Question 1

A company reported an increase in accounts payable and a decrease in inventory during 2019.Which of the following statements is correct?

Accepted Answer

A)  Cash paid to suppliers equals cost of goods sold plus both the increase in accounts payable and the decrease in inventory.
B)  Cash paid to suppliers equals cost of goods sold minus both the increase in accounts payable and the decrease in inventory.
C)  Cash paid to suppliers equals cost of goods sold minus the increase in accounts payable,plus the decrease in inventory.
D)  Cash paid to suppliers equals cost of goods sold plus the increase in accounts payable,minus the decrease in inventory. B

Question 2

A company reported an increase in prepaid rent and an increase in accrued liabilities during 2019.Which of the following statements is correct?

Accepted Answer

A)  When determining cash paid for operating expenses,both the increase in prepaid rent and the increase in accrued liabilities are subtracted from operating expenses.
B)  When determining cash paid for operating expenses,both the increase in prepaid rent and the increase in accrued liabilities are added to operating expenses.
C)  When determining cash paid for operating expenses,the increase in prepaid rent is added to operating expenses and the increase in accrued liabilities is subtracted from operating expenses.
D)  When determining cash paid for operating expenses,the increase in prepaid rent is subtracted from operating expenses and the increase in accrued liabilities is added to operating expenses. C

Question 3

During the year ended December 31,2019,Blythe Company paid cash of $2.2 million to purchase stock in another company,$1.0 million to purchase its common stock for treasury shares,$.5 million to buy short-term investments,and $3.4 million to purchase new equipment.Blythe also sold used equipment for cash of $.8 million when its book value was $.6 million.
A.Prepare the investing activities section of Blythe's cash flow statement for the year ended December 31,2019.
B.Is the net cash flow for investing activities a net cash inflow,or a net cash outflow? Briefly describe the reason for your answer.

Accepted Answer

A.
  B.The net cash flow is an outflow because more cash was used than was provided by the investing activities.

Question 4

Collection of principal on a note receivable is a cash flow from financing activities.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following items about the statement of cash flows is correct?

Accepted Answer

A)  Noncash expenses such as depreciation are subtracted from net income when using the indirect method for computing cash flows from operating activities.
B)  Cash equivalents are highly liquid investments with original maturities of less than three months.
C)  Repurchasing stock from owners would be classified as an investing cash outflow.
D)  Cash paid for interest would be classified as a financing cash outflow.

Question 6

Which of the following would be a financing activities cash flow?

Accepted Answer

A)  Common stock dividends received from an investment in another company.
B)  Interest payments.
C)  Purchase of treasury stock.
D)  Purchase of a building by signing a note payable.

Question 7

Brice Corporation reported the following information:
   Compute Brice's cash paid for income taxes in 2019.

Accepted Answer

The answer of Brice Corporation reported the following information:
 ...

Question 8

The financial statements for World Company show the following: Cost of goods sold,$725,000.
 How much cash was paid to suppliers?

Accepted Answer

A)  $731,000.
B)  $736,000.
C)  $719,000.
D)  $714,000.

Question 9

Cash flows from financing activities include those cash flows with respect to issuing and retiring long-term debt and equity.

Accepted Answer

A) True 
 B)False

Question 10

The quality of income ratio can only be interpreted based on knowledge of a company's business operations and strategies.

Accepted Answer

A) True 
 B)False

Question 11

Atkins Corporation has provided the following information for the year ended December 31,2019: • The equipment account balance increased by $200,000 from the beginning of the year to the end of the year.
• The equipment accumulated depreciation account balance increased by $35,000 from the beginning of the year to the end of the year.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense recorded on the equipment during the year was $65,000.
-
Which of the following statements is incorrect with respect to preparation of the statement of cash flows? Assume that the equipment purchase and sale resulted in cash flows.

Accepted Answer

A)  A $30,000 cash inflow is reported from the equipment sale.
B)  Using the indirect method,net income is increased by the $65,000 depreciation expense.
C)  Using the indirect method,net income is decreased by the $10,000 gain on the sale of the equipment.
D)  A $60,000 cash inflow is reported from the equipment sale.

Question 12

Use the following information to prepare a statement of cash flows (direct method)for Ames Corporation for the year ended December 31,2019.

Accepted Answer

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

Question 13

State the three cash flow classifications that are reported within a statement of cash flows and describe the primary activities included in each.

Accepted Answer

The answer of State the three cash flow classifications that...

Question 14

When a company sells equipment for cash at a loss,cash flows from investing activities decreases.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not be a cash flow from financing activities?

Accepted Answer

A)  Issuance of common stock for cash.
B)  Borrowing cash on a long-term note payable.
C)  Collection of a cash dividend.
D)  Repayment of principal on a long-term note payable.

Question 16

If sales revenue was $1,800,000 and accounts receivable decreased $40,000 during the year,then cash collected from customers equals $1,840,000.

Accepted Answer

A) True 
 B)False

Question 17

Bold Company's 2019 income statement reported total sales revenue of $250,000.During 2019,accounts receivable decreased by $20,000 and accounts payable increased $10,000.How much cash was collected from customers during 2019?

Accepted Answer

A)  $230,000.
B)  $270,000.
C)  $250,000.
D)  $280,000.

Question 18

The quality of income ratio decreases when cash is used to pay accounts payable.

Accepted Answer

A) True 
 B)False

Question 19

Under the indirect method,a decrease in inventory is subtracted from net income because inventory purchases are less than cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following transactions increases the quality of income ratio?

Accepted Answer

A)  The accrual of revenue.
B)  The accrual of an expense.
C)  The cash payment of an account payable.
D)  The payment of a cash dividend.

Exam 12: Statement of Cash Flows

A company reported an increase in accounts payable and a decrease in inventory during 2019.Which of the following statements is correct?

A company reported an increase in prepaid rent and an increase in accrued liabilities during 2019.Which of the following statements is correct?

Collection of principal on a note receivable is a cash flow from financing activities.

Which of the following items about the statement of cash flows is correct?

Which of the following would be a financing activities cash flow?

Brice Corporation reported the following information: Compute Brice's cash paid for income taxes in 2019.

The financial statements for World Company show the following: Cost of goods sold,$725,000. How much cash was paid to suppliers?

Cash flows from financing activities include those cash flows with respect to issuing and retiring long-term debt and equity.

The quality of income ratio can only be interpreted based on knowledge of a company's business operations and strategies.

Use the following information to prepare a statement of cash flows (direct method)for Ames Corporation for the year ended December 31,2019.

State the three cash flow classifications that are reported within a statement of cash flows and describe the primary activities included in each.

When a company sells equipment for cash at a loss,cash flows from investing activities decreases.

Which of the following would not be a cash flow from financing activities?

If sales revenue was $1,800,000 and accounts receivable decreased $40,000 during the year,then cash collected from customers equals $1,840,000.

Bold Company's 2019 income statement reported total sales revenue of $250,000.During 2019,accounts receivable decreased by $20,000 and accounts payable increased $10,000.How much cash was collected from customers during 2019?

The quality of income ratio decreases when cash is used to pay accounts payable.

Under the indirect method,a decrease in inventory is subtracted from net income because inventory purchases are less than cost of goods sold.

Which of the following transactions increases the quality of income ratio?