Question 1

When using the spreadsheet (work sheet) method to analyze noncash accounts, it is best to start with

Accepted Answer

A)  cash 
B)  net income 
C)  retained earnings 
D)  revenue

Question 2

Cash flows from investing activities, as part of the statement of cash flows, would include any receipts from the issuance of bonds payable.

Accepted Answer

A) True 
 B)False

Question 3

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the net decrease in inventories from the beginning to the end of the period is added to net income for the period.

Accepted Answer

A) True 
 B)False

Question 4

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question.
-Amortization of intangible assets

Accepted Answer

A) Increase cash from operating activities 
B) Decrease cash from operating activities 
C) Increase cash from investing activities 
D) Decrease cash from investing activities 
E) Increase cash from financing activities
F)Decrease cash from financing activities
G)Noncash investing and financing activity

Question 5

Under the direct method of reporting cash flows from operations, the primary source of cash is cash received from customers.

Accepted Answer

A) True 
 B)False

Question 6

The income statement disclosed the following items for the current year:
​ $$\begin{array} { | l | r | } 
\hline \text { Depreciation expense } & \$ 36,000 \
\hline \text { Gain on disposal of equipment } & 21,000 \
\hline \text { Net income } & 317,500 \
\hline
\end{array}$$ ​
Balances of the current assets and current liabilities accounts changed between December 31, last year, and December 31, this year, as follows:
​ $\begin{array}{|l|r|}
\hline \text { Increase in accounts receivable } & \$ 5,600 \
\hline \text { Decrease in inventory } & 3,200 \
\hline \text { Decrease in prepaid insurance } & 1,200 \
\hline \text { Decrease in account payable } & 3,800 \
\hline \text { Increase in income taxes payable } & 1,200 \
\hline \text { Increase in dividends payable } & 850 \
\hline
\end{array}$ ​
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Accepted Answer

The answer of The income statement disclosed the following items...

Question 7

A company purchases equipment for $32,000 cash. This transaction 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 8

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported.
-Sale of machinery held for use by the company

Accepted Answer

A) Operating activities 
B) Financing activities 
C) Investing activities 
D) Schedule of noncash financing and investing

Question 11

Based on the following, what is free cash flow? $\begin{array}{lc}
\text { Net cash flow from operating activities } & \$ 318,000 \
\text { Net cash flow used for investing activities } & (30,000) \
\text { Net cash flow from financing activities } & 30,000
\end{array}$ Cash flows from investing include the purchase of a replacement asset for $100,000 and the sale of the one used in production, which is now obsolete, for $70,000. Cash flows from financing include $70,000 of borrowing.

Accepted Answer

The answer of Based on the following, what is free...

Question 12

The comparative balance sheet of ConnieJo Company, for December 31, Years 1 and 2 ended December 31 appears below in condensed form:  ​
Additional data for the current year are as follows:
​ (a) Fully depreci ated equipment costing $ \$ 39,000 $ was scrapped, no salvage, and equipment was purchased for $ \$ 157,000 $.
(b) Bonds payable for $ \$ 100,000 $ were retired by payment at their face amount.
(c) 5,000 shares of common stock were issued at $ \$ 15 $ for cash.
(d) Cash dividends declared were paid $ \$ 41,400 $.
(e) All sales are on account. ​
Prepare a statement of cash flows, using the indirect method of reporting cash flows from operating activities.

Accepted Answer

The answer of The comparative balance sheet of ConnieJo Company,...

Question 13

Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year. The amount of cash Norris Co. used for payment of dividends during the year was

Accepted Answer

A)  $55,000 
B)  $80,000 
C)  $105,000 
D)  $65,000

Question 14

Preferred stock issued in exchange for land would be reported in the statement of cash flows 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

Question 15

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question.
-Decrease in accounts payable balance

Accepted Answer

A) Increase cash from operating activities 
B) Decrease cash from operating activities 
C) Increase cash from investing activities 
D) Decrease cash from investing activities 
E) Increase cash from financing activities
F)Decrease cash from financing activities
G)Noncash investing and financing activity

Question 16

On the basis of the following data for Branch Co. for the current and preceding years ended December 31, prepare a statement of cash flows for the current year using the indirect method.
Assume that equipment costing $125,000 was purchased for cash and the land was sold for $15,000. The stock was issued for cash and the only entries in the retained earnings account were for net income of $56,000 and cash dividends declared and paid of $18,000.

Accepted Answer

The answer of On the basis of the following data...

Question 17

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported.
-Loss on sale of equipment

Accepted Answer

A) Operating activities 
B) Financing activities 
C) Investing activities 
D) Schedule of noncash financing and investing

Question 18

Net income was $51,000 for the year. The accumulated depreciation balance increased by $14,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. Under the indirect method, the cash flow from operations is $37,000.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

Accepted Answer

A)  issuance of bonds payable 
B)  issuance of common stock 
C)  purchase of treasury stock 
D)  purchase of long-term assets

Question 20

Cash flows from investing activities, as part of the statement of cash flows, would include any receipts from the sale of land.

Accepted Answer

A) True 
 B)False

Exam 13: Statement of Cash Flows

When using the spreadsheet (work sheet) method to analyze noncash accounts, it is best to start with

Cash flows from investing activities, as part of the statement of cash flows, would include any receipts from the issuance of bonds payable.

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the net decrease in inventories from the beginning to the end of the period is added to net income for the period.

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -Amortization of intangible assets

Under the direct method of reporting cash flows from operations, the primary source of cash is cash received from customers.

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

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

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Sale of machinery held for use by the company

Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year. The amount of cash Norris Co. used for payment of dividends during the year was

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -Decrease in accounts payable balance

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Loss on sale of equipment

Net income was $51,000 for the year. The accumulated depreciation balance increased by $14,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. Under the indirect method, the cash flow from operations is $37,000.

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

Cash flows from investing activities, as part of the statement of cash flows, would include any receipts from the sale of land.