Question 1

Under the indirect method of preparing the statement of cash flows,a gain on the sale of equipment is:

Accepted Answer

A) subtracted from net income in the operating activities section. 
B) added to net income in the operating activities section. 
C) subtracted from the book value of the equipment in the financing activities section. 
D) ignored since this transaction does not affect cash. 
A) subtracted from net income in the operating activities section. 
B) added to net income in the operating activities section. 
C) subtracted from the book value of the equipment in the financing activities section. 
D) ignored since this transaction does not affect cash.

Question 2

The direct method of preparing the statement of cash flows:

Accepted Answer

A) has an identical operating activities section as the indirect method. 
B) is used by a vast majority of companies. 
C) is preferred by FASB. 
D) is much easier for companies to compute. 
A) has an identical operating activities section as the indirect method. 
B) is used by a vast majority of companies. 
C) is preferred by FASB. 
D) is much easier for companies to compute.

Question 3

Depreciation expense is listed on the direct method statement of cash flows because it affects income.

Accepted Answer

A) True 
 B)False

Question 4

Interest revenue for the current year is $90,000.Interest payable increased $41,000 during the year and Interest receivable increased $55,000 during the year.No discount or premium was amortized.What is the cash received for interest revenue?

Accepted Answer

A) $35,000 
B) $49,000 
C) $90,000 
D) $145,000 
A) $35,000 
B) $49,000 
C) $90,000 
D) $145,000

Question 5

Net cash provided by operating activities is $2.9 million.Planned capital expenditures are $2.4 million.Depreciation expense is $1.2 million per year.What is free cash flow?

Accepted Answer

A) ($700,000) 
B) $500,000 
C) $1,200,000 
D) $1,700,000 
A) ($700,000) 
B) $500,000 
C) $1,200,000 
D) $1,700,000

Question 6

Under the direct method of preparing the statement of cash flows,cash receipts from operating activities do NOT include:

Accepted Answer

A) collection of long-term note receivable. 
B) collections from customers. 
C) receipt of interest on investments. 
D) receipt of dividends on investments. 
A) collection of long-term note receivable. 
B) collections from customers. 
C) receipt of interest on investments. 
D) receipt of dividends on investments.

Question 7

Collections on long-term loans are reported as investing activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 8

A statement of cash flows reports the cash inflows and cash outflows for a company at a point in time.

Accepted Answer

A) True 
 B)False

Question 9

Newton Corporation reported an increase in inventory of $85,000.The cost of goods sold for the year was $170,000.There was also a $4000 decrease in accounts payable from the beginning of the year to the end of the year.What is Newton's cash payment to suppliers for inventory?

Accepted Answer

A) $174,000 
B) $251,000 
C) $255,000 
D) $259,000 
A) $174,000 
B) $251,000 
C) $255,000 
D) $259,000

Question 10

A statement of cash flows accomplishes all of the following EXCEPT:

Accepted Answer

A) determines the ability of the company to pay dividends and interest. 
B) provides information about the cash receipts and cash payments during a period. 
C) lists revenues and expenses. 
D) predicts future cash flows. 
A) determines the ability of the company to pay dividends and interest. 
B) provides information about the cash receipts and cash payments during a period. 
C) lists revenues and expenses. 
D) predicts future cash flows.

Question 11

Operating income is typically equal to Net cash provided by operating activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 12

Land was purchased by issuing common stock.This transaction would be reported on the statement of cash flows as a(n):

Accepted Answer

A) operating activity. 
B) investing activity. 
C) financing activity. 
D) noncash investing and financing activity. 
A) operating activity. 
B) investing activity. 
C) financing activity. 
D) noncash investing and financing activity.

Question 13

A gain on sale of equipment is subtracted from net income when determining Net cash provided by operating activities under the indirect method of preparing the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 14

On the statement of cash flows,investing activities include:

Accepted Answer

A) obtaining cash from creditors. 
B) collecting cash on long-term loans. 
C) selling stock to stockholders. 
D) repaying borrowed money. 
A) obtaining cash from creditors. 
B) collecting cash on long-term loans. 
C) selling stock to stockholders. 
D) repaying borrowed money.

Question 15

On January 1,2019,the Notes Receivable account has a balance of $11,000.On December 31,2019,the Notes Receivable account has a balance of $120,000.No collections on notes receivable occurred in 2019.What is the amount of long-term notes that were made in 2019?

Accepted Answer

A) $11,000 
B) $109,000 
C) $120,000 
D) $131,000 
A) $11,000 
B) $109,000 
C) $120,000 
D) $131,000

Question 16

Which of the following transactions does NOT affect cash during a period?

Accepted Answer

A) sale of treasury stock 
B) write-off of an uncollectible account 
C) purchase of property with cash 
D) payment of an accounts payable 
A) sale of treasury stock 
B) write-off of an uncollectible account 
C) purchase of property with cash 
D) payment of an accounts payable

Question 17

Most of the time,net income will be the same as net cash provided by operating activities.

Accepted Answer

A) True 
 B)False

Question 18

ABC Corporation's income tax expense totaled $20,000 and income tax payable increased by $3,000;therefore,the cash paid for income taxes was $17,000.

