Question 1

Insurance and utility expenses are considered operating activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 2

In a statement of cash flows, which of the following would be classified as an investing activity?

Accepted Answer

A) The sale of the company's own common stock for cash. 
B) The sale of equipment. 
C) Interest paid to a lender. 
D) The issuance of bonds payable. 
A) The sale of the company's own common stock for cash. 
B) The sale of equipment. 
C) Interest paid to a lender. 
D) The issuance of bonds payable.

Question 3

Majorn Auto Parts Store had net income of $81,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year:   Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided (used) by operating activities?

Accepted Answer

A) $41,000 
B) ($53,000) 
C) $185,000 
D) $279,000 
A) $41,000 
B) ($53,000) 
C) $185,000 
D) $279,000

Question 4

Krech Corporation's comparative balance sheet appears below:   The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities. Which of the following is correct regarding the operating activities section of the statement of cash flows?

Accepted Answer

A) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income 
B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income 
C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income 
D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income 
A) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income 
B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income 
C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income 
D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

Question 5

Frankin Corporation's net cash provided by operating activities was $192; its capital expenditures were $154; and its cash dividends were $27. The company's free cash flow was:

Accepted Answer

A) $38 
B) $373 
C) $11 
D) $165 
A) $38 
B) $373 
C) $11 
D) $165

Question 6

The statement of cash flows relies on a fundamental principle of double-entry bookkeeping; namely, the change in the cash balance must equal the change in total liabilities and stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 7

In a statement of cash flows, issuing bonds payable affects the:

Accepted Answer

A) operating activities section. 
B) financing activities section. 
C) investing activities section. 
D) free cash flow activities section. 
A) operating activities section. 
B) financing activities section. 
C) investing activities section. 
D) free cash flow activities section.

Question 8

Free cash flow decreases when a company issues common stock for cash.

Accepted Answer

A) True 
 B)False

Question 9

In the statement of cash flows, collecting cash from customers is treated as a cash inflow in the financing activities section.

Accepted Answer

A) True 
 B)False

Question 10

Dukas Corporation's net cash provided by operating activities was $218,000; its net income was $203,000; its capital expenditures were $146,000; and its cash dividends were $49,000.
Required:
Determine the company's free cash flow.

Accepted Answer

Free cash flow = Net cash from

Question 11

Alcoser Corporation's most recent balance sheet appears below:   Net income for the year was $60. Cash dividends were $12. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) financing activities for the year was:

Accepted Answer

A) $10 
B) $5 
C) ($12) 
D) $17 
A) $10 
B) $5 
C) ($12) 
D) $17

Question 12

Which one of the following transactions should be classified as a financing activity on the statement of cash flows?

Accepted Answer

A) Purchase of equipment. 
B) Purchase of the company's own stock. 
C) Sale of a long-term investment. 
D) Payment of interest to a lender. 
A) Purchase of equipment. 
B) Purchase of the company's own stock. 
C) Sale of a long-term investment. 
D) Payment of interest to a lender.

Question 13

Hirshberg Corporation's comparative balance sheet appears below:   The company's net income (loss) for the year was $11,000 and its cash dividends were $4,000. It did not sell or retire any property, plant, and equipment during the year. The company's net cash provided by operating activities is:

Accepted Answer

A) $48,000 
B) $18,000 
C) $40,000 
D) $52,000 
A) $48,000 
B) $18,000 
C) $40,000 
D) $52,000

Question 14

An increase in accrued liabilities of $1,000 during a year would be shown on the company's statement of cash flows prepared under the indirect method as:

Accepted Answer

A) an addition to net income of $1,000 in order to arrive at net cash provided by operating activities. 
B) a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities. 
C) a deduction of $1,000 under investing activities. 
D) an addition of $1,000 under financing activities. 
A) an addition to net income of $1,000 in order to arrive at net cash provided by operating activities. 
B) a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities. 
C) a deduction of $1,000 under investing activities. 
D) an addition of $1,000 under financing activities.

