Question 1

The Statement of Cash Flows is not a required financial statement in the same sense as the income statement and balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

A firm's recent comparative balance sheets and income statements follow:  
Income statement for year ended December 31, 2011
$\begin{array}{|l|r|}
\hline \text { Sales revenue } & \$ 77,500 \
\hline \text { Cost of goods sold } & (53,500) \
\hline \text { Gross margin } & 24,000 \
\hline \text { Depreciation expense } & (16,500) \
\hline \text { Gain on sale of equipment } & 6,500 \
\hline \text { Net income } & \$ 14,000 \
\hline
\end{array}$
Additional information:
1. During 2011, equipment costing $20,000 was sold for cash.
2. During 2011, $10,000 of bonds payable were issued in exchange for capital assets. There was no amortization of bond discount or premium.
Required:
Prepare the 2011 Statement of Cash Flows using the indirect method.

Accepted Answer

Statement of Cash Flows
For the Year End

Question 3

The gain on the sale of a long-term investment should be disclosed separately in a Statement of Cash Flows of a company with substantial operating profits as a(n):

Accepted Answer

A)  Adjustment to net income in the reconciliation of net income to cash from operating activities. 
B)  Outflow from operating activities. 
C)  Outflow from investing activities. 
D)  Inflow from financing activities. 
A)  Adjustment to net income in the reconciliation of net income to cash from operating activities. 
B)  Outflow from operating activities. 
C)  Outflow from investing activities. 
D)  Inflow from financing activities.

Question 4

In the preparation of the Statement of Cash Flows using the Direct Method, an operating loss would be reported under cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 5

KEC paid the following cash outflows during 2012: $$\begin{array} { | l | l | } 
\hline \text { Cash tor dividends } & \$ 12,000 \
\hline \text { Cash loaned to KEC president } & 20,000 \
\hline \text { Cash tor interest } & 4,000 \
\hline \text { Cash tor income taxes } & 25,000 \
\hline \text { Cash to purchase KEC common stock } & 40,000 \
\hline \text { Cash to purchase ABC common stock } & 43,000 \
\hline
\end{array}$$ What would be cash outflow for operating, investing, and financing activities, respectively, for 2012?
Note: Under IFRS, interest received may also be an investing activity.

Accepted Answer

Operating Cash Outflows: $25,0

Question 6

BWL paid the following cash outflows during 2012: $$\begin{array} { | l | l | } 
\hline \text { Cash for BWL common stock dividends } & \$ 20,000 \
\hline \text { Cash for capital as sets } & 100,000 \
\hline \text { Cash for common stock } & 30,000 \
\hline \text { Cash for interest } & 5,000 \
\hline \text { Cash for investment in securities av ailable for sale } & 80,000 \
\hline
\end{array}$$ What would be BWL's cash outflow for investing and financing activities, respectively, for 2012 under IFRS?
Note: Under IFRS, dividends received may also be classified as operating cash flows.

Accepted Answer

Investing Cash Outflows: $100,

Question 7

KWB made the following cash outflows during 2011: $$\begin{array} { | l | l | } 
\hline \text { Cash for dividend paym ent on K''B comm on shares } & \$ 5,000 \
\hline \text { Cash tor capital as sets } & 50,000 \
\hline \text { Cash tor interest } & 3,000 \
\hline \text { Cash tor purchase of JCK comm on stock } & 40,000 \
\hline
\end{array}$$ What would be KWB's cash outflows for investing and financing activities for 2011 under IFRS?
Note: Under IFRS, dividends and interest paid may also be classified as operating cash flows.

Accepted Answer

Investing Cash Outflows: $50,0

Question 8

SDB reported sales of $300,000, write-offs of uncollectible accounts of $10,000 against the allowance, and a decrease in net accounts receivable of $40,000 during 2013. What would be SDB's cash collected from customers during 2013?

