Question 1

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory decreased by $20,000 during the year, and accounts payable decreased by $30,000 during the year. What would be DBB's cash paid to suppliers for 2013?

Accepted Answer

A)  $550,000 
B)  $590,000 
C)  $600,000 
D)  $610,000 
E)  $650,000

Question 2

The Statement of Cash Flows does not report the effects of:

Accepted Answer

A)  Common shares purchased for cancellation. 
B)  Cash dividends paid. 
C)  Common shares issued for cash to pay for assets or to pay debt. 
D)  Common shares issued as the result of a stock dividend.

Question 3

RJB reported sales of $200,000 and an increase in accounts receivable of $30,000 during 2011. Under the direct method, calculate what would be RJB's cash collected from customers during 2011?

Accepted Answer

The answer of RJB reported sales of $200,000 and an...

Question 4

Cash flows from investing activities would include all of these except:

Accepted Answer

A)  Proceeds from sale of operating assets. 
B)  Proceeds from sale of long-term investments. 
C)  Interest paid on notes receivable. 
D)  Proceeds from sale of securities available for sale. 
E)  Collection of principal amounts of loans made to other parties.

Question 5

A firm's accumulated depreciation account increased $30,000 for the year, and total plant assets at cost increased $200,000. During the year, the firm purchased $350,000 of new equipment for cash, and sold equipment for $50,000 cash. This equipment had been depreciated $30,000 at the time of sale.
Present the complete disclosure of these events in an indirect format Statement of Cash Flows.

Accepted Answer

The answer of A firm's accumulated depreciation account increased $30,000...

Question 6

If cash collected from customers for 2013 is $780,000 and accounts receivable increased by $20,000 during the year, what were sales for 2013?

Accepted Answer

A)  $600,000 
B)  $780,000 
C)  $800,000 
D)  Cannot be determined from information given.

Question 7

An asset (land) was purchased and payment in full was made by issuing the company's common shares. No cash was paid. Therefore, this transaction should be reported on the Statement of Cash Flows:

Accepted Answer

A)  as an "Adjustment to reconcile net income to operating activities." 
B)  should not be reported on the Statement of Cash Flows but details explained in the disclosure notes. 
C)  as an outflow of cash. 
D)  as a non-cash exchange.

Question 8

Which of the following items involving current trade accounts receivable is most likely to appear in a Statement of Cash Flows?

Accepted Answer

A)  Balance in allowance for uncollectible accounts 
B)  Write-off of a specific account 
C)  Sales returns and allowances 
D)  Collection of an account previously written off 
E)  Change in net sales

Question 9

A corporation reported the following information in its income statement: $$\begin{array} { | l | l | } 
\hline \text { Sales revenue (none on credit) } & \$ 60,000 \
\hline \text { Cost of goods sold (paid in cash) } & 40,000 \
\hline \text { Gross margin on sales } & 20,000 \
\hline \text { Depreciation expense } & ( 2,000 ) \
\hline \text { Amortiz ation expense } & ( 1,000 ) \
\hline \text { Wage expense (paid in cash) } & ( 2,500 ) \
\hline \text { Income betore taxes } & 14,500 \
\hline \text { Income taxes } ( 20 \% ) \text { (paid in cash) } & ( 2,900 ) \
\hline \text { Net income } & \$ 11,600 \
\hline
\end{array}$$ The corporation should report the following amount on its Statement of Cash Flows for net cash from operating activities:

Accepted Answer

A)  $11,600. 
B)  $13,600. 
C)  $14,600. 
D)  $17,100.

Question 10

During 2016, ABC Inc. Accounts Payable balance decreased by $20,000. The company purchased $100,000 of inventory on account. The company made another inventory purchases of $100,000 (on account) during the year, $10,000 of which was returned to its suppliers for credit. The company's cash payments to its inventory suppliers during 2016 was:

Accepted Answer

A)  $90,000. 
B)  $120,000. 
C)  $210,000. 
D)  $110,000. 
E)  $80,000.

