The following account balances are for Curran Company: Additional data for Year 2: (1) Sales on account for the period totaled $100,000.(2) Salary expense was $14,000.(3) Rent expense was $12,000.Based on this information, what was the net cash inflow from operating activities for Year 2? \[\begin{array} { | l | r | r | } \hline & 12 / 31 / 2013 & 12 / 31 / 2014 \\ \hline \text { Accounts receivable } & \$ 84,000 & \$ 60,000 \\ \hline \text { Prepaid rent } & 8,000 & 4,000 \\ \hline \text { Long-term marketable securities } & 80,000 & 70,000 \\ \hline \text { Dividends payable } & 6,000 & 2,000 \\ \hline \text { Salaries payable } & 8,000 & 2,000 \\ \hline \text { Notes payable } & 44,000 & 34,000 \\ \hline \end{array}\]

A) $88,000. B) $84,000. C) $92,000. D) $74,000. A) $88,000. B) $84,000. C) $92,000. D) $74,000.

Arch Associates reports the following comparative balance sheets and income statement information.All inventory purchases are made on account. The amount of cash paid for inventory purchases during Year 2 was: \[\begin{array}{l} \begin{array} {| l | l | l | } \hline &12/31/2013&12/31/2014\\ \hline \text {Cash }&\$ 12,000&\$ 22,000\\ \hline \text {Accounts receivable}&4,000&8,000 \\ \hline \text {Prepaid insurance }&10,000&8,000 \\ \hline \text {Inventory }&6,000& 2,000\\ \hline \text {Property, plant and equipment }&12,000&10,000\\ \hline \text {Total assets }&\$ 44,000&\$ 50,000\\ \hline \text { }&\\ \hline \text { Accounts payable } &\$ 8,000& \$ 12,000\\ \hline \text { Salaries payable } &10,000&4,000\\ \hline \text { Long term notes payable } & 8,000&6,000 \\ \hline \text { Stockholders' equity }& 18,000 &28,000 \\ \hline \text { Total liabilities and equity } &\$ 44,000&\$ 50,000\\ \hline \end{array} \end{array}\] NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 \[\begin{array} { | l | r | } \hline { \text { Income Statement } } \\ \hline { \text { Year Ended 12/31/14 } } \\ \hline \text { Revenue } & \$ 70,000\\ \hline \text { Cost of goods sold } & 40,000 \\ \hline \text { Gross margin } & 30,000\\ \hline \text { Operating expense } & 20,000 \\ \hline \text { Net income } &\$ 10,000 \\ \hline \end{array}\] NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

A) $40,000. B) $32,000. C) $22,000. D) $36,000. NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2 A) $40,000. B) $32,000. C) $22,000. D) $36,000. NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

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

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

Arch Associates reports the following comparative balance sheets and income statement information.The amount of cash collected from customers during Year 2 was: Arch Associates Comparative Balance Sheets \[\begin{array}{l} \begin{array} {| l | l | l | } \hline &12/31/2013&12/31/2014\\ \hline \text {Cash }&\$ 12,000&\$ 22,000\\ \hline \text {Accounts receivable}&4,000&8,000 \\ \hline \text {Prepaid insurance }&10,000&8,000 \\ \hline \text {Inventory }&6,000& 2,000\\ \hline \text {Property, plant and equipment }&12,000&10,000\\ \hline \text {Total assets }&\$ 44,000&\$ 50,000\\ \hline \text { }&\\ \hline \text { Accounts payable } &\$ 8,000& \$ 12,000\\ \hline \text { Salaries payable } &10,000&4,000\\ \hline \text { Long term notes payable } & 8,000&6,000 \\ \hline \text { Stockholders' equity }& 18,000 &28,000 \\ \hline \text { Total liabilities and equity } &\$ 44,000&\$ 50,000\\ \hline \end{array} \end{array}\] NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 \[\begin{array} { | l | r | } \hline { \text { Income Statement } } \\ \hline { \text { Year Ended 12/31/14 } } \\ \hline \text { Revenue } & \$ 70,000\\ \hline \text { Cost of goods sold } & 40,000 \\ \hline \text { Gross margin } & 30,000\\ \hline \text { Operating expense } & 20,000 \\ \hline \text { Net income } &\$ 10,000 \\ \hline \end{array}\] NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

A) $66,000. B) $62,000. C) $74,000. D) $70,000. NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2 A) $66,000. B) $62,000. C) $74,000. D) $70,000. NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

Exam 14: Statement of Cash Flows

The following information was drawn from the year-end balance sheets of White, Inc.White, Inc. uses the cost method to account for treasury stock. No treasury stock was sold during the year. What is the amount of cash outflows for the purchase of treasury stock? 2014 2013 Bonds payable \ 200,000 \ 275,000 Common stock 112,500 87,500 Treasury stock 17,500 12,500 Retained earnings 35,000 27,500

(Multiple Choice)

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Question 61

The following information was drawn from the year-end balance sheets of White, Inc.White, Inc., issued $30,000 in bonds during Year 2. The bonds were issued at face value. All bonds were retired at face value. What is the amount of cash outflow for the payment of bond liabilities? 2014 2013 Bonds payable \2 00,000 \2 75,000 Common stock 112,500 87,500 Treasury stock 17,500 12,500 Retained earnings 35,000 27,500

(Multiple Choice)

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Question 62

All of the following are additions to net income when preparing the statement of cash flows under the indirect method except:

(Multiple Choice)

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Question 63

The direct method shows the specific sources and uses of cash that are associated with operating activities.

(True/False)

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Question 64

There are two methods, direct and indirect, for preparing and presenting the statement of cash flows.

(True/False)

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Question 65

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?