Accepted Answer

A)  $300,000 
B)  $330,000 
C)  $340,000 
D)  $350,000 
A)  $300,000 
B)  $330,000 
C)  $340,000 
D)  $350,000

Question 9

KWB made the following cash outflows during 2011:$\begin{array} { | l | l | } 
\hline \text { Cash for dividends on KWB common shares } & \$ 5,000 \
\hline \text { Cash for capital assets } & 50,000 \
\hline \text { Cash for interest } & 3,000 \
\hline \text { Cash loaned to president of KWB } & 10,000 \
\hline \text { Cash for purchase of JCK common stock } & 40,000 \
\hline
\end{array}$Calculate KWB's cash outflow for investing activities for 2011.

Accepted Answer

The answer of KWB made the following cash outflows during...

Question 10

Assume cash paid to suppliers for 2011 is $420,000, that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011.
Calculate the net change in accounts payable during 2011.

Accepted Answer

The answer of Assume cash paid to suppliers for 2011...

Question 11

In a Statement of Cash Flows, the amortization of goodwill for a company with substantial operating profits should be presented as a(n):

Accepted Answer

A)  Inflow from operating activities. 
B)  Inflow from investing activities. 
C)  Outflow from investing activities. 
D)  Adjustment to net income in the reconciliation of net income to cash from operating activities. 
A)  Inflow from operating activities. 
B)  Inflow from investing activities. 
C)  Outflow from investing activities. 
D)  Adjustment to net income in the reconciliation of net income to cash from operating activities.

Question 12

Under ASPE, interest received and paid and dividends received must be classified in the operating activities section of the Statement of Cash Flows.

Accepted Answer

A) True 
 B)False

Question 13

Two formats of presenting the Statement of Cash Flows are allowed under ASPE and IFRS. Describe the two formats and provide your own opinion on which results in a more complete picture of a firm's cash flows.

Accepted Answer

The direct and indirect formats are two

Question 14

A firm's dividends payable account increased $10,000 during the year. The firm also declared $35,000 of dividends. What is the complete disclosure in the direct method Statement of Cash Flows for these events?

Accepted Answer

A)  $25,000 financing cash outflow; $10,000 addition reconciling adjustment 
B)  $45,000 financing cash outflow 
C)  $25,000 financing cash outflow 
D)  $35,000 financing cash outflow 
E)  $25,000 financing cash outflow; $10,000 subtraction reconciling adjustment 
A)  $25,000 financing cash outflow; $10,000 addition reconciling adjustment 
B)  $45,000 financing cash outflow 
C)  $25,000 financing cash outflow 
D)  $35,000 financing cash outflow 
E)  $25,000 financing cash outflow; $10,000 subtraction reconciling adjustment

Question 15

The following income statement and additional information for MDB, Inc. is relevant to the statement of changes in financial position. $\begin{array} { | l | l | l | l | } 
\hline & \text { Income Statement } & \text { Additional Information } & \
\hline \text { Sales } & \$ 500,000 & \text { Increase in Acct/Rec } & \$ 10,000 \
\hline \text { Cost of goods sold } & ( 300,000 ) & \text { Increase in Inventory } & \$ 5,000 \
\hline \text { Operating expenses } & ( 140,000 ) & \text { Decrease in Acct/Pay } & \$ 8,000 \
\hline \text { Net income } & 60,000 & \text { Increase in Accrued Oper. Exps } & \$ 6,000 \
\hline
\end{array}$Required:
1. Prepare a schedule showing cash from operations (direct method).
2. Prepare a schedule showing cash from operations (indirect method).

Accepted Answer

The answer of The following income statement and additional information...

Question 16

Dividends received may be classified as operating or investing activities under IFRS.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the operating cash flow?

Accepted Answer

A)  rent payments 
B)  dividend payments 
C)  payments for the purchase of a building 
D)  principal payment on a bank loan 
A)  rent payments 
B)  dividend payments 
C)  payments for the purchase of a building 
D)  principal payment on a bank loan

Question 18

Choose the operating cash flow for Bikk Inc.

