had a beginning balance of $25,000 and an ending balance of $92,500.The increase was due to the purchase of equipment for cash.
5)The Long-Term Investments account (marketable securities)had a beginning balance of $18,000 and an ending balance of $12,500.The decrease was due to the sale of investments at cost.
6)The amount of cash dividends declared and paid during the year was $22,000.
7)The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250.
What is the net cash flow from financing activities?

Accepted Answer

A) $22,000 inflow 
B) $25,000 inflow 
C) $25,000 outflow 
D) $47,000 outflow 
A) $22,000 inflow 
B) $25,000 inflow 
C) $25,000 outflow 
D) $47,000 outflow

Question 8

During the year,the Abbot Company had the following changes in account balances:
1)The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000.The increase was due to depreciation expense.
2)The long-term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000.The decrease was due to repayment of debt.
3)The Accounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.
4)The Equipment account had a beginning balance of $25,000 and an ending balance of $92,500.The increase was due to the purchase of equipment for cash.
5)The Long-Term Investments account (marketable securities)had a beginning balance of $18,000 and an ending balance of $12,500.The decrease was due to the sale of investments at cost.
6)The amount of cash dividends declared and paid during the year was $22,000.
7)The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250.
Assume that a statement of cash flows has been prepared.The combination of the three major components (operating activities,investing activities,financing activities)equals the:

Accepted Answer

A) Net income for the period. 
B) Change in the cash account balance between the beginning and end of the period. 
C) Ending cash balance. 
D) Amount of cash inflow for the period. 
A) Net income for the period. 
B) Change in the cash account balance between the beginning and end of the period. 
C) Ending cash balance. 
D) Amount of cash inflow for the period.

Question 9

When using the indirect method,the amount of net cash flow from operating activities will be the same as it would be if the direct method were used.

Accepted Answer

A) True 
 B)False

Question 10

The Knott Company reported depreciation expense of $10,000 and net income of $16,000 on its income statement.During the year,the company's accounts receivable balance decreased by $4,000.Based on this information,what was the net cash flow from operating activities?

Accepted Answer

A)  $12,000. 
B)  $16,000. 
C)  $32,000. 
D)  $30,000. 
A)  $12,000. 
B)  $16,000. 
C)  $32,000. 
D)  $30,000.

Question 11

Under the indirect method,the increase or decrease in current liabilities is handled in the operating section of a cash flow statement.

Accepted Answer

A) True 
 B)False

Question 12

Pingry Company's accounts receivable balance increased by $14,000 during the year.The company's income statement reports sales revenue of $437,500,all on account.How much cash was collected from customers during the year?

Accepted Answer

A)  $437,500 
B)  $451,500 
C)  $423,500 
D)  None of these answers are correct. 
A)  $437,500 
B)  $451,500 
C)  $423,500 
D)  None of these answers are correct.

Question 13

When using the indirect method,a decrease in a current asset (other than cash or cash equivalents)is:

Accepted Answer

A)  subtracted from current liabilities in the cash flows from financing activities section. 
B)  subtracted from net income in the cash flows from operating activities section. 
C)  added to net income in the cash flows from operating activities section. 
D)  added in the cash flows from investing activities section. 
A)  subtracted from current liabilities in the cash flows from financing activities section. 
B)  subtracted from net income in the cash flows from operating activities section. 
C)  added to net income in the cash flows from operating activities section. 
D)  added in the cash flows from investing activities section.

Question 14

Hansen Corporation reported net income of $328,000 for the current year.In addition,accounts payable increased $24,000 during the year,inventory increased by $15,000,and accounts receivable decreased by $20,000.Using the indirect method,what is the net cash flow from operating activities?

Accepted Answer

A)  $387,000 
B)  $357,000 
C)  $328,000 
D)  $317,000 
A)  $387,000 
B)  $357,000 
C)  $328,000 
D)  $317,000

Question 15

Cash receipts from the sale of investments would be classified as a financing activity.

Accepted Answer

A) True 
 B)False

Question 16

Which method is used by the majority of U.S.companies to report cash flows from operating activities?

Accepted Answer

A)  Accrual method 
B)  Direct method 
C)  Indirect method 
D)  Computational method 
A)  Accrual method 
B)  Direct method 
C)  Indirect method 
D)  Computational method

Question 17

Which of the following would be reported as a financing activity on the statement of cash flows?

Accepted Answer

A)  Dividends collected from an investment in marketable securities. 
B)  Note payable issued to purchase equipment. 
C)  Purchase of investment securities. 
D)  Cash paid for the purchase of treasury stock. 
A)  Dividends collected from an investment in marketable securities. 
B)  Note payable issued to purchase equipment. 
C)  Purchase of investment securities. 
D)  Cash paid for the purchase of treasury stock.

