Question 1

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 2

The declaration and issuance of a stock dividend would be reported on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 3

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 4

When using the worksheet 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

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 6

Cash flows from operating activities, as part of the statement of cash flows, include cash transactions that enter into the determination of net income.

Accepted Answer

A) True 
 B)False

Question 7

On the basis of the details of the common stock account presented below, calculate the total amount to be recorded in financing section of the statement of cash flows. Indicate whether the amount results in an increase or decrease in cash.

Accepted Answer

The answer of On the basis of the details of...

Question 8

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

Accepted Answer

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

Question 9

Durrand Corporation's accumulated depreciation increased by $12,000, while patents decreased by $2,200 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $4,300 from sale of land. Reconcile a net income of $65,000 to net cash flow from operating activities.

Accepted Answer

The answer of Durrand Corporation's accumulated depreciation increased by $12,000,...

Question 10

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 11

Cash paid for equipment would be reported in 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 12

On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include

Accepted Answer

A)  receipts from the sale of investments 
B)  amortization of premium on bonds payable 
C)  payments for cash dividends 
D)  receipts from the issuance of capital stock

Question 13

Match between columns
                        Premises: Receipt of dividends
Issuance of the company’s common stock
Amortization expense
Payment of dividends
Net income
Purchase of equipment

Accepted Answer

The Answer of financing and Operating and Investing is...

Question 14

Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

Accepted Answer

The answer of Lamar Corporation purchased land for $150,000. Later...

Question 15

The following information is available from the current period financial statements:  The net cash flow from operating activities using the indirect method is

Accepted Answer

A)  $230,000 
B)  $188,000 
C)  $198,000 
D)  $156,000

Question 16

Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is

Accepted Answer

A)  $105,000 
B)  $118,000 
C)  $92,000 
D)  $169,000

Question 17

Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $5,300. The value of this transaction in the Investing section of the statement of cash flows is:

Accepted Answer

A)  $12,500 
B)  $5,300 
C)  $2,750 
D)  $2,550

Question 18

The comparative balance sheet of Colson Company, for 2011 and the preceding year ended December 31, 2010 appears below in condensed form:
  The income statement for the current year is as follows:
  Additional data for the current year are as follows:
  Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities.

Accepted Answer

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

Question 19

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 20

Which of the following would not be found in a Schedule of Noncash Investing and Financing Activities, reported at the end of a Statement of Cash Flows?

Accepted Answer

A)  equipment acquired in exchange for a note payable 
B)  bonds payable exchanged for capital stock 
C)  purchase of treasury stock 
D)  capital stock issued to acquire fixed assets

Exam 14: Statement of Cash Flows

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.

The declaration and issuance of a stock dividend would be reported on the statement of cash flows.

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

When using the worksheet 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.

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

Cash flows from operating activities, as part of the statement of cash flows, include cash transactions that enter into the determination of net income.

On the basis of the details of the common stock account presented below, calculate the total amount to be recorded in financing section of the statement of cash flows. Indicate whether the amount results in an increase or decrease in cash.

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

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.

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

On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include

For each of the following, identify whether it would be disclosed as an operating , financing, or investing activity on the statement of cash flows under the indirect method.

Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

The following information is available from the current period financial statements: The net cash flow from operating activities using the indirect 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.

Which of the following would not be found in a Schedule of Noncash Investing and Financing Activities, reported at the end of a Statement of Cash Flows?