Accepted Answer

A) True 
 B)False

Question 19

Under the direct method of preparing the statement of cash flows,all of the following would be reported under operating activities EXCEPT:

Accepted Answer

A) collections from customers. 
B) interest received on notes receivable. 
C) dividends received on investments in stock. 
D) cash proceeds on sale of long-term investments. 
A) collections from customers. 
B) interest received on notes receivable. 
C) dividends received on investments in stock. 
D) cash proceeds on sale of long-term investments.

Question 20

Under the direct method of preparing the statement of cash flows,cash payments from operating activities do NOT include:

Accepted Answer

A) payments to suppliers. 
B) payments to employees. 
C) payment of dividends. 
D) payment of interest. 
A) payments to suppliers. 
B) payments to employees. 
C) payment of dividends. 
D) payment of interest.

Under the indirect method of preparing the statement of cash flows,a gain on the sale of equipment is:

The direct method of preparing the statement of cash flows:

Depreciation expense is listed on the direct method statement of cash flows because it affects income.

Interest revenue for the current year is $90,000.Interest payable increased $41,000 during the year and Interest receivable increased $55,000 during the year.No discount or premium was amortized.What is the cash received for interest revenue?

Net cash provided by operating activities is $2.9 million.Planned capital expenditures are $2.4 million.Depreciation expense is $1.2 million per year.What is free cash flow?

Under the direct method of preparing the statement of cash flows,cash receipts from operating activities do NOT include:

Collections on long-term loans are reported as investing activities on the statement of cash flows.

A statement of cash flows reports the cash inflows and cash outflows for a company at a point in time.

Newton Corporation reported an increase in inventory of $85,000.The cost of goods sold for the year was $170,000.There was also a $4000 decrease in accounts payable from the beginning of the year to the end of the year.What is Newton's cash payment to suppliers for inventory?

A statement of cash flows accomplishes all of the following EXCEPT:

Operating income is typically equal to Net cash provided by operating activities on the statement of cash flows.

Land was purchased by issuing common stock.This transaction would be reported on the statement of cash flows as a(n):

A gain on sale of equipment is subtracted from net income when determining Net cash provided by operating activities under the indirect method of preparing the statement of cash flows.

On the statement of cash flows,investing activities include:

On January 1,2019,the Notes Receivable account has a balance of $11,000.On December 31,2019,the Notes Receivable account has a balance of $120,000.No collections on notes receivable occurred in 2019.What is the amount of long-term notes that were made in 2019?

Which of the following transactions does NOT affect cash during a period?

Most of the time,net income will be the same as net cash provided by operating activities.

ABC Corporation's income tax expense totaled $20,000 and income tax payable increased by $3,000;therefore,the cash paid for income taxes was $17,000.

Under the direct method of preparing the statement of cash flows,all of the following would be reported under operating activities EXCEPT:

Under the direct method of preparing the statement of cash flows,cash payments from operating activities do NOT include:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 11: The Statement of Cash Flows

Under the indirect method of preparing the statement of cash flows,a gain on the sale of equipment is:

The direct method of preparing the statement of cash flows:

Depreciation expense is listed on the direct method statement of cash flows because it affects income.

Interest revenue for the current year is $90,000.Interest payable increased $41,000 during the year and Interest receivable increased $55,000 during the year.No discount or premium was amortized.What is the cash received for interest revenue?

Net cash provided by operating activities is $2.9 million.Planned capital expenditures are $2.4 million.Depreciation expense is $1.2 million per year.What is free cash flow?

Under the direct method of preparing the statement of cash flows,cash receipts from operating activities do NOT include:

Collections on long-term loans are reported as investing activities on the statement of cash flows.

A statement of cash flows reports the cash inflows and cash outflows for a company at a point in time.

Newton Corporation reported an increase in inventory of $85,000.The cost of goods sold for the year was $170,000.There was also a $4000 decrease in accounts payable from the beginning of the year to the end of the year.What is Newton's cash payment to suppliers for inventory?

A statement of cash flows accomplishes all of the following EXCEPT:

Operating income is typically equal to Net cash provided by operating activities on the statement of cash flows.

Land was purchased by issuing common stock.This transaction would be reported on the statement of cash flows as a(n):

A gain on sale of equipment is subtracted from net income when determining Net cash provided by operating activities under the indirect method of preparing the statement of cash flows.

On the statement of cash flows,investing activities include:

On January 1,2019,the Notes Receivable account has a balance of $11,000.On December 31,2019,the Notes Receivable account has a balance of $120,000.No collections on notes receivable occurred in 2019.What is the amount of long-term notes that were made in 2019?

Which of the following transactions does NOT affect cash during a period?

Most of the time,net income will be the same as net cash provided by operating activities.

ABC Corporation's income tax expense totaled $20,000 and income tax payable increased by $3,000;therefore,the cash paid for income taxes was $17,000.

Under the direct method of preparing the statement of cash flows,all of the following would be reported under operating activities EXCEPT:

Under the direct method of preparing the statement of cash flows,cash payments from operating activities do NOT include:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

Investments

Time Value of Money

Filters