Question 1

Connor Designs Company has cash flows for operating activities of $425,000.Cash flows used for investments in property,plant,and equipment totaled $65,000,of which 70% of this investment was used to replace machinery to maintain its current operations.
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What is the free cash flow for Connor Designs?

Accepted Answer

The answer of Connor Designs Company has cash flows for...

Question 2

Identify the section of the statement of cash flows (a-d)where each of the following items would be reported.
-Decrease in inventory

Accepted Answer

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

Question 3

Cash,as the term is used for the statement of cash flows,could indicate either cash or cash equivalents.

Accepted Answer

A) True 
 B)False

Question 4

When using the spreadsheet (work sheet)method to analyzing noncash accounts,no order of analysis is required,but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

Accepted Answer

A) True 
 B)False

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

If land costing $145,000 was sold for $205,000,the $60,000 gain on the sale would be added to net income in the operating activities section of the statement of cash flows (prepared by the indirect method).

Accepted Answer

A) True 
 B)False

Question 7

To determine cash payments for merchandise for the statement of cash flows using the direct method,a decrease in accounts payable is added to the cost of goods sold.Assume all accounts payable are owed to merchandise suppliers.

Accepted Answer

A) True 
 B)False

Question 8

Income tax expense was $175,000 for the year.Income tax payable was $30,000 and $40,000 at the beginning and end of the year,respectively.Cash payments for income tax reported on the statement of cash flows using the direct method is

Accepted Answer

A)  $175,000 
B)  $165,000 
C)  $205,000 
D)  $215,000

Question 9

If $475,000 of bonds payable are sold at 101,$475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 10

Financing activities include

Accepted Answer

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

Question 11

On the statement of cash flows,a $7,500 gain on the sale of fixed assets would be

Accepted Answer

A)  added to net income in converting the net income reported on the income statement to cash flows from operating activities 
B)  deducted from net income in converting the net income reported on the income statement to cash flows from operating activities 
C)  added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends 
D)  deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

Question 12

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

Accepted Answer

A)  retirement of bond payable 
B)  acquisition of treasury stock 
C)  declaration of stock dividends 
D)  issuance of long-term debt

Question 14

State the section(s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:

Accepted Answer

The answer of State the section(s)of the statement of cash...

Question 15

A corporation uses the indirect method for preparing the statement of cash flows.A fixed asset has been sold for $25,000 representing a gain of $4,500.The value in the operating activities section regarding this event would be

Accepted Answer

A)  $25,000 
B)  $(4,500) 
C)  $29,500 
D)  $4,500

Question 16

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 17

If a gain of $11,000 is realized in selling (for cash)office equipment having a book value of $55,000,the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A)  $44,000 
B)  $11,000 
C)  $55,000 
D)  $66,000

Question 18

Sales reported on the income statement were $690,000.The accounts receivable balance declined $39,000 over the year.Determine the amount of cash received from customers.

Accepted Answer

The answer of Sales reported on the income statement were...

Question 19

The statement of cash flows is an optional financial statement.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 13: Statement of Cash Flows

Connor Designs Company has cash flows for operating activities of $425,000.Cash flows used for investments in property,plant,and equipment totaled $65,000,of which 70% of this investment was used to replace machinery to maintain its current operations. What is the free cash flow for Connor Designs?

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Decrease in inventory

Cash,as the term is used for the statement of cash flows,could indicate either cash or cash equivalents.

When using the spreadsheet (work sheet)method to analyzing noncash accounts,no order of analysis is required,but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

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

If land costing $145,000 was sold for $205,000,the $60,000 gain on the sale would be added to net income in the operating activities section of the statement of cash flows (prepared by the indirect method).

To determine cash payments for merchandise for the statement of cash flows using the direct method,a decrease in accounts payable is added to the cost of goods sold.Assume all accounts payable are owed to merchandise suppliers.

Income tax expense was $175,000 for the year.Income tax payable was $30,000 and $40,000 at the beginning and end of the year,respectively.Cash payments for income tax reported on the statement of cash flows using the direct method is

If $475,000 of bonds payable are sold at 101,$475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

Financing activities include

On the statement of cash flows,a $7,500 gain on the sale of fixed assets would be

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

State the section(s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:

A corporation uses the indirect method for preparing the statement of cash flows.A fixed asset has been sold for $25,000 representing a gain of $4,500.The value in the operating activities section regarding this event would be

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.

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000,the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Sales reported on the income statement were $690,000.The accounts receivable balance declined $39,000 over the year.Determine the amount of cash received from customers.

The statement of cash flows is an optional financial statement.

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