Question 1

When using the direct method for reporting operating activities, which of the following would represent a cash-paid item?

Accepted Answer

A)  Depreciation expense, adjusted for changes in depreciation methods 
B)  Patent amortization expense, adjusted for changes in estimates 
C)  Interest expense, adjusted for changes in interest payable and amortization of bond premiums or discounts 
D)  Loss on sale of plant assets 
E)  Gain on sale of plant assets 
A)  Depreciation expense, adjusted for changes in depreciation methods 
B)  Patent amortization expense, adjusted for changes in estimates 
C)  Interest expense, adjusted for changes in interest payable and amortization of bond premiums or discounts 
D)  Loss on sale of plant assets 
E)  Gain on sale of plant assets

Question 2

Which one of the following statement does not primarily report changes in amounts or accounts?

Accepted Answer

A)  Statement of Cash Flows 
B)  Balance sheet 
C)  Income statement 
D)  Statement of retained earnings 
A)  Statement of Cash Flows 
B)  Balance sheet 
C)  Income statement 
D)  Statement of retained earnings

Question 3

A corporation started operations on January 1; the reporting period ends December 31. At the end of the year, the company's records reflected the following amounts after all adjusting entries: Sales revenue, $700,000; Cost of goods sold, $400,000; Expenses (total), $200,000; Accrued wages payable, $5,000; Accounts payable, $10,000 and Accounts receivable, $25,000.
(a) Net income, accrual basis, was $____________________.
(b) Net cash inflow from operating activities was $____________.

Accepted Answer

a) @#IMG-DLM&
b) Net cash infl

Question 4

Cash paid to suppliers plus an increase in inventory minus an increase in accounts payable would equal cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 5

ABC had the following balances on its Statement of Financial Position for Year 1:
Accounts Receivable, Jan 1, Year 1: $500
Accounts Receivable, Dec 31, Year 1: $400
Allowance for Doubtful Accounts, Jan 1, Year 1: $50cr
Allowance for Doubtful Accounts, Dec 31st, Year 1: $140cr
All sales during Year 1 were made on credit, in the amount of $1,000. Bad debt expense for the year was $100.
What were ABC's cash collections for Year1?

Accepted Answer

$500 + $1,

Question 6

On a reconciliation of net income to cash from operations, depreciation is treated as an adjustment to net income because depreciation:

Accepted Answer

A)  is a direct outflow of cash. 
B)  reduces net income but does not involve an outflow of cash. 
C)  reduces net income and involves an outflow of cash. 
D)  is an outflow of cash to a reserve account for replacement of assets. 
A)  is a direct outflow of cash. 
B)  reduces net income but does not involve an outflow of cash. 
C)  reduces net income and involves an outflow of cash. 
D)  is an outflow of cash to a reserve account for replacement of assets.

Question 7

Under IFRS, interest paid may be classified as:

Accepted Answer

A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Operating activities or financing activities. 
E)  Operating activities or investing activities. 
A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Operating activities or financing activities. 
E)  Operating activities or investing activities.

Question 8

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory decreased by $20,000 during the year, and accounts payable increased by $30,000 during the year. What would be DBB's cash paid to suppliers for 2013?

Accepted Answer

A)  $550,000 
B)  $590,000 
C)  $600,000 
D)  $610,000 
E)  $650,000 
A)  $550,000 
B)  $590,000 
C)  $600,000 
D)  $610,000 
E)  $650,000

Question 9

A change in the company's policy on defining cash equivalents should be reported as a cumulative effect adjustment.

Accepted Answer

A) True 
 B)False

Question 10

Cash paid for income taxes under the direct method would be income tax expense minus:

Accepted Answer

A)  An increase in income taxes payable. 
B)  A decrease in income taxes payable. 
C)  Beginning income taxes payable. 
D)  Ending income taxes payable. 
A)  An increase in income taxes payable. 
B)  A decrease in income taxes payable. 
C)  Beginning income taxes payable. 
D)  Ending income taxes payable.

Question 11

The main purpose of the Statement of Cash Flows is:

Accepted Answer

A)  to determine the change in cash for the period. 
B)  to disclose information about cash receipts and disbursements during the period. 
C)  to disclose the changes in long-term asset and liability accounts during the period. 
D)  to disclose significant noncash investing and financing activities during the period. 
E)  to explain why net income and net operating cash flows are different. 
A)  to determine the change in cash for the period. 
B)  to disclose information about cash receipts and disbursements during the period. 
C)  to disclose the changes in long-term asset and liability accounts during the period. 
D)  to disclose significant noncash investing and financing activities during the period. 
E)  to explain why net income and net operating cash flows are different.

