Question 1

Free cash flow refers to the excess of cash inflows over cash outflows.

Accepted Answer

A) True 
 B)False

Question 2

[The following information applies to the questions displayed below.]
An analysis of Kenny Corporation's Investment in Marketable Securities account during 2018 disclosed the following:
   Kenny's 2018 income statement included a $90,000 loss on sale of marketable securities and $65,000 dividend income from marketable securities.All payments and proceeds relating to marketable securities transactions were in cash.
-How should the transactions involving marketable securities be classified in Kenny's statement of cash flows for 2018?

Accepted Answer

A) The purchase of marketable securities,sales of marketable securities,and receipt of dividends are all classified as investing activities. 
B) The purchase and the sale of marketable securities are classified as investing activities;the receipt of dividends is classified as an operating activity. 
C) The purchase of marketable securities is classified as an investing activity;the sale of marketable securities is classified as a financing activity;the receipt of dividends is classified as an operating activity. 
D) The purchase and the sale of marketable securities are classified as investing activities;the receipt of dividends is classified as a financing activity. 
A) The purchase of marketable securities,sales of marketable securities,and receipt of dividends are all classified as investing activities. 
B) The purchase and the sale of marketable securities are classified as investing activities;the receipt of dividends is classified as an operating activity. 
C) The purchase of marketable securities is classified as an investing activity;the sale of marketable securities is classified as a financing activity;the receipt of dividends is classified as an operating activity. 
D) The purchase and the sale of marketable securities are classified as investing activities;the receipt of dividends is classified as a financing activity.

Question 3

In a statement of cash flows,collections of accounts receivable are classified as:

Accepted Answer

A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Revenues and Gains. 
A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Revenues and Gains.

Question 4

Free cash flow is computed as net cash flow from operating activities plus cash used to acquire plant assets minus cash paid for dividends.

Accepted Answer

A) True 
 B)False

Question 5

[The following information applies to the questions displayed below.]
The financial statements of Seldin,Inc. ,provide the following information for the current year:
  
-Compute the amount of Seldin's cash payments for operating expenses.

Accepted Answer

A) $73,000 
B) $59,000 
C) $81,000 
D) $65,000 
A) $73,000 
B) $59,000 
C) $81,000 
D) $65,000

Question 6

Monarch Company uses the indirect method to prepare its statement of cash flows.The following information has been gathered for the current period:   On the basis of the above information only,Monarch Company's statement of cash flows shows net cash flow from operating activities to be:

Accepted Answer

A) $187,000. 
B) $333,000. 
C) $225,000. 
D) $361,000. 
A) $187,000. 
B) $333,000. 
C) $225,000. 
D) $361,000.

Question 7

Rent expense in Marrin Company's 2018 income statement is $420,000.If Prepaid Rent was $70,000 at December 31,2017,and is $95,000 at December 31,2018,the cash paid for rent during 2018 is:

Accepted Answer

A) $420,000. 
B) $445,000. 
C) $395,000. 
D) $480,000. 
A) $420,000. 
B) $445,000. 
C) $395,000. 
D) $480,000.

Question 8

[The following information applies to the questions displayed below.]
During 2018,the cash flows related to Global Data,Inc.'s lending and borrowing activities are summarized as follows:
  
-On the basis of the above information alone,what is Global Data's net cash flow from financing activities?

Accepted Answer

A) $147,000 net cash used for financing activities 
B) $145,500 net cash used for financing activities 
C) $206,100 net cash used for financing activities 
D) $500,100 net cash used for financing activities 
A) $147,000 net cash used for financing activities 
B) $145,500 net cash used for financing activities 
C) $206,100 net cash used for financing activities 
D) $500,100 net cash used for financing activities

Question 9

Both FASB and IASB require the cash flow statement to be organized in three categories,operating activities,investing activities,and financing activities.

