Question 1

In preparing a statement of cash flows using the indirect method,the Depreciation Expense ________.

Accepted Answer

A) is added back as an adjustment to Net Income in the operating activities section 
B) is shown as a negative cash flow in the investing activities section 
C) is added back to Purchases of Plant Assets under investing activities 
D) is shown as a negative cash flow under operating activities 
A) is added back as an adjustment to Net Income in the operating activities section 
B) is shown as a negative cash flow in the investing activities section 
C) is added back to Purchases of Plant Assets under investing activities 
D) is shown as a negative cash flow under operating activities

Question 2

Nelson Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
   
The change in Accounts Payable is as a negative cash flow in the adjustments to net income.

Accepted Answer

A) True 
 B)False

Question 3

Taylor Chemicals Company follows the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:
 
Net Income for the year was $92,000.
Based on the above information,determine the amount of dividends declared during 2016.

Accepted Answer

A) $3,200 
B) $92,000 
C) $62,000 
D) $30,000 
A) $3,200 
B) $92,000 
C) $62,000 
D) $30,000

Question 4

The financing activities section of the statement of cash flows includes activities that affect current assets and current liabilities.

Accepted Answer

A) True 
 B)False

Question 5

A-Z Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
 
How will the change in Accrued Liabilities be shown on the statement of cash flows?

Accepted Answer

A) as an addition to Net Income 
B) as a deduction from Net Income 
C) as a deduction from operating cash flows 
D) as an addition to operating cash flows 
A) as an addition to Net Income 
B) as a deduction from Net Income 
C) as a deduction from operating cash flows 
D) as an addition to operating cash flows

Question 6

One of the purposes of the statement of cash flows is to ________.

Accepted Answer

A) determine the operating income of a business 
B) to calculate inventory turnover 
C) evaluate the level of debt and leverage of a company 
D) predict the ability of a company to pay debts and dividends 
A) determine the operating income of a business 
B) to calculate inventory turnover 
C) evaluate the level of debt and leverage of a company 
D) predict the ability of a company to pay debts and dividends

Question 7

Which of the following sections of the statement of cash flows includes the issuance of stock and the payment of cash dividends?

Accepted Answer

A) the investing activities section 
B) the financing activities section 
C) the operating activities section 
D) the non-cash investing and financing section 
A) the investing activities section 
B) the financing activities section 
C) the operating activities section 
D) the non-cash investing and financing section

Question 8

Which of the following sections of the statement of cash flows is presented differently between the direct method and indirect method?

Accepted Answer

A) investing activities 
B) financing activities 
C) operating activities 
D) non-cash activities 
A) investing activities 
B) financing activities 
C) operating activities 
D) non-cash activities

Question 9

McDaniel,Inc.uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2017:

Use the direct method to compute the payments made to employees.(Accrued Liabilities relate to other operating expense. )

Accepted Answer

A) $69,400 
B) $42,400 
C) $23,000 
D) $46,400 
A) $69,400 
B) $42,400 
C) $23,000 
D) $46,400

Question 10

The net cash flow from operating activities is calculated in the same way,whether the company uses the direct or the indirect method of preparing the statement of cash flow.

Accepted Answer

A) True 
 B)False

Question 11

Wellesley,Inc.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
   
The change in Merchandise Inventory is shown as a negative cash flow in the adjustments to net income.

Accepted Answer

A) True 
 B)False

Question 12

Karaoke Records Company uses the indirect method to prepare its statement of cash flows.Refer to the following sections of the comparative balance sheet:

Additional information for 2017:
• No stock was retired.
• No treasury stock was sold.
• The company repaid $60,000 of long-term notes payable.
• The company borrowed $51,000 on a new long-term note payable.
• Net income for the year was $68,000.
Prepare the financing section of the statement of cash flows for the year ended December 31,2017.

Accepted Answer

Cash Flows

Question 13

The only part that differs in a statement of cash flows prepared by the direct method from one prepared by the indirect method is the ________.

