Question 1

The indirect and direct methods of preparing the statement of cash flows are identical except for the

Accepted Answer

A)  significant noncash activity section. 
B)  operating activities section. 
C)  investing activities section. 
D)  financing activities section.

Question 2

The following data are available for Two-off Company. $$\begin{array} { l r } 
\text { Increase in accounts payable } & \$ 120,000 \
\text { Increase in bonds payable } & 300,000 \
\text { Sale of investments } & 150,000 \
\text { Issuance of common stock } & 160,000 \
\text { Payment of cash dividends } & 90,000
\end{array}$$ Net cash provided by financing activities is:

Accepted Answer

A)  $180,000. 
B)  $370,000. 
C)  $360,000. 
D)  $420,000.

Question 3

In the Buans Company, land decreased $80,000 because of a cash sale for $80,000, the equipment account increased $35,000 as a result of a cash purchase, and Bonds Payable increased $60,000 from an issuance for cash at face value. The net cash provided by investing activities is

Accepted Answer

A)  $80,000. 
B)  $165,000. 
C)  $45,000. 
D)  $25,000.

Question 4

In computing cash payments for operating expenses, a decrease in prepaid expenses is ______________ and an increase in accrued expenses payable is ______________ to (from) operating expenses, exclusive of depreciation.

Accepted Answer

The answer of In computing cash payments for operating expenses,...

Question 5

During the year, Salaries and Wages Payable decreased by $5,000. If Salaries and Wages Expense amounted to $174,000 for the year, the cash paid to employees (including deductions from gross pay) is

Accepted Answer

A)  $179,000. 
B)  $174,000. 
C)  $169,000. 
D)  $184,000.

Question 6

LRRP Company had credit sales of $650,000. The beginning accounts receivable balance was $15,000 and the ending accounts receivable balance was $140,000. What were the cash collections from customers during the period?

Accepted Answer

A)  $775,000 
B)  $650,000 
C)  $525,000 
D)  $665,000

Question 7

Investing activities include

Accepted Answer

A)  collecting cash on loans made. 
B)  obtaining cash from creditors. 
C)  obtaining capital from owners. 
D)  repaying money previously borrowed.

Question 8

Wayne Company reported net income of $265,000 for 2017. Wayne also reported depreciation expense of $45,000 and a loss of $8,000 on the sale of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $6,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method.

Accepted Answer

The answer of Wayne Company reported net income of $265,000...

Question 9

Jean's Vegetable Market had the following transactions during 2017:
1) Issued $50,000 of par value common stock for cash.
2) Repaid a 6 year note payable in the amount of $22,000.
3) Acquired land by issuing common stock of par value $100,000.
4) Declared and paid a cash dividend of $2,000.
5) Sold a long-term investment (cost $3,000) for cash of $8,000.
6) Acquired an investment in IBM stock for cash of $15,000.
What is the net cash provided used by investing activities?

Accepted Answer

A)  $15,000 
B)  $33,000 
C)  ($7,000) 
D)  $8,000

Question 10

The third (final) step in preparing the statement of cash flows is to

Accepted Answer

A)  analyze changes in noncurrent asset and liability accounts. 
B)  compare the net change in cash with the change in the cash account reported on the balance sheet. 
C)  determine net cash provided by operating activities. 
D)  list the noncash activities.

Question 11

In preparing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

Accepted Answer

A) True 
 B)False

Question 12

Why is the statement of cash flows useful?

Accepted Answer

The answer of Why is the statement of cash flows...

Question 13

Financial statement readers can determine future investing and financing transactions by examining a company's statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 14

If a loss of $25,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A)  $65,000. 
B)  $90,000. 
C)  $115,000. 
D)  $25,000.

Question 15

Which of the following transactions would not be classified as a financing activity?

Accepted Answer

A)  Purchase of treasury stock 
B)  Payment of dividends 
C)  Issuance of bonds at a discount 
D)  Purchase of a long-term investment in bonds

Question 16

The order of presentation of activities on the statement of cash flows is

Accepted Answer

A)  operating, investing, and financing. 
B)  operating, financing, and investing. 
C)  financing, operating, and investing. 
D)  financing, investing, and operating.

Question 17

In Ramon Company, Treasury Stock increased $20,000 from a cash purchase, and Retained Earnings increased $80,000 as a result of net income of $120,000 and cash dividends paid of $40,000. Net cash used by financing activities is:

Accepted Answer

A)  $20,000. 
B)  $40,000. 
C)  $120,000. 
D)  $60,000.

Question 18

Financing activities involve

Accepted Answer

A)  lending money. 
B)  acquiring investments. 
C)  issuing debt. 
D)  acquiring long-lived assets.

Question 19

Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

Accepted Answer

A) True 
 B)False

Question 20

Generally, the most important category on the statement of cash flows is cash flows from

Accepted Answer

A)  operating activities. 
B)  investing activities. 
C)  financing activities. 
D)  significant noncash activities.

Exam 12: Statement of Cash Flows

The indirect and direct methods of preparing the statement of cash flows are identical except for the

In the Buans Company, land decreased $80,000 because of a cash sale for $80,000, the equipment account increased $35,000 as a result of a cash purchase, and Bonds Payable increased $60,000 from an issuance for cash at face value. The net cash provided by investing activities is

In computing cash payments for operating expenses, a decrease in prepaid expenses is and an increase in accrued expenses payable is to (from) operating expenses, exclusive of depreciation.

During the year, Salaries and Wages Payable decreased by $5,000. If Salaries and Wages Expense amounted to $174,000 for the year, the cash paid to employees (including deductions from gross pay) is

LRRP Company had credit sales of $650,000. The beginning accounts receivable balance was $15,000 and the ending accounts receivable balance was $140,000. What were the cash collections from customers during the period?

Investing activities include

The third (final) step in preparing the statement of cash flows is to

In preparing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

Why is the statement of cash flows useful?

Financial statement readers can determine future investing and financing transactions by examining a company's statement of cash flows.

If a loss of $25,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Which of the following transactions would not be classified as a financing activity?

The order of presentation of activities on the statement of cash flows is

In Ramon Company, Treasury Stock increased $20,000 from a cash purchase, and Retained Earnings increased $80,000 as a result of net income of $120,000 and cash dividends paid of $40,000. Net cash used by financing activities is:

Financing activities involve

Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

Generally, the most important category on the statement of cash flows is cash flows from