Question 1

Net income differs from net cash flows from operations because of all the following except:

Accepted Answer

A) Non-cash expenses such as depreciation. 
B) Timing differences between recognizing revenue and expenses and their cash flows. 
C) Gains and losses included in net income but classified as investing or financing activities. 
D) Cash received in exchange for goods sold in the normal course of operations. 
A) Non-cash expenses such as depreciation. 
B) Timing differences between recognizing revenue and expenses and their cash flows. 
C) Gains and losses included in net income but classified as investing or financing activities. 
D) Cash received in exchange for goods sold in the normal course of operations.

Question 2

Which of the following does not decrease the cash flow from operating activities?

Accepted Answer

A) The prepayment of an expense. 
B) The purchase of operating equipment. 
C) The payment of interest. 
D) The prepayment of an expense,the purchase of operating equipment,and the payment of interest all decrease cash from operating activities. 
A) The prepayment of an expense. 
B) The purchase of operating equipment. 
C) The payment of interest. 
D) The prepayment of an expense,the purchase of operating equipment,and the payment of interest all decrease cash from operating activities.

Question 3

Hines Cannery issued capital stock in 2018 for $700,000.During 2018 the company paid dividends of $250,000.What is the effect of these events in Hines' statement of cash flows for 2018?

Accepted Answer

A) $700,000 cash provided by investing activities,and $250,000 cash disbursed for financing activities. 
B) $700,000 cash provided by financing activities,and $250,000 cash disbursed for investing activities. 
C) $700,000 cash provided by financing activities,and $250,000 cash disbursed for operating activities. 
D) $450,000 net cash provided by financing activities. 
A) $700,000 cash provided by investing activities,and $250,000 cash disbursed for financing activities. 
B) $700,000 cash provided by financing activities,and $250,000 cash disbursed for investing activities. 
C) $700,000 cash provided by financing activities,and $250,000 cash disbursed for operating activities. 
D) $450,000 net cash provided by financing activities.

Question 4

[The following information applies to the questions displayed below.]
The financial statements of York,Inc. ,provide the following information for the current year:
  
-Compute the amount of cash payments for purchases of merchandise during the current year.

Accepted Answer

A) $813,750 
B) $811,125 
C) $819,000 
D) $1,078,875 
A) $813,750 
B) $811,125 
C) $819,000 
D) $1,078,875

Question 5

Which method will yield the higher cash flows from financing activities?

Accepted Answer

A) The indirect method. 
B) The direct method. 
C) Both direct and indirect methods will yield the same amount. 
D) Depends upon the situation. 
A) The indirect method. 
B) The direct method. 
C) Both direct and indirect methods will yield the same amount. 
D) Depends upon the situation.

Question 6

Bert's Bungy Jumping,Inc.paid $650,000 cash for casualty insurance during the year 2018.If the income statement for the year reports insurance expense of $620,000 then:

Accepted Answer

A) Bert's prepaid insurance decreased $30,000. 
B) Bert's cash account balance decreased $30,000. 
C) Bert's prepaid insurance increased $30,000. 
D) Bert's prepaid insurance was $30,000 at year-end. 
A) Bert's prepaid insurance decreased $30,000. 
B) Bert's cash account balance decreased $30,000. 
C) Bert's prepaid insurance increased $30,000. 
D) Bert's prepaid insurance was $30,000 at year-end.

Question 7

[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.
-Based solely on the above information,Kenny's net cash flow from investing activities for 2018 is:

Accepted Answer

A) $215,000 net cash used by investing activities. 
B) $165,000 net cash provided by investing activities. 
C) $265,000 net cash used by investing activities. 
D) $290,000 net cash provided by investing activities. 
A) $215,000 net cash used by investing activities. 
B) $165,000 net cash provided by investing activities. 
C) $265,000 net cash used by investing activities. 
D) $290,000 net cash provided by investing activities.

Question 8

The purchase or sale of marketable securities is reported in the statement of cash flows as a financing activity.

Accepted Answer

A) True 
 B)False

Question 9

Both the direct method and the indirect method of computing net cash flow from operating activities convert accrual-based income statement amounts into cash flows.

Accepted Answer

A) True 
 B)False

Question 10

All of the following are financing activities except:

Accepted Answer

A) Borrowing money. 
B) Lending money. 
C) Selling capital stock. 
D) Paying dividends. 
A) Borrowing money. 
B) Lending money. 
C) Selling capital stock. 
D) Paying dividends.