Question 12

The sale of $3,000 worth of cash equivalents at cost has what effect on the indirect method Statement of Cash Flows.

Accepted Answer

A)  Add $3,000 in the reconciliation 
B)  No disclosure 
C)  $3,000 Operating cash inflow 
D)  $3,000 investing cash inflow 
E)  $3,000 investing cash outflow 
A)  Add $3,000 in the reconciliation 
B)  No disclosure 
C)  $3,000 Operating cash inflow 
D)  $3,000 investing cash inflow 
E)  $3,000 investing cash outflow

Question 13

RJB reported sales of $200,000 and an increase in accounts receivable of $30,000 during 2001. Under the direct method, what would be RJB's cash collected from customers during 2001?

Accepted Answer

A)  $170,000 
B)  $200,000 
C)  $230,000 
D)  Cannot be determined from information given. 
A)  $170,000 
B)  $200,000 
C)  $230,000 
D)  Cannot be determined from information given.

Question 14

Choose the correct statement about preparation of the Statement of Cash Flows:

Accepted Answer

A)  only the indirect method is required; the direct method is optional. 
B)  a spreadsheet must be used in computerized situations. 
C)  no particular preparation method is mandated by GAAP. 
D)  the direct method must be used unless available information does not permit it, in which case the indirect method may be used. 
A)  only the indirect method is required; the direct method is optional. 
B)  a spreadsheet must be used in computerized situations. 
C)  no particular preparation method is mandated by GAAP. 
D)  the direct method must be used unless available information does not permit it, in which case the indirect method may be used.

Question 15

Depreciation expense is not a source of cash or cash equivalents.

Accepted Answer

A) True 
 B)False

Question 16

VJW received the following cash inflows during 2013: $$\begin{array} { | l | l | } 
\hline \text { Cash from customers } & \$ 200,000 \
\hline \text { Sale of capital assets } & 50,000 \
\hline \text { Interest on loan receivable } & 10,000 \
\hline \text { Proceeds from sale of investments } & 40,000 \
\hline
\end{array}$$ Calculate cash inflow from financing activities for 2013.

Accepted Answer

The answer of VJW received the following cash inflows during...

Question 17

Complete the following Statement of Cash Flows, indirect method, schedule to determine cash inflow (outflow) from operating activities:
Statement of Cash Flows, Indirect Method
Operating Activities:
Net income = $150,000
Adjustments to convert net income to cash from operating activities: $\begin{array}{|l|l|}
\hline \text { Depreciation expense, } \$ 12,000 & \
\hline \text { Gain on sale of capital assets, } \$ 7,000 & \
\hline \text { Loss on sale of long-term investments, } \$ 4,000 & \
\hline \text { Amortization of discount on bonds payable, } \$ 3,000 & \
\hline \text { Increase in Inventory, } \$ 6,000 & \\hline \text { Gain on retirement of long-term debt, } \$ 8,000 & \
\hline \text { Decrease in Accounts Receivable, } \$ 5,000 & \
\hline \text { Correction of prior years' errors, loss } \$ 11,000 & \
\hline \text { Cash inflow (outflow) from operating activities } & \$ \
\hline
\end{array}$

Accepted Answer

Operating Activities

Question 18

MJC received the following cash inflows during 2012: $$\begin{array} { | l | l | } 
\hline \text { Cash from customers } & \$ 600 \
\hline \text { Sales of investments in sec urities av ailable for sale } & 100 \
\hline \text { Sale of common stock } & 70 \
\hline \text { Proceeds from bonds payable } & 400 \
\hline \text { Sale of patents } & 20 \
\hline \text { nterest received } & 4 \
\hline
\end{array}$$ What would be cash inflow from operating, investing, and financing activities, respectively, for 2012?
Note: Under IFRS, interest received may also be an investing activity.

Accepted Answer

Operating Cash flows: $600 + $

Question 19

A Statement of Cash Flows would not report the effects of:

Accepted Answer

A)  Cash dividends paid. 
B)  A purchase and immediate retirement of common stock. 
C)  Stock dividends declared and issued. 
D)  Common shares issued for cash. 
A)  Cash dividends paid. 
B)  A purchase and immediate retirement of common stock. 
C)  Stock dividends declared and issued. 
D)  Common shares issued for cash.

