Question 1

Cash paid for taxes and interest must be disclosed on the face of the statement or in the disclosure notes under both the direct and indirect methods of reporting cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Accepted Answer

A) Depreciation expense. 
B) Amortization of a patent. 
C) Amortization of premium on bonds payable. 
D) Dividends declared.

Question 3

Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows.Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

Accepted Answer

The answer of Listed below are the reporting classifications for...

Question 4

Goodfellow Corporation reported insurance expense of $477 for the current year.The beginning and ending balances in the prepaid insurance account were $50 and $30,respectively.What was the amount of cash paid for insurance?

Accepted Answer

A) $477. 
B) $457. 
C) $497. 
D) None of these answer choices is correct.

Question 5

Acquiring land with a long-term note is:

Accepted Answer

A) Reported as an investing activity in the statement of cash flows. 
B) Reported as a financing activity in the statement of cash flows. 
C) Reported as a noncash investing and financing activity. 
D) None of the above is correct.

Question 6

What activities are included in the statement of cash flows under the section titled "Cash flows from investing activities"?

Accepted Answer

The answer of What activities are included in the statement...

Question 7

Which of the following is reported as a financing activity in the statement of cash flows?

Accepted Answer

A) The sale of securities classified as available for sale. 
B) The acquisition of stock for the purpose of retiring it. 
C) The payment of interest on bonds payable. 
D) The receipt of dividend revenue.

Question 8

Alpha Company had the following account balances for 2016:

Alpha reported net income of $210,000 for 2016.Assuming no other changes in current account balances,what is the amount of net cash provided by operating activities for 2016 reported in the statement of cash flows?

Accepted Answer

A) $224,000. 
B) $206,000. 
C) $214,000. 
D) $196,000.

Question 9

Partial balance sheets and additional information are listed below for Sowell Company.
  
Additional information for 2016:
Net income was $88,000.
Depreciation expense was $19,000.
Required:
Prepare the operating activities section of the statement of cash flows for 2016 using the indirect method.

Accepted Answer

The answer of Partial balance sheets and additional information are...

Question 10

Creditors and investors would generally find the statement of cash flows least useful for assessing the:

Accepted Answer

A) Ability to generate future cash flows. 
B) Ability to pay dividends. 
C) Financial position at a point in time. 
D) Quality of earnings.

Question 11

Use the following to answer questions 
In its 2015 Annual Report to Shareholders,Kinney Inc.reported the following Consolidated Statement of Cash Flows:
For the years ended December 31,
  
-Kinney reported cost of goods sold of $168,114,150 in its fiscal 2015 income statement.Compute its net inventory purchases during the year.

Accepted Answer

The answer of Use the following to answer questions 
In...

Question 12

Partial balance sheets and additional information are listed below for Funk Company.
  
Additional information for 2016:
Net income was $170,000.
Depreciation expense was $30,000.
Sales totaled $800,000.
Cost of goods sold totaled $325,000.
Required:
Prepare the summary entry for the amount of cash received from customers during 2016.

Accepted Answer

The answer of Partial balance sheets and additional information are...

Question 13

Use the following to answer questions 
In its 2015 Annual Report to Shareholders,Henchman & Co.provided the following Statement of Cash Flows:
  
-(a. )What is the most significant change in operating cash outflow activity in 2015 relative to
2014?
(b. )What balance sheet accounts would likely have changed during 2015 in relation to the
cash flow change that you identify in (a)?

Accepted Answer

The answer of Use the following to answer questions 
In...

Question 14

Transactions that involve merely purchases or sales of cash equivalents generally are not reported on a statement of cash flows.Describe an exception to this generalization.What is the essential characteristic of the transaction that qualifies as an exception?

Accepted Answer

The answer of Transactions that involve merely purchases or sales...

Question 15

Bowers Corporation reported the following ($ in 000s)for the year: 
Sales on account were $1,900 for the year.How much cash was collected from customers on account?

Accepted Answer

A) $1,627. 
B) $1,642. 
C) $1,638. 
D) $2,142.

Exam 21: The Statement of Cash Flows