Accepted Answer

A) True 
 B)False

Question 10

[The following information applies to the questions displayed below.]
The financial statements of Seldin,Inc. ,provide the following information for the current year:
  
-Early in 2018,Larsen Corporation purchased marketable securities at a cost of $90,000.In September,dividends of $6,600 were received;Larsen sold the securities in December at a gain of $5,600.How would these transactions be reported on Larsen's statement of cash flows for 2018?

Accepted Answer

A) $95,600 net cash provided by investing activities;$6,600 included in cash provided by operating activities. 
B) $12,200 net cash provided by investing activities. 
C) $95,600 cash provided by investing activities;$90,000 cash used in financing activities. 
D) $84,400 net cash used in investing activities;$95,600 cash provided by investing activities. 
A) $95,600 net cash provided by investing activities;$6,600 included in cash provided by operating activities. 
B) $12,200 net cash provided by investing activities. 
C) $95,600 cash provided by investing activities;$90,000 cash used in financing activities. 
D) $84,400 net cash used in investing activities;$95,600 cash provided by investing activities.

Question 11

Cash flow from operations activities-indirect method
An analysis of the 2018 financial statements of Portside Provisions reveals the following:
(a)Accounts payable to suppliers of merchandise decreased by $65,000 during 2018.
(b)Dividends of $135,000 were declared in November 2018,to be paid in January 2019.
(c)Dividends of $120,000,declared in November 2017,were paid in January 2018.
(d)Inventory levels increased by $91,000 during 2018.
(e)Depreciation expense for 2018 amounted to $53,000.
(f)Land,which had a cost of $350,000,was sold in 2018 for $400,000 cash,resulting in a gain of $50,000.
(g)Net income for 2018 was $745,000.
Using only the above information,follow the indirect method to compute Portside Provisions' net cash flows from operating activities for 2018.

Accepted Answer

The answer of Cash flow from operations activities-indirect method
An analysis...

Question 12

Cash flows from operating activities-indirect method
The data below are taken from the financial statements of the Rutherford Corporation:
   Complete the partial statement of cash flows for the year ended December 31,2018,showing the computation of net cash flows from operating activities by the indirect method:

Accepted Answer

The answer of Cash flows from operating activities-indirect method
The data...

Question 13

How should purchases,sales,and depreciation of plant assets be classified in Hierarchy's statement of cash flows for the current year? (Assume the direct method is used by Hierarchy. )

Accepted Answer

A) Purchases of plant assets are classified as operating activities;sales of plant assets are classified as financing activities;depreciation is classified as an operating activity. 
B) Purchases of plant assets and depreciation are classified as investing activities;sales of plant assets are classified as operating activities. 
C) Purchases and sales of plant assets are classified as investing activities;depreciation does not appear as an operating,financing,or investing activity. 
D) Since plant assets are used to generate income from operations,purchases,sales,and depreciation of plant assets are all classified as operating activities. 
A) Purchases of plant assets are classified as operating activities;sales of plant assets are classified as financing activities;depreciation is classified as an operating activity. 
B) Purchases of plant assets and depreciation are classified as investing activities;sales of plant assets are classified as operating activities. 
C) Purchases and sales of plant assets are classified as investing activities;depreciation does not appear as an operating,financing,or investing activity. 
D) Since plant assets are used to generate income from operations,purchases,sales,and depreciation of plant assets are all classified as operating activities.

Question 14

If Global Data's income statement for 2018 reports interest expense of $25,200,then:

Accepted Answer

A) Interest payable decreased by $16,800 in 2018. 
B) Interest payable increased by $16,800 in 2018. 
C) Interest payable at the end of 2018 amounts to $16,800. 
D) Either the amount reported in the income statement or the interest payment shown above must be incorrect. 
A) Interest payable decreased by $16,800 in 2018. 
B) Interest payable increased by $16,800 in 2018. 
C) Interest payable at the end of 2018 amounts to $16,800. 
D) Either the amount reported in the income statement or the interest payment shown above must be incorrect.

