Question 1

The gain resulting from the sale of equipment shown when using the indirect method to prepare the statement of cash flows is reported in the:

Accepted Answer

A) operating section as a deduction. 
B) investing section as a deduction. 
C) operating section as an addition. 
D) investing section as an addition. 
A) operating section as a deduction. 
B) investing section as a deduction. 
C) operating section as an addition. 
D) investing section as an addition.

Question 2

Which of the following would not be reported as an investing activity on the statement of cash flows?

Accepted Answer

A) Cash dividends received from an investment in marketable securities. 
B) Cash loaned to another company. 
C) Cash received from the sale of equipment. 
D) Cash paid to purchase production equipment. 
A) Cash dividends received from an investment in marketable securities. 
B) Cash loaned to another company. 
C) Cash received from the sale of equipment. 
D) Cash paid to purchase production equipment.

Question 3

Which method is used by 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 4

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 5

Which of the following statements is incorrect regarding the use of the indirect method when preparing the operating activities of the statement of cash flows?

Accepted Answer

A) A decrease in Accounts Payable is deducted from net income 
B) A decrease in Prepaid Insurance is added to net income 
C) Gain on the retirement of bonds is deducted from net income 
D) Depreciation expense is subtracted from net income 
A) A decrease in Accounts Payable is deducted from net income 
B) A decrease in Prepaid Insurance is added to net income 
C) Gain on the retirement of bonds is deducted from net income 
D) Depreciation expense is subtracted from net income

Question 6

Would issuing a mortgage to purchase a building be reported on the statement of cash flows? If so, where would it be reported? If not, why not?

Accepted Answer

Answers will vary
Issuing a mortgage to

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Cash from the sale of treasury stock would be classified as an investing cash flow.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would not be reported as a financing activity on the statement of cash flows?

Accepted Answer

A) Cash receipts from issuing common stock 
B) Cash payments for interest 
C) Cash payments to purchase treasury stock 
D) Cash payments for dividends 
A) Cash receipts from issuing common stock 
B) Cash payments for interest 
C) Cash payments to purchase treasury stock 
D) Cash payments for dividends

The gain resulting from the sale of equipment shown when using the indirect method to prepare the statement of cash flows is reported in the:

Which of the following would not be reported as an investing activity on the statement of cash flows?

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

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?

Which of the following statements is incorrect regarding the use of the indirect method when preparing the operating activities of the statement of cash flows?

Would issuing a mortgage to purchase a building be reported on the statement of cash flows? If so, where would it be reported? If not, why not?

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

Cash from the sale of treasury stock would be classified as an investing cash flow.

Which of the following would not be reported as a financing activity on the statement of cash flows?

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 gain resulting from the sale of equipment shown when using the indirect method to prepare the statement of cash flows is reported in the:

Which of the following would not be reported as an investing activity on the statement of cash flows?

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

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?

Which of the following statements is incorrect regarding the use of the indirect method when preparing the operating activities of the statement of cash flows?

Would issuing a mortgage to purchase a building be reported on the statement of cash flows? If so, where would it be reported? If not, why not?

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

Cash from the sale of treasury stock would be classified as an investing cash flow.

Which of the following would not be reported as a financing activity on the statement of cash flows?

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