Question 11

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory increased by $20,000 during the year, and accounts payable increased by $30,000 during the year. What would be DBB's cash paid to suppliers for 2013?

Accepted Answer

A)  $550,000 
B)  $590,000 
C)  $600,000 
D)  $610,000 
E)  $650,000

Question 12

A firm's accumulated depreciation account increased $30,000 for the year, and total plant assets at cost increased $200,000. During the year, the firm purchased $350,000 of new equipment for cash, and sold equipment for $50,000 cash. This equipment had been depreciated $30,000 at the time of sale. What is the complete disclosure of these events in the indirect method Statement of Cash Flows?

Accepted Answer

A)  $350,000 investing cash outflow; $50,000 investing cash inflow; $70,000 addition reconciling adjustment 
B)  $350,000 investing cash outflow; $50,000 investing cash inflow; $60,000 addition reconciling adjustment 
C)  $300,000 investing cash outflow; $130,000 addition reconciling adjustment 
D)  $350,000 investing cash outflow; $50,000 investing cash inflow; $60,000 addition reconciling adjustment; $70,000 addition reconciling adjustment

Question 13

For which of the following accounts would change during the year and that account would not be found in the reconciliation of net income and net operating cash flow?

Accepted Answer

A)  Dividends payable 
B)  Interest payable 
C)  Prepaid rent 
D)  Wages payable 
E)  Short-term notes payable to supplier

Question 14

The following information was provided by the records of RST for the annual reporting period ended December 31, 2011: $$\begin{array} { | l | l | } 
\hline \text { Cost of goods sold as reported on the income statement) } & \$ 170 \
\hline \text { Depreciation expense } & \$ 10 \
\hline \text { Merchandise inventory increase } & \$ 2 \
\hline \text { Goodwill amortized } & \$ 4 \
\hline \text { Accounts payable decrease } & \$ 18 \
\hline
\end{array}$$ The cash paid to suppliers was:

Accepted Answer

A)  $172. 
B)  $188. 
C)  $190. 
D)  $200.

Question 15

The following was provided by the records of RST for the current reporting year: $$\begin{array} { | l | l | } 
\hline \text { Net loss (as reported on the income statement) } & \$ 40,000 \
\hline \text { Decrease in inventory } & 18,000 \
\hline \text { Increase in accounts receiable } & 3,000 \
\hline \text { Depreciation expense } & 27,000 \
\hline \text { Increase in accounts payable } & 9,000 \
\hline \text { Cash dividend declared and paid } & 2,000 \
\hline \text { Decrease in income tax payable } & 4,000 \
\hline
\end{array}$$ The cash flow from operating activities was:

Accepted Answer

A)  $40,000 outflow. 
B)  $7,000 inflow. 
C)  $5,000 inflow. 
D)  $4,000 inflow.

Question 16

The adjusted trial balances for a firm, at December 31, 2011 and 2010 are as follows:
Additional information:
No plant assets were sold in 2011. The firm allocates depreciation expense to other operating expense accounts. 
$\begin{array}{|l|r|r|}
\hline \text { Interest expense } & 4,300 & 2,600 \
\hline \text { Income tax expense } & \underline{20,400} & {61,200} \
\hline & \$ 756,700 & \$ 976,100 \
\hline
\end{array}$

Required:
Determine the firm's 2011 net cash flow from operating activities using the indirect method.

Accepted Answer

The answer of The adjusted trial balances for a firm,...

Question 17

Which of the following would cause an outflow of cash?

Accepted Answer

A)  Issuance of long-term debt to finance a construction project 
B)  Collection on an account receivable 
C)  Cash purchase of a long-term marketable security 
D)  Sale of a long-term asset for cash

Question 18

Which one of the following would not be a cash outflow from financing activities for ABC Company?

Accepted Answer

A)  Cash paid for dividends on ABC common stock. 
B)  Cash paid for purchase of XYZ common stock. 
C)  Cash paid for dividends on ABC preferred stock. 
D)  Cash paid for interest on ABC bonds payable.

Exam 5: The Statement of Cash Flows