Question 1

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

Accepted Answer

A)  investing activities 
B)  financing activities 
C)  noncash investing and financing activities 
D)  operating activities

Question 2

The statement of cash flows is not one of the basic financial statements.

Accepted Answer

A) True 
 B)False

Question 3

The net income reported on an income statement for the current year was $63,000.  Depreciation recorded on fixed assets for the year was $24,000.  Balances of the current asset and current liability accounts at the end and beginning of the year are listed below.  Prepare the Cash Flows from Operating Activities section of the statement of cash flows using the indirect method.

Accepted Answer

The answer of The net income reported on an income...

Question 4

The comparative balance sheets of Posner Company, for Years 1 and 2 ended December 31, appear below in condensed form:  
The income statement for the current year is as follows:  
Additional data for the current year are as follows: 
(a) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and new equipment was purchased for $183,200.
(b) Bonds payable for $100,000 were retired by payment at their face amount. 
(c) 5,000 shares of common stock were issued at $13 for cash. 
(d) Cash dividends declared and paid, $25,000. 
Prepare a statement of cash flow, using the indirect method of reporting cash flows from operating activities.

Accepted Answer

The answer of The comparative balance sheets of Posner Company,...

Question 5

An analysis of the general ledger accounts indicates that equipment, with an original cost of $200,000 and accumulated depreciation of $170,000 on the date of sale, was sold for $20,000 during the year.  Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.

Accepted Answer

The answer of An analysis of the general ledger accounts...

Question 6

A building with a book value of $54,000 is sold for $63,000 cash.  Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

Accepted Answer

A)  an increase of $54,000 from investing activities 
B)  an increase of $63,000 from investing activities and a deduction from net income of $9,000 
C)  an increase of $9,000 from investing activities 
D)  an increase of $54,000 from investing activities and an addition to net income of $9,000

Question 7

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. 
a. Received dividends 
b. Paid of dividends 
c. Purchased of equipment 
d. Net income 
e. Issued company's common stock 
f. Amortization expense

Accepted Answer

The answer of For each of the following, identify whether...

Question 8

The cash flows from operating activities are reported by the direct method on the statement of cash flows.  Determine the following: 
(a) If sales for the current year were $375,000 and accounts receivable increased by $29,000 during the year, what was the amount of cash received from customers? 
(b) If income tax for the current year was $39,000 and income tax payable decreased by $21,000 during the year, what was the amount of cash payments for income tax?

Accepted Answer

The answer of The cash flows from operating activities are...

Question 9

Cash paid for equipment would be reported on the statement of cash flows in

Accepted Answer

A)  the cash flows from operating activities section 
B)  the cash flows from financing activities section 
C)  the cash flows from investing activities section 
D)  a separate schedule

Question 10

The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.

Accepted Answer

A) True 
 B)False

Question 11

Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)

Accepted Answer

A)  investing activity 
B)  operating activity 
C)  noncash investing and financing activity 
D)  financing activity

Question 12

Cash flows from financing activities, as part of the statement of cash flows, would include any payments for dividends.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Accepted Answer

A)  a decrease in inventory 
B)  a decrease in accounts payable 
C)  preferred dividends declared and paid 
D)  a decrease in accounts receivable

Question 14

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.

Accepted Answer

A) True 
 B)False

Question 15

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000.  As a result of this transaction, cash would

Accepted Answer

A)  increase by $48,000 
B)  decrease by $7,000 
C)  increase by $55,000 
D)  decrease by $27,000

Question 16

The cash flows from operating activities are reported by the direct method on the statement of cash flows.  Determine the following: 
(a) If sales for the current year were $695,000 and accounts receivable decreased by $43,500 during the year, what was the amount of cash received from customers? 
(b) If income tax expense for the current year was $56,000 and income tax payable decreased by $5,200 during the year, what was the amount of cash payments of income tax?

Accepted Answer

The answer of The cash flows from operating activities are...

Question 17

Cash dividends of $45,000 were declared during the year.  Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year.  The amount of cash for the payment of dividends during the year is

Accepted Answer

A)  $50,000 
B)  $40,000 
C)  $55,000 
D)  $35,000

Question 18

Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively.  Cash received from customers to be reported on the statement of cash flows using the direct method is

Accepted Answer

A)  $700,000 
B)  $600,000 
C)  $580,000 
D)  $620,000

Question 19

Selected data taken from the accounting records of Laser Inc. for the current year ended December 31 are as follows:  
During the current year, the cost of merchandise sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows. 
Required: 
Determine the amount reported on the statement of cash flows for: 
(a)  Cash payments for merchandise 
(b)  Cash payments for operating expenses

Accepted Answer

The answer of Selected data taken from the accounting records...

Question 20

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

Accepted Answer

A)  the cash flows from financing activities section 
B)  the cash flows from investing activities section 
C)  a separate schedule 
D)  the cash flows from operating activities section

Exam 13: Statement of Cash Flows

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

The statement of cash flows is not one of the basic financial statements.

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

Cash paid for equipment would be reported on the statement of cash flows in

The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.

Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)

Cash flows from financing activities, as part of the statement of cash flows, would include any payments for dividends.

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is

Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the statement of cash flows using the direct method is

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in