Question 18

Diaz Company had the following comparative balance sheet information at the end of Year 2 and Year 1:
 $\begin{array}{c}
\text {Diaz Company}\
\text { Comparative Balance Sheets}\
\begin{array}{lll}
\
\text {Cash}\
\text {Accounts receivable}\
\text {Inventory}\
\text {Prepaid insurance}\
\text {Property, plant and equipment}\
\text {Accumulated depreciation}\
\text {Total}\
\text {Accounts payable}\
\text {Bonds payable}\
\text {Common stock}\
\text {Retained earnings}\
\text {Total}
\end{array}
\begin{array}{cc}
 \text { Year } 2 &  \text { Year } 1 \
 \$  30,000&  \$  28,000 \
  48,000 &  50,000 \
 158,000 &  156,000\
 10,000&  8,000 \
 70,000  & 60,000 \
 (14,000)  & (10,000) \
\$  302,000 & \$ 292,000 \
\$  14,000 & \$  18,000 \
 90,000 & 120,000 \
140,000 & 120,000 \
58,000 &  34,000 \
\$302,000 &\$292,000 \
\end{array}
\end{array}$
 Diaz reported net income for Year 2 of $40,000.No property,plant,and equipment were disposed of during the year.Diaz uses the indirect method to prepare the statement of cash flows.
Calculate Diaz's cash flow from investing activities for Year 2.

Accepted Answer

\[\begin{array} { l } 
\text {

Question 19

Cash flows from investing activities are related to the acquisition and disposition of assets other than inventory and supplies.

Accepted Answer

A) True 
 B)False

Question 20

The following information was drawn from Empire's Year 2 and Year 1 year-end balance sheets. $\begin{array}{lrr}
&\text { Year } 2&\text { Year } 1\
 \text { Investment Securities } &\$105,000&\$112,500\
\end{array}$
 Empire incurred a $1,500 loss on the sale of investment securities during Year 2.No investment securities were purchased during Year 2.Based on this information alone,what is the amount of cash that was collected from the sale of securities?

Accepted Answer

A)  $7,500 
B)  $6,000 
C)  $9,000 
D)  $1,500 
A)  $7,500 
B)  $6,000 
C)  $9,000 
D)  $1,500

The cash proceeds from the sale of a building will be the book value plus any loss or minus any gain.

Erie Company began the accounting period with $27,000 in accounts receivable.The ending balance in accounts receivable was $10,000.If the credit sales during the period were $44,000,what is the amount of cash received from customers?

When the indirect method is used to prepare the statement of cash flows,what is the starting point of the operating activities section?

When using the indirect method,the amount of net cash flow from operating activities will be the same as it would be if the direct method were used.

The Knott Company reported depreciation expense of $10,000 and net income of $16,000 on its income statement.During the year,the company's accounts receivable balance decreased by $4,000.Based on this information,what was the net cash flow from operating activities?

Under the indirect method,the increase or decrease in current liabilities is handled in the operating section of a cash flow statement.

Pingry Company's accounts receivable balance increased by $14,000 during the year.The company's income statement reports sales revenue of $437,500,all on account.How much cash was collected from customers during the year?

When using the indirect method,a decrease in a current asset (other than cash or cash equivalents)is:

Hansen Corporation reported net income of $328,000 for the current year.In addition,accounts payable increased $24,000 during the year,inventory increased by $15,000,and accounts receivable decreased by $20,000.Using the indirect method,what is the net cash flow from operating activities?

Cash receipts from the sale of investments would be classified as a financing activity.

Which method is used by the majority of U.S.companies to report cash flows from operating activities?

Which of the following would be reported as a financing activity on the statement of cash flows?

Cash flows from investing activities are related to the acquisition and disposition of assets other than inventory and supplies.

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

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Exam 14: Statement of Cash Flows

The cash proceeds from the sale of a building will be the book value plus any loss or minus any gain.

Erie Company began the accounting period with $27,000 in accounts receivable.The ending balance in accounts receivable was $10,000.If the credit sales during the period were $44,000,what is the amount of cash received from customers?

When the indirect method is used to prepare the statement of cash flows,what is the starting point of the operating activities section?

When using the indirect method,the amount of net cash flow from operating activities will be the same as it would be if the direct method were used.

The Knott Company reported depreciation expense of $10,000 and net income of $16,000 on its income statement.During the year,the company's accounts receivable balance decreased by $4,000.Based on this information,what was the net cash flow from operating activities?

Under the indirect method,the increase or decrease in current liabilities is handled in the operating section of a cash flow statement.

Pingry Company's accounts receivable balance increased by $14,000 during the year.The company's income statement reports sales revenue of $437,500,all on account.How much cash was collected from customers during the year?

When using the indirect method,a decrease in a current asset (other than cash or cash equivalents)is:

Hansen Corporation reported net income of $328,000 for the current year.In addition,accounts payable increased $24,000 during the year,inventory increased by $15,000,and accounts receivable decreased by $20,000.Using the indirect method,what is the net cash flow from operating activities?

Cash receipts from the sale of investments would be classified as a financing activity.

Which method is used by the majority of U.S.companies to report cash flows from operating activities?

Which of the following would be reported as a financing activity on the statement of cash flows?

Cash flows from investing activities are related to the acquisition and disposition of assets other than inventory and supplies.

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Filters