Question 1

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)  Separately lists each major item of operating cash receipts. 
B)  Separately lists each major item of operating cash payments. 
C)  Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. 
D)  Is required if the company is a merchandiser. 
E)  Must not be used in all circumstances. 
A)  Separately lists each major item of operating cash receipts. 
B)  Separately lists each major item of operating cash payments. 
C)  Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. 
D)  Is required if the company is a merchandiser. 
E)  Must not be used in all circumstances.

Question 2

For each of the following independent cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

Accepted Answer

The answer of For each of the following independent cases,...

Question 3

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.

Accepted Answer

A) True 
 B)False

Question 4

A company reported net income of $318,000, operating cash flows of $218,000, total cash flows of $184,000, and average total assets of $898,000. Calculate its cash flow on total assets ratio.

Accepted Answer

The answer of A company reported net income of $318,000,...

Question 5

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Accepted Answer

A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash investing or financing activity. 
E)  None of these. This is not reported on the statement of cash flows. 
A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash investing or financing activity. 
E)  None of these. This is not reported on the statement of cash flows.

Question 6

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

Accepted Answer

The answer of The FASB requires a reconciliation of net...

Question 7

Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise.

Accepted Answer

The answer of Based on the following information provided about...

Question 8

When preparing a statement of cash flows on the indirect method, which of the following is correct?

Accepted Answer

A)  Proceeds from the sale of equipment should be added to net income in the operating activities section. 
B)  A loss on the sale of land should be added to net income in the operating activities section. 
C)  The declaration of a cash dividend should be a use of cash in the financing activities section. 
D)  The issuance of a stock dividend should be a use of cash in the financing activities section. 
E)  The purchase of land and a building by issuing a long-term note payable should be a source of cash in the financing activities section. 
A)  Proceeds from the sale of equipment should be added to net income in the operating activities section. 
B)  A loss on the sale of land should be added to net income in the operating activities section. 
C)  The declaration of a cash dividend should be a use of cash in the financing activities section. 
D)  The issuance of a stock dividend should be a use of cash in the financing activities section. 
E)  The purchase of land and a building by issuing a long-term note payable should be a source of cash in the financing activities section.

Question 9

In preparing a company's statement of cash flows for the most recent year, the following information is available:   Net cash flows from investing activities for the year were:

Accepted Answer

A)  $134,000 of net cash used by investing activities. 
B)  $134,000 of net cash provided by investing activities. 
C)  $120,000 of net cash used by investing activities. 
D)  $252,000 of net cash used by investing activities. 
E)  $221,000 of net cash provided by investing activities. 
A)  $134,000 of net cash used by investing activities. 
B)  $134,000 of net cash provided by investing activities. 
C)  $120,000 of net cash used by investing activities. 
D)  $252,000 of net cash used by investing activities. 
E)  $221,000 of net cash provided by investing activities.

Question 10

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Accepted Answer

A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash investing or financing activity. 
E)  None of these. This is not reported on the statement of cash flows. 
A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Schedule of noncash investing or financing activity. 
E)  None of these. This is not reported on the statement of cash flows.

Question 11

Of the following, which one affects cash during a period?

Accepted Answer

A)  The declaration of a stock dividend. 
B)  Writing off an uncollectible account receivable. 
C)  The declaration of a cash dividend. 
D)  An adjusting entry recognizing the expiration of prepaid insurance. 
E)  The payment of interest expense accrued in a previous accounting period. 
A)  The declaration of a stock dividend. 
B)  Writing off an uncollectible account receivable. 
C)  The declaration of a cash dividend. 
D)  An adjusting entry recognizing the expiration of prepaid insurance. 
E)  The payment of interest expense accrued in a previous accounting period.

Question 12

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

Accepted Answer

The direct method for reporting cash flo

Question 13

Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the direct method.   Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows:

Accepted Answer

The answer of Use the following income statement and information...

Question 14

All cash transactions eventually affect noncash ___________ accounts.

Accepted Answer

The answer of All cash transactions eventually affect noncash ___________...

Question 15

The payment of cash dividends never changes the balance of retained earnings.

Accepted Answer

A) True 
 B)False

Question 16

The reporting of investing and financing activities is _________________ under the direct and indirect methods of preparing the statement of cash flows.

Accepted Answer

The answer of The reporting of investing and financing activities...

Question 17

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

Accepted Answer

A) True 
 B)False

Question 18

Use the following company information to prepare a schedule of significant noncash investing and financing activities:
(a) Sold a building with a book value of $125,000 for $195,000 cash and land with a book value of $32,000 for $65,000 cash.
(b) Issued 10,000 shares of $10 par value common stock in exchange for equipment with a market value of $135,000.
(c) Retired a $100,000, 10% bond by issuing another $100,000, 12% bond issue.
(d) Acquired land by issuing a ten-year, 9%, $44,000 note payable.

Accepted Answer

The answer of Use the following company information to prepare...

Question 19

The cash flow on total assets ratio is computed by dividing _____________ by __________.

Accepted Answer

Cash flows

Question 20

Companies have the option of using either the direct or indirect method to prepare the operating section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Exam 16: Reporting the Statement of Cash Flows

The indirect method for the preparation of the operating activities section of the statement of cash flows:

For each of the following independent cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.

A company reported net income of $318,000, operating cash flows of $218,000, total cash flows of $184,000, and average total assets of $898,000. Calculate its cash flow on total assets ratio.

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise.

When preparing a statement of cash flows on the indirect method, which of the following is correct?

In preparing a company's statement of cash flows for the most recent year, the following information is available: Net cash flows from investing activities for the year were:

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Of the following, which one affects cash during a period?

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

All cash transactions eventually affect noncash ___________ accounts.

The payment of cash dividends never changes the balance of retained earnings.

The reporting of investing and financing activities is _________________ under the direct and indirect methods of preparing the statement of cash flows.

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

The cash flow on total assets ratio is computed by dividing _____________ by __________.

Companies have the option of using either the direct or indirect method to prepare the operating section of the statement of cash flows.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters

The cash flow on total assets ratio is computed by dividing ___ by .