Accepted Answer

A)  Principal payment on a note payable to a supplier for inventory purchased by Bikk for resale by Bikk. 
B)  Dividend paid to Bikk's shareholders. 
C)  Principal payment on a loan from a financial institution; Bikk used the proceeds to purchase inventory for resale. 
D)  Capitalized interest. 
A)  Principal payment on a note payable to a supplier for inventory purchased by Bikk for resale by Bikk. 
B)  Dividend paid to Bikk's shareholders. 
C)  Principal payment on a loan from a financial institution; Bikk used the proceeds to purchase inventory for resale. 
D)  Capitalized interest.

Question 19

The Statement of Cash Flows is dated at a specific point in time like the balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

Depreciation expense represents a "flow" of cash during the current period.

Accepted Answer

A) True 
 B)False

The Statement of Cash Flows is not a required financial statement in the same sense as the income statement and balance sheet.

The gain on the sale of a long-term investment should be disclosed separately in a Statement of Cash Flows of a company with substantial operating profits as a(n):

In the preparation of the Statement of Cash Flows using the Direct Method, an operating loss would be reported under cash flows from operating activities.

SDB reported sales of $300,000, write-offs of uncollectible accounts of $10,000 against the allowance, and a decrease in net accounts receivable of $40,000 during 2013. What would be SDB's cash collected from customers during 2013?

KWB made the following cash outflows during 2011: Cash for dividends on KWB common shares \ 5,000 Cash for capital assets 50,000 Cash for interest 3,000 Cash loaned to president of KWB 10,000 Cash for purchase of JCK common stock 40,000 Calculate KWB's cash outflow for investing activities for 2011.

Assume cash paid to suppliers for 2011 is $420,000, that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011. Calculate the net change in accounts payable during 2011.

In a Statement of Cash Flows, the amortization of goodwill for a company with substantial operating profits should be presented as a(n):

Under ASPE, interest received and paid and dividends received must be classified in the operating activities section of the Statement of Cash Flows.

Two formats of presenting the Statement of Cash Flows are allowed under ASPE and IFRS. Describe the two formats and provide your own opinion on which results in a more complete picture of a firm's cash flows.

A firm's dividends payable account increased $10,000 during the year. The firm also declared $35,000 of dividends. What is the complete disclosure in the direct method Statement of Cash Flows for these events?

Dividends received may be classified as operating or investing activities under IFRS.

Which of the following is the operating cash flow?

Choose the operating cash flow for Bikk Inc.

The Statement of Cash Flows is dated at a specific point in time like the balance sheet.

Depreciation expense represents a "flow" of cash during the current period.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 5: The Statement of Cash Flows

The Statement of Cash Flows is not a required financial statement in the same sense as the income statement and balance sheet.

The gain on the sale of a long-term investment should be disclosed separately in a Statement of Cash Flows of a company with substantial operating profits as a(n):

In the preparation of the Statement of Cash Flows using the Direct Method, an operating loss would be reported under cash flows from operating activities.

SDB reported sales of $300,000, write-offs of uncollectible accounts of $10,000 against the allowance, and a decrease in net accounts receivable of $40,000 during 2013. What would be SDB's cash collected from customers during 2013?

Assume cash paid to suppliers for 2011 is $420,000, that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011. Calculate the net change in accounts payable during 2011.

In a Statement of Cash Flows, the amortization of goodwill for a company with substantial operating profits should be presented as a(n):

Under ASPE, interest received and paid and dividends received must be classified in the operating activities section of the Statement of Cash Flows.

Two formats of presenting the Statement of Cash Flows are allowed under ASPE and IFRS. Describe the two formats and provide your own opinion on which results in a more complete picture of a firm's cash flows.

A firm's dividends payable account increased $10,000 during the year. The firm also declared $35,000 of dividends. What is the complete disclosure in the direct method Statement of Cash Flows for these events?

Dividends received may be classified as operating or investing activities under IFRS.

Which of the following is the operating cash flow?

Choose the operating cash flow for Bikk Inc.

The Statement of Cash Flows is dated at a specific point in time like the balance sheet.

Depreciation expense represents a "flow" of cash during the current period.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters