Question 1

Investing activities include

Accepted Answer

A) collecting cash on loans made. 
B) obtaining cash from customers. 
C) obtaining capital from stockholders. 
D) repaying money previously borrowed.

Question 2

Free cash flow is

Accepted Answer

A) all cash in the bank 
B) cash from operations 
C) cash from financing,less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends 
D) cash flow from operations,less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends

Question 3

Land costing $71,000 was sold for $50,000 cash.The loss on the sale was reported on the income statement as other expense.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?

Accepted Answer

A) $50,000 
B) $71,000 
C) $121,000 
D) $21,000

Question 4

There is no difference in the Investing and Financing sections of the statement of cash flows using the indirect and direct method.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Kennedy,Inc.reported the following data:
  
Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.

Accepted Answer

The answer of Kennedy,Inc.reported the following data:
  
Prepare the...

Question 7

On the basis of the following data for Grant Co.for 2011 and the preceding year ended December 31,2010,prepare a statement of cash flows.Use the indirect method of reporting cash flows from operating activities.Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000;that the stock was issued for cash;and that the only entries in the retained earnings account were net income of $56,000 and cash dividends declared of $18,000.

Accepted Answer

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

Question 8

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,while...

Question 9

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 10

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

Question 11

On the statement of cash flows,the cash flows from operating activities section would include

Accepted Answer

A) receipts from the issuance of capital stock 
B) receipts from the sale of investments 
C) payments for the acquisition of investments 
D) cash receipts from sales activities

Question 12

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 13

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,for...

Question 14

On the basis of the following data for Branch Co.for the year ended December 31,2011 and the preceding year,prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities.
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 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 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

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

Question 18

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 19

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 20

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

Exam 14: Statement of Cash Flows

Investing activities include

Free cash flow is

Land costing $71,000 was sold for $50,000 cash.The loss on the sale was reported on the income statement as other expense.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?

There is no difference in the Investing and Financing sections of the statement of cash flows using the indirect and direct method.

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

Kennedy,Inc.reported the following data: Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.

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:

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?

On the statement of cash flows,the cash flows from operating activities section would include

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:

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

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

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

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