Question 20

In preparing a Statement of Cash Flows, you encountered the following transaction of February 1, 2013: acquired a small office building in exchange for 5,000 of our common shares; market value $15 per share. How should this transaction be reported on the Statement of Cash Flows?

Accepted Answer

A)  Report as a concurrent inflow and outflow of cash on the Statement of Cash Flows. 
B)  Report as a noncash investing and financing activity. 
C)  Not reported on the Statement of Cash Flows because it did not affect cash, but details explained in the disclosure notes. 
D)  Report on a Statement of Cash Flows as an investing activity. 
A)  Report as a concurrent inflow and outflow of cash on the Statement of Cash Flows. 
B)  Report as a noncash investing and financing activity. 
C)  Not reported on the Statement of Cash Flows because it did not affect cash, but details explained in the disclosure notes. 
D)  Report on a Statement of Cash Flows as an investing activity.

When using the direct method for reporting operating activities, which of the following would represent a cash-paid item?

Which one of the following statement does not primarily report changes in amounts or accounts?

Cash paid to suppliers plus an increase in inventory minus an increase in accounts payable would equal cost of goods sold.

On a reconciliation of net income to cash from operations, depreciation is treated as an adjustment to net income because depreciation:

Under IFRS, interest paid may be classified as:

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory decreased by $20,000 during the year, and accounts payable increased by $30,000 during the year. What would be DBB's cash paid to suppliers for 2013?

A change in the company's policy on defining cash equivalents should be reported as a cumulative effect adjustment.

Cash paid for income taxes under the direct method would be income tax expense minus:

The main purpose of the Statement of Cash Flows is:

The sale of $3,000 worth of cash equivalents at cost has what effect on the indirect method Statement of Cash Flows.

RJB reported sales of $200,000 and an increase in accounts receivable of $30,000 during 2001. Under the direct method, what would be RJB's cash collected from customers during 2001?

Choose the correct statement about preparation of the Statement of Cash Flows:

Depreciation expense is not a source of cash or cash equivalents.

VJW received the following cash inflows during 2013: Cash from customers \ 200,000 Sale of capital assets 50,000 Interest on loan receivable 10,000 Proceeds from sale of investments 40,000 Calculate cash inflow from financing activities for 2013.

A Statement of Cash Flows would not report the effects of:

In preparing a Statement of Cash Flows, you encountered the following transaction of February 1, 2013: acquired a small office building in exchange for 5,000 of our common shares; market value $15 per share. How should this transaction be reported on the Statement of Cash Flows?

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

When using the direct method for reporting operating activities, which of the following would represent a cash-paid item?

Which one of the following statement does not primarily report changes in amounts or accounts?

Cash paid to suppliers plus an increase in inventory minus an increase in accounts payable would equal cost of goods sold.

On a reconciliation of net income to cash from operations, depreciation is treated as an adjustment to net income because depreciation:

Under IFRS, interest paid may be classified as:

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory decreased by $20,000 during the year, and accounts payable increased by $30,000 during the year. What would be DBB's cash paid to suppliers for 2013?

A change in the company's policy on defining cash equivalents should be reported as a cumulative effect adjustment.

Cash paid for income taxes under the direct method would be income tax expense minus:

The main purpose of the Statement of Cash Flows is:

The sale of $3,000 worth of cash equivalents at cost has what effect on the indirect method Statement of Cash Flows.

RJB reported sales of $200,000 and an increase in accounts receivable of $30,000 during 2001. Under the direct method, what would be RJB's cash collected from customers during 2001?

Choose the correct statement about preparation of the Statement of Cash Flows:

Depreciation expense is not a source of cash or cash equivalents.

VJW received the following cash inflows during 2013: Cash from customers \ 200,000 Sale of capital assets 50,000 Interest on loan receivable 10,000 Proceeds from sale of investments 40,000 Calculate cash inflow from financing activities for 2013.

A Statement of Cash Flows would not report the effects of:

In preparing a Statement of Cash Flows, you encountered the following transaction of February 1, 2013: acquired a small office building in exchange for 5,000 of our common shares; market value $15 per share. How should this transaction be reported on the Statement of Cash Flows?

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