Question 15

McCorey Corporation recorded the following events last year:   On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be:

Accepted Answer

A) $110,000 
B) $55,000 
C) $150,000 
D) $130,000 
A) $110,000 
B) $55,000 
C) $150,000 
D) $130,000

Question 16

Walmouth Corporation's comparative balance sheet and income statement for last year appear below:     The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) financing activities last year was:

Accepted Answer

A) ($104,000) 
B) $104,000 
C) ($60,000) 
D) $60,000 
A) ($104,000) 
B) $104,000 
C) ($60,000) 
D) $60,000

Question 17

Excerpts from Deblois Corporation's comparative balance sheet appear below:   Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

Accepted Answer

A) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is subtracted from net income 
B) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is added to net income 
C) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is added to net income 
D) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is subtracted from net income 
A) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is subtracted from net income 
B) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is added to net income 
C) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is added to net income 
D) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is subtracted from net income

Question 18

Walmouth Corporation's comparative balance sheet and income statement for last year appear below:     The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities last year was:

Accepted Answer

A) $30,000 
B) ($30,000) 
C) ($40,000) 
D) $40,000 
A) $30,000 
B) ($30,000) 
C) ($40,000) 
D) $40,000

Question 19

Kaeser Corporation's most recent balance sheet appears below:   The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. The net cash provided by (used in) investing activities for the year was:

Accepted Answer

A) $17 
B) $67 
C) ($17) 
D) ($67) 
A) $17 
B) $67 
C) ($17) 
D) ($67)

Question 20

When a company pays a supplier for inventory it has purchased, the cash outflow is recorded in the investing activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Insurance and utility expenses are considered operating activities on the statement of cash flows.

In a statement of cash flows, which of the following would be classified as an investing activity?

Frankin Corporation's net cash provided by operating activities was $192; its capital expenditures were $154; and its cash dividends were $27. The company's free cash flow was:

The statement of cash flows relies on a fundamental principle of double-entry bookkeeping; namely, the change in the cash balance must equal the change in total liabilities and stockholders' equity.

In a statement of cash flows, issuing bonds payable affects the:

Free cash flow decreases when a company issues common stock for cash.

In the statement of cash flows, collecting cash from customers is treated as a cash inflow in the financing activities section.

Dukas Corporation's net cash provided by operating activities was $218,000; its net income was $203,000; its capital expenditures were $146,000; and its cash dividends were $49,000. Required: Determine the company's free cash flow.

Which one of the following transactions should be classified as a financing activity on the statement of cash flows?

Hirshberg Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was $11,000 and its cash dividends were $4,000. It did not sell or retire any property, plant, and equipment during the year. The company's net cash provided by operating activities is:

An increase in accrued liabilities of $1,000 during a year would be shown on the company's statement of cash flows prepared under the indirect method as:

Excerpts from Deblois Corporation's comparative balance sheet appear below: Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

Kaeser Corporation's most recent balance sheet appears below: The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. The net cash provided by (used in) investing activities for the year was:

When a company pays a supplier for inventory it has purchased, the cash outflow is recorded in the investing activities section of the statement of cash flows.

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

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Exam 12: Statement of Cash Flows

Insurance and utility expenses are considered operating activities on the statement of cash flows.

In a statement of cash flows, which of the following would be classified as an investing activity?

Frankin Corporation's net cash provided by operating activities was $192; its capital expenditures were $154; and its cash dividends were $27. The company's free cash flow was:

The statement of cash flows relies on a fundamental principle of double-entry bookkeeping; namely, the change in the cash balance must equal the change in total liabilities and stockholders' equity.

In a statement of cash flows, issuing bonds payable affects the:

Free cash flow decreases when a company issues common stock for cash.

In the statement of cash flows, collecting cash from customers is treated as a cash inflow in the financing activities section.

Dukas Corporation's net cash provided by operating activities was $218,000; its net income was $203,000; its capital expenditures were $146,000; and its cash dividends were $49,000. Required: Determine the company's free cash flow.

Which one of the following transactions should be classified as a financing activity on the statement of cash flows?

Hirshberg Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was $11,000 and its cash dividends were $4,000. It did not sell or retire any property, plant, and equipment during the year. The company's net cash provided by operating activities is:

An increase in accrued liabilities of $1,000 during a year would be shown on the company's statement of cash flows prepared under the indirect method as:

Excerpts from Deblois Corporation's comparative balance sheet appear below: Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

Kaeser Corporation's most recent balance sheet appears below: The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. The net cash provided by (used in) investing activities for the year was:

When a company pays a supplier for inventory it has purchased, the cash outflow is recorded in the investing activities section of the statement of cash flows.

Managerial Accounting and Cost Concepts

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

Filters