Question 1

The cash received from issuing common stock is not reported on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 2

Use the following information .
The Kerfuffle Company Income Statement
For the Year Ended June 30, 2019
  General and Administrative Expenses
    Liabilities and Stockholders' Equity
  Additional information:
Plant assets that originally cost $67,200 were sold for $56,400, resulting in a gain of $8,200. Dividends of $35,815 were declared and paid in 2019. There were no dividends declared in 2018.
-Using the information provided, prepare the cash flows from operating activities for The Kerfuffle Company using the indirect method.

Accepted Answer

The answer of Use the following information .
The Kerfuffle Company...

Question 3

If the income statement reports a net loss for the year, the loss is not reported in the operating activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

Cannon Manufacturing Co. sold equipment that cost $18,000 for $5,000. A gain on sale of $1,000 was recorded. How is the Cash Flows from Investing Activities affected?

Accepted Answer

A) A cash inflow of $5,000 is recorded. 
B) A cash inflow of $6,000 is recorded. 
C) A cash inflow of $11,000 is recorded. 
D) A cash inflow of $12,000 is recorded.

Question 5

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O)operating, (I)investing, (F)financing, or a significant (N)noncash financing and investing activity.
-declared dividend

Accepted Answer

A) (O)operating 
B) (I)investing 
C) (F)financing, or a significant 
D) (N)noncash financing and investing activity.

Question 6

The purchase of treasury stock is treated as a cash outflow in the------------ section of the statement of cash flows.

Accepted Answer

The answer of The purchase of treasury stock is treated...

Question 7

When a firm issues a long-term note payable, the amount that it receives for the note is considered a cash inflow from financing activities.

Accepted Answer

A) True 
 B)False

Question 8

On a statement of cash flows, depreciation expense is:

Accepted Answer

A) subtracted from net income in the computation of the net cash provided by operating activities. 
B) added to net income in the computation of the net cash provided by operating activities. 
C) treated as a cash outflow in the computation of the net cash used in investing activities. 
D) treated as a cash inflow in the computation of the net cash used in investing activities.

Question 9

For each of the following operating activities, select whether it is a source of cash, a use of cash or neither under the indirect method.
-increase in Prepaid Expense

Accepted Answer

A) source 
B) use 
C) neither

Question 10

A decrease in current liabilities is:

Accepted Answer

A) a source of cash under operating activities. 
B) not reported on the statement of cash flows. 
C) a use of cash under operating activities. 
D) a use of cash under investing activities.

Question 11

Corporations do not commonly use the direct method for the Statement of Cash Flows because

Accepted Answer

A) of the many additional disclosures and schedules that must accompany the statement. 
B) the FASB prefers the indirect method. 
C) the direct method does not follow GAAP. 
D) there are fewer disclosures required under the indirect method.

Question 12

Generally, if a short-term investment is to be classified as a cash equivalent,:

Accepted Answer

A) 1 month from the date it was acquired. 
B) 3 months from the date it was acquired. 
C) 6 months from the date it was acquired. 
D) 12 months from the date it was acquired.

Question 13

Anders Inc, reported that its bonds with a par value of $500,000 and a carrying value of $545,000 were retired for $525,000 resulting in a gain of $20,000. The amounts to be reported on the statement of cash flows include:

Accepted Answer

A) a $45,000 decrease in cash for financing activities 
B) a $525,000 decrease in cash for investing activities and a $45,000 increase in financing activities. 
C) a $20,000 decrease in cash from operating activities and a $525,000 decrease in cash for financing activities. 
D) $20,000 increase in cash from operating activities and a $545,000 decrease in cash used for financing activities.

Question 14

For each of the following operating activities, select whether it is a source of cash, a use of cash or neither under the indirect method.
-increase in Accounts Receivable

Accepted Answer

A) source 
B) use 
C) neither

Exam 24: The Statement of Cash Flows

The cash received from issuing common stock is not reported on the statement of cash flows.

If the income statement reports a net loss for the year, the loss is not reported in the operating activities section of the statement of cash flows.

Cannon Manufacturing Co. sold equipment that cost $18,000 for $5,000. A gain on sale of $1,000 was recorded. How is the Cash Flows from Investing Activities affected?

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -declared dividend

The purchase of treasury stock is treated as a cash outflow in the------------ section of the statement of cash flows.

When a firm issues a long-term note payable, the amount that it receives for the note is considered a cash inflow from financing activities.

On a statement of cash flows, depreciation expense is:

For each of the following operating activities, select whether it is a source of cash, a use of cash or neither under the indirect method. -increase in Prepaid Expense

A decrease in current liabilities is:

Corporations do not commonly use the direct method for the Statement of Cash Flows because

Generally, if a short-term investment is to be classified as a cash equivalent,:

Anders Inc, reported that its bonds with a par value of $500,000 and a carrying value of $545,000 were retired for $525,000 resulting in a gain of $20,000. The amounts to be reported on the statement of cash flows include:

For each of the following operating activities, select whether it is a source of cash, a use of cash or neither under the indirect method. -increase in Accounts Receivable