(Multiple Choice)

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Question 66

Blair Corporation reported the following for Year 2: Required: a) Use the reconciliation approach to compute the appropriate figures for cash flows from operating activities.b) Present in good form the cash flows from operating activities section of a statement of cash flows using the direct method. Beginning Ending Accounts receivabl \ 40,000 \ 38,000 Merchandise inventory 32,000 36,000 Prepaid insurance 200 140 Interest receivable 1,800 600 Accounts payable 2,500 4,200 Salaries payable 4,000 3,600 Other information: Sales (all on account) \2 80,000 Interest revenue 10,000 Cost of goods sold 160,000 Salaries expense 24,000 Insurance expense 2,200

(Essay)

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Question 67

Which of the following statements best explains the correct handling of depreciation on the statement of cash flows when using the indirect method?

(Multiple Choice)

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Question 68

Income tax expense was $137,500 for the year. The balance of the income tax payable account was $7,500 at the beginning of the year and $10,000 at the end of the year. Cash payments for income tax reported on the cash flow statement using the direct method equals:

(Multiple Choice)

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Question 69

Which of the following statements is incorrect regarding preparing a statement of cash flows using the direct method?

(Multiple Choice)

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Question 70

The indirect method for preparing the statement of cash flows begins with the amount of sales revenue reported on the income statement.

(True/False)

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Question 71

The indirect method of preparing the statement of cash flows is recommended by the Financial Accounting Standards Board.

(True/False)

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Question 72

The following account balances are for Curran Company: Additional data for Year 2: (1) Sales on account for the period totaled $100,000.(2) Salary expense was $14,000.(3) Rent expense was $12,000.Based on this information, what was the net cash inflow from operating activities for Year 2? 12/31/2013 12/31/2014 Accounts receivable \ 84,000 \ 60,000 Prepaid rent 8,000 4,000 Long-term marketable securities 80,000 70,000 Dividends payable 6,000 2,000 Salaries payable 8,000 2,000 Notes payable 44,000 34,000

(Multiple Choice)

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Question 73

Wade Company reported wages expense of $32,000 during the year. The beginning balance in Wages Payable was $1,200, and at the end of the year, the balance in Wages Payable was $1,700. What was the amount of cash paid for employee wages during the year?

(Multiple Choice)

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Question 74

Arch Associates reports the following comparative balance sheets and income statement information.All inventory purchases are made on account. The amount of cash paid for inventory purchases during Year 2 was: 12/31/2013 12/31/2014 Cash \ 12,000 \ 22,000 Accounts receivable 4,000 8,000 Prepaid insurance 10,000 8,000 Inventory 6,000 2,000 Property, plant and equipment 12,000 10,000 Total assets \ 44,000 \ 50,000 Accounts payable \ 8,000 \ 12,000 Salaries payable 10,000 4,000 Long term notes payable 8,000 6,000 Stockholders' equity 18,000 28,000 Total liabilities and equity \ 44,000 \ 50,000 NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 Income Statement Year Ended 12/31/14 Revenue \ 70,000 Cost of goods sold 40,000 Gross margin 30,000 Operating expense 20,000 Net income \ 10,000 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

(Multiple Choice)

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Question 75

The following information was drawn from Empire's Year 2 and Year 1 year-end balance sheets.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? 2014 2013 Investment securities \ 105,000 \ 112,500

(Multiple Choice)

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Question 76

In preparing the statement of cash flows by the indirect method, a decrease in prepaid expenses would be added to net income.

(True/False)

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Question 77

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

(Multiple Choice)

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Question 78

Arch Associates reports the following comparative balance sheets and income statement information.The amount of cash collected from customers during Year 2 was: Arch Associates Comparative Balance Sheets 12/31/2013 12/31/2014 Cash \ 12,000 \ 22,000 Accounts receivable 4,000 8,000 Prepaid insurance 10,000 8,000 Inventory 6,000 2,000 Property, plant and equipment 12,000 10,000 Total assets \ 44,000 \ 50,000 Accounts payable \ 8,000 \ 12,000 Salaries payable 10,000 4,000 Long term notes payable 8,000 6,000 Stockholders' equity 18,000 28,000 Total liabilities and equity \ 44,000 \ 50,000 NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 Income Statement Year Ended 12/31/14 Revenue \ 70,000 Cost of goods sold 40,000 Gross margin 30,000 Operating expense 20,000 Net income \ 10,000 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

(Multiple Choice)

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Question 79

What types of accounts are reconciled to determine cash flows from operating activities?

(Essay)

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Question 80

All of the following are additions to net income when preparing the statement of cash flows under the indirect method except:

The direct method shows the specific sources and uses of cash that are associated with operating activities.

There are two methods, direct and indirect, for preparing and presenting the statement of cash flows.

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?

Which of the following statements best explains the correct handling of depreciation on the statement of cash flows when using the indirect method?

Income tax expense was $137,500 for the year. The balance of the income tax payable account was $7,500 at the beginning of the year and $10,000 at the end of the year. Cash payments for income tax reported on the cash flow statement using the direct method equals:

Which of the following statements is incorrect regarding preparing a statement of cash flows using the direct method?

The indirect method for preparing the statement of cash flows begins with the amount of sales revenue reported on the income statement.

The indirect method of preparing the statement of cash flows is recommended by the Financial Accounting Standards Board.

Wade Company reported wages expense of $32,000 during the year. The beginning balance in Wages Payable was $1,200, and at the end of the year, the balance in Wages Payable was $1,700. What was the amount of cash paid for employee wages during the year?

In preparing the statement of cash flows by the indirect method, a decrease in prepaid expenses would be added to net income.

What types of accounts are reconciled to determine cash flows from operating activities?

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