Question 1

The first step in preparing the worksheet is to enter the beginning and ending balances of balance sheet accounts.

Accepted Answer

A) True 
 B)False  True

Question 2

The payment of a cash dividend would be classified as a(n)

Accepted Answer

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

Question 3

When using the T-account approach, the change in cash is equal to the change in liabilities less the change in equity plus the change in noncash assets.

Accepted Answer

A) True 
 B)False  False

Question 4

Hoffman Company's net income for the current year was $480,000.Depreciation was $62,000.Accounts receivable and inventories decreased by $20,000 and $32,000, respectively.Prepaid expenses and salaries payable increased, respectively, by $2,000 and $16,000.Equipment was sold at a gain of $8,000.How much cash was provided by operating activities?

Accepted Answer

A)  $536,000.
B)  $600,000.
C)  $576,000.
D)  $476,000.

Question 5

Anjali Shah Company had credit sales of $1,600,000.The beginning accounts receivable balance was $165,000 and the ending accounts receivable balance was $280,000.Using the direct method of reporting cash flows from operating activities, what were the cash collections from customers during the period?

Accepted Answer

A)  $1,815,000.
B)  $1,600,000.
C)  $1,485,000.
D)  $1,765,000.

Question 6

Assume that the Kaenzig Corporation uses the indirect method to depict cash flows.Indicate where, if at all, common stock issued for cash would be classified.

Accepted Answer

A)  Operating activities section.
B)  Investing activities section.
C)  Financing activities section.
D)  Does not represent a cash flow.

Question 7

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Accepted Answer

A)  the current year's income statement.
B)  a comparative balance sheet.
C)  additional information.
D)  All of these answer choices are correct.

Question 8

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 9

Which of the following is not typically a characteristic experienced by a company during the introductory phase of the corporate life cycle?

Accepted Answer

A)  Cash used in operations will exceed cash generated by operations.
B)  Considerable cash will be used to purchase productive assets.
C)  Cash from investing is positive.
D)  Cash from financing is positive.

Question 10

Assume that the Charleston Inc.uses the indirect method to depict cash flows.Indicate where, if at all, an inventory increase would be classified on the statement of cash flows.

Accepted Answer

A)  Operating activities section.
B)  Investing activities section.
C)  Financing activities section.
D)  Does not represent a cash flow.

Question 11

Cash flows from operating activities, as reported on the statement of cash flows under the indirect method, would include

Accepted Answer

A)  receipts from the sale of investments.
B)  net income.
C)  payments for dividends.
D)  receipts from the issuance of capital stock.

Question 12

Cash from investing becomes less positive and cash from financing becomes more negative during the

Accepted Answer

A)  introductory phase.
B)  growth phase.
C)  maturity phase.
D)  decline phase.

Question 13

Assume that the Decker Corporation uses the indirect method to depict cash flows.Indicate where, if at all, dividends received on securities held would be reported on the statement of cash flows.

Accepted Answer

A)  Operating activities section.
B)  Investing activities section.
C)  Financing activities section.
D)  Does not represent a cash flow.

Question 14

McLaughlin Company issued common stock for proceeds of $558,000 during 2022.The company paid dividends of $99,000 and issued a long-term note payable for $375,000 in exchange for equipment during the year.The company also purchased treasury stock that had a cost of $81,000.The financing section of the statement of cash flows will report net cash inflows of

Accepted Answer

A)  $378,000.
B)  $834,000.
C)  $459,000.
D)  $753,000.

Question 15

LKN Company reported net income of $90,000 for the year 2022.During 2022, accounts receivable increased by $6,000, accounts payable decreased by $4,000 and depreciation expense of $10,000 was recorded.Net cash provided by operating activities for 2022 is

Accepted Answer

A)  $100,000.
B)  $80,000.
C)  $82,000.
D)  $90,000.

Question 16

If Reed Company realizes a loss of $9,000 on a cash sale of 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)  $81,000.
B)  $90,000.
C)  $99,000.
D)  $9,000.

Question 17

Which of the following is the first step in preparing the statement of cash flows?

Accepted Answer

A)  Determine the net cash provided by operating activities.
B)  Determine the net income.
C)  Determine net cash provided by investing and financing activities.
D)  Determine the net increase (decrease)  in cash.

Question 18

When equipment is sold for cash, the amount received is reflected as a cash

Accepted Answer

A)  inflow in the operating section.
B)  inflow in the financing section.
C)  inflow in the investing section.
D)  outflow in the operating section.

Question 19

If Martinelli Corporation realizes a gain of $81,000 on a cash sale of equipment having a book value of $600,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A)  $519,000.
B)  $681,000.
C)  $600,000.
D)  $81,000.

Question 20

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

Accepted Answer

A)  added to net income.
B)  deducted from net income.
C)  ignored because it does not affect cash.
D)  not reported on a statement of cash flows.

Exam 12: Statement of Cash Flows

The first step in preparing the worksheet is to enter the beginning and ending balances of balance sheet accounts.

The payment of a cash dividend would be classified as a(n)

When using the T-account approach, the change in cash is equal to the change in liabilities less the change in equity plus the change in noncash assets.

Assume that the Kaenzig Corporation uses the indirect method to depict cash flows.Indicate where, if at all, common stock issued for cash would be classified.

To determine the net cash provided (used) by operating activities, it is necessary to analyze

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

Which of the following is not typically a characteristic experienced by a company during the introductory phase of the corporate life cycle?

Assume that the Charleston Inc.uses the indirect method to depict cash flows.Indicate where, if at all, an inventory increase would be classified on the statement of cash flows.

Cash flows from operating activities, as reported on the statement of cash flows under the indirect method, would include

Cash from investing becomes less positive and cash from financing becomes more negative during the

Assume that the Decker Corporation uses the indirect method to depict cash flows.Indicate where, if at all, dividends received on securities held would be reported on the statement of cash flows.

LKN Company reported net income of $90,000 for the year 2022.During 2022, accounts receivable increased by $6,000, accounts payable decreased by $4,000 and depreciation expense of $10,000 was recorded.Net cash provided by operating activities for 2022 is

If Reed Company realizes a loss of $9,000 on a cash sale of 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 is the first step in preparing the statement of cash flows?

When equipment is sold for cash, the amount received is reflected as a cash

If Martinelli Corporation realizes a gain of $81,000 on a cash sale of equipment having a book value of $600,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is