Question 11

Depreciation is a non-cash expense.

Accepted Answer

A) True 
 B)False

Question 12

Under the indirect method,depreciation,increase in inventories,and "non-operating" losses are added to net income to arrive at net cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 13

[The following information applies to the questions displayed below.]
The financial statements of New World,Inc. ,provide the following information for the current year:
  
-Compute the amount of New World's cash payments for purchases of merchandise during the current year.

Accepted Answer

A) $1,627,500 
B) $1,622,250 
C) $1,638,000 
D) $2,157,750 
A) $1,627,500 
B) $1,622,250 
C) $1,638,000 
D) $2,157,750

Question 14

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

Accepted Answer

A) $277,200 
B) $283,500 
C) $378,000 
D) $349,650 
A) $277,200 
B) $283,500 
C) $378,000 
D) $349,650

Question 15

Any "non-cash" investing and financing transactions should be disclosed in a supplementary schedule accompanying a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 16

Whether one uses the direct or the indirect method of presentation of the statement of cash flows,the totals from each of the three sections (activities)will be the same regardless of the method used.

Accepted Answer

A) True 
 B)False

Question 17

Relationship of cash flows to accrual accounting
(a)The 2018 statement of cash flows of Citation Corporation shows the amount of cash received from customers as $800,000.Comparative balance sheets report accounts receivable to be $70,000 at January 1 and $100,000 at December 31,2018.Compute the amount of net sales reported in Citation Corporation's income statement for 2018: $________
(b)The supplementary schedule for noncash investing and financing activities accompanying Citation Corporation's 2018 statement of cash flows disclosed the following:   Citation Corporation's 2018 income statement reports a $61,000 loss on the disposal of land.Prepare the journal entry made by Citation in 2018 to record this sale of land.

Accepted Answer

(a)Net sales (in the income statement):

Question 18

[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.
-The cash proceeds received by Kenny Corporation in 2018 for the sale of marketable securities was:

Accepted Answer

A) $230,000. 
B) $280,000. 
C) $195,000. 
D) $180,000. 
A) $230,000. 
B) $280,000. 
C) $195,000. 
D) $180,000.

Question 19

The "worksheet approach" to preparing a statement of cash flows involves analyzing changes in non-cash balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 20

Alexander Company reported an increase of $185,000 in its accounts receivable during the year.The company's statement of cash flows reported $500,000 of cash received from customers.What amount of net sales must Alexander have recorded?

Accepted Answer

A) $315,000 
B) $685,000 
C) $500,000 
D) $185,000 
A) $315,000 
B) $685,000 
C) $500,000 
D) $185,000

Exam 13: Statement of Cash Flows

Net income differs from net cash flows from operations because of all the following except:

Which of the following does not decrease the cash flow from operating activities?

Hines Cannery issued capital stock in 2018 for $700,000.During 2018 the company paid dividends of $250,000.What is the effect of these events in Hines' statement of cash flows for 2018?

[The following information applies to the questions displayed below.] The financial statements of York,Inc. ,provide the following information for the current year: -Compute the amount of cash payments for purchases of merchandise during the current year.

Which method will yield the higher cash flows from financing activities?

Bert's Bungy Jumping,Inc.paid $650,000 cash for casualty insurance during the year 2018.If the income statement for the year reports insurance expense of $620,000 then:

The purchase or sale of marketable securities is reported in the statement of cash flows as a financing activity.

Both the direct method and the indirect method of computing net cash flow from operating activities convert accrual-based income statement amounts into cash flows.

All of the following are financing activities except:

Depreciation is a non-cash expense.

Under the indirect method,depreciation,increase in inventories,and "non-operating" losses are added to net income to arrive at net cash flow from operating activities.

[The following information applies to the questions displayed below.] The financial statements of New World,Inc. ,provide the following information for the current year: -Compute the amount of New World's cash payments for purchases of merchandise during the current year.

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

Any "non-cash" investing and financing transactions should be disclosed in a supplementary schedule accompanying a statement of cash flows.

Whether one uses the direct or the indirect method of presentation of the statement of cash flows,the totals from each of the three sections (activities)will be the same regardless of the method used.

The "worksheet approach" to preparing a statement of cash flows involves analyzing changes in non-cash balance sheet accounts.

Alexander Company reported an increase of $185,000 in its accounts receivable during the year.The company's statement of cash flows reported $500,000 of cash received from customers.What amount of net sales must Alexander have recorded?

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

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