Accepted Answer

A) financing activities section 
B) investing activities section 
C) operating activities section 
D) non-cash investing and financing activities section 
A) financing activities section 
B) investing activities section 
C) operating activities section 
D) non-cash investing and financing activities section

Question 14

Qtopia Electric Company uses the direct method to prepare its statement of cash flows.Qtopia has reported cost of goods sold of $85,000 on its income statement for 2017.If the balance in Accounts Payable,for merchandise inventory suppliers only,has decreased by $8,000 during the year,then $8,000 needs to be subtracted from $85,000 to calculate payments to suppliers for merchandise inventory purchases.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term assets?

Accepted Answer

A) the financing activities section 
B) the operating activities section 
C) the investing activities section 
D) the non-cash investing and financing section 
A) the financing activities section 
B) the operating activities section 
C) the investing activities section 
D) the non-cash investing and financing section

Question 16

Which of the following appears on a statement of cash flows prepared using the direct method?

Accepted Answer

A) adjustments to net income 
B) cash payments for salaries 
C) adjustments for gains and losses on sale of property 
D) increase/decrease in current assets 
A) adjustments to net income 
B) cash payments for salaries 
C) adjustments for gains and losses on sale of property 
D) increase/decrease in current assets

Question 17

Use the following information to calculate the free cash flow of Harris,Inc.
Net cash provided by operating activities,$25,000
Net cash provided by financing activities,$35,000
Net cash used for planned investment in long-term assets,$12,000
Net cash used for investing activities,$20,000
Cash dividends paid,$10,000.

Accepted Answer

The answer of Use the following information to calculate the...

Question 18

Avatar Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
 
How will the change in Accounts Payable be shown on the statement of cash flows?

Accepted Answer

A) as an addition to Net Income 
B) as a deduction from Net Income 
C) as a deduction from investing cash flows 
D) as an addition to operating cash flows 
A) as an addition to Net Income 
B) as a deduction from Net Income 
C) as a deduction from investing cash flows 
D) as an addition to operating cash flows

Question 19

The contribution of equipment by a stockholder in exchange for common stock is an example of ________.

Accepted Answer

A) investing activity 
B) financing activity 
C) operating activity 
D) non-cash investing and financing activity 
A) investing activity 
B) financing activity 
C) operating activity 
D) non-cash investing and financing activity

Question 20

Which of the following statements accurately describes the statement of cash flows?

Accepted Answer

A) It shows the relative proportion of debt and assets. 
B) It is the link between the accrual-based income statement and the cash reported on the balance sheet. 
C) It indicates when long-term debt will mature. 
D) It is the link between net income and earnings per share. 
A) It shows the relative proportion of debt and assets. 
B) It is the link between the accrual-based income statement and the cash reported on the balance sheet. 
C) It indicates when long-term debt will mature. 
D) It is the link between net income and earnings per share.

Exam 16: The Statement of Cash Flows

In preparing a statement of cash flows using the indirect method,the Depreciation Expense ________.

Nelson Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: The change in Accounts Payable is as a negative cash flow in the adjustments to net income.

Taylor Chemicals Company follows the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: Net Income for the year was $92,000. Based on the above information,determine the amount of dividends declared during 2016.

The financing activities section of the statement of cash flows includes activities that affect current assets and current liabilities.

A-Z Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: How will the change in Accrued Liabilities be shown on the statement of cash flows?

One of the purposes of the statement of cash flows is to ________.

Which of the following sections of the statement of cash flows includes the issuance of stock and the payment of cash dividends?

Which of the following sections of the statement of cash flows is presented differently between the direct method and indirect method?

McDaniel,Inc.uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2017: Use the direct method to compute the payments made to employees.(Accrued Liabilities relate to other operating expense. )

The net cash flow from operating activities is calculated in the same way,whether the company uses the direct or the indirect method of preparing the statement of cash flow.

Wellesley,Inc.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: The change in Merchandise Inventory is shown as a negative cash flow in the adjustments to net income.

The only part that differs in a statement of cash flows prepared by the direct method from one prepared by the indirect method is the ________.

Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term assets?

Which of the following appears on a statement of cash flows prepared using the direct method?

Avatar Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: How will the change in Accounts Payable be shown on the statement of cash flows?

The contribution of equipment by a stockholder in exchange for common stock is an example of ________.

Which of the following statements accurately describes the statement of cash flows?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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