Question 15

When equipment is purchased entirely through a loan:

Accepted Answer

A) The equipment is shown as an increase in the investing activities section. 
B) The equipment is shown as a decrease in the investing activities section. 
C) The loan is shown as an increase in the financing section. 
D) Neither the loan nor the purchase of equipment is shown in the investing or the financing sections. 
A) The equipment is shown as an increase in the investing activities section. 
B) The equipment is shown as a decrease in the investing activities section. 
C) The loan is shown as an increase in the financing section. 
D) Neither the loan nor the purchase of equipment is shown in the investing or the financing sections.

Question 16

Cash flows and accounting records
In a business with an accrual-based accounting system,is a statement of cash flows based upon account balances shown in the adjusted trial balance? Explain.

Accepted Answer

No.In an accrual-based accounting system

Question 17

The comparative balance sheets of Greenvale Games,Inc.show a net decrease in unexpired insurance of $400 and a net decrease in interest payable of $250.In order to reconcile net income with net cash flow from operating activities,net income should be:

Accepted Answer

A) Increased by $650. 
B) Reduced by $650. 
C) Increased by $150. 
D) Reduced by $150. 
A) Increased by $650. 
B) Reduced by $650. 
C) Increased by $150. 
D) Reduced by $150.

Question 18

The statement of cash flows helps investors and creditors assess both the cash and noncash aspects of a company's investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 19

If accounts receivable increased during the year,deducting the increase from net sales determines the amount of cash received.

Accepted Answer

A) True 
 B)False

Question 20

Free cash flow arises out of:

Accepted Answer

A) Operating activities. 
B) Investing activities. 
C) Financing activities. 
D) Management activities. 
A) Operating activities. 
B) Investing activities. 
C) Financing activities. 
D) Management activities.

Exam 13: Statement of Cash Flows

Free cash flow refers to the excess of cash inflows over cash outflows.

In a statement of cash flows,collections of accounts receivable are classified as:

Free cash flow is computed as net cash flow from operating activities plus cash used to acquire plant assets minus cash paid for dividends.

[The following information applies to the questions displayed below.] The financial statements of Seldin,Inc. ,provide the following information for the current year: -Compute the amount of Seldin's cash payments for operating expenses.

Monarch Company uses the indirect method to prepare its statement of cash flows.The following information has been gathered for the current period: On the basis of the above information only,Monarch Company's statement of cash flows shows net cash flow from operating activities to be:

Rent expense in Marrin Company's 2018 income statement is $420,000.If Prepaid Rent was $70,000 at December 31,2017,and is $95,000 at December 31,2018,the cash paid for rent during 2018 is:

[The following information applies to the questions displayed below.] During 2018,the cash flows related to Global Data,Inc.'s lending and borrowing activities are summarized as follows: -On the basis of the above information alone,what is Global Data's net cash flow from financing activities?

Both FASB and IASB require the cash flow statement to be organized in three categories,operating activities,investing activities,and financing activities.

How should purchases,sales,and depreciation of plant assets be classified in Hierarchy's statement of cash flows for the current year? (Assume the direct method is used by Hierarchy. )

If Global Data's income statement for 2018 reports interest expense of $25,200,then:

When equipment is purchased entirely through a loan:

Cash flows and accounting records In a business with an accrual-based accounting system,is a statement of cash flows based upon account balances shown in the adjusted trial balance? Explain.

The comparative balance sheets of Greenvale Games,Inc.show a net decrease in unexpired insurance of $400 and a net decrease in interest payable of $250.In order to reconcile net income with net cash flow from operating activities,net income should be:

The statement of cash flows helps investors and creditors assess both the cash and noncash aspects of a company's investing and financing activities.

If accounts receivable increased during the year,deducting the increase from net sales determines the amount of cash received.

Free cash flow arises out of:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters