Question 1

Companies can use two different methods to report the amount of cash flow from their investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 2

The objective of the indirect method is to reconcile net income to net cash flow from _______________________________.

Accepted Answer

The answer of The objective of the indirect method is...

Question 3

The term cash on the statement of cash flows includes ________________________.

Accepted Answer

The answer of The term cash on the statement of...

Question 4

A building with a cost of $163,000 and accumulated depreciation of $32,000 was sold for a $11,000 gain.When using the indirect method,the cash generated from this investing activity was $131,000.

Accepted Answer

A) True 
 B)False

Question 5

The repurchase of a company's own stock should be reported on the statement of cash flows as an investing activity.

Accepted Answer

A) True 
 B)False

Question 6

Springfield Company's comparative balance sheets included inventory of $89,700 at December 31,2013,and $73,300 at December 31,2014.Springfield's comparative balance sheets also included accounts payable of $54,400 at December 31,2013,and $38,100 at December 31,2014.Springfield's accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory on account.Cost of goods sold,as reported by Springfield on its 2014 income statement,amounted to $750,800.What is the amount of cash payments for inventory that Springfield will report in the Operating Activities section of its 2014 statement of cash flows assuming that the direct method is used?

Accepted Answer

The answer of Springfield Company's comparative balance sheets included inventory...

Question 7

Almed Company reported the following information for 2013 and 2014.  How much cash was paid for insurance during 2014?

Accepted Answer

A) $13,300 
B) $14,200 
C) $15,100 
D) $15,700

Question 8

Where would you tell someone to find the information needed to compute the cash flow adequacy ratio?

Accepted Answer

A) the balance sheet only 
B) the statement of cash flows and the notes to the statements 
C) the statement of cash flows only 
D) the income statement only

Question 9

When using the indirect method,how is an increase in accounts receivable during the year shown on the statement of cash flows?

Accepted Answer

A) Operating activity 
B) Investing activity 
C) Financing activity 
D) Noncash investing and financing activity

Question 10

When using the indirect method,where is the gain from selling a long-term investment recognized? (The proceeds from selling the investment are considered separately. )

Accepted Answer

A) Operating activity 
B) Investing activity 
C) Financing activity 
D) Noncash investing or financing activity

Question 11

Which balance sheet accounts are most affected by financing activities

Accepted Answer

A) Current assets. 
B) Current liabilities. 
C) Long-term assets. 
D) Long-term liabilities and stockholders' equity.

Question 12

Yen Co.reported the following information at the end of 2013 and 2014:  An analysis of Yen's records indicated that there were no cash flow effects resulting from the changes in the two accounts presented above.How should Yen report the changes in these accounts on a statement of cash flows?

Accepted Answer

A) Yen should report $65,000 for the acquisition of land as an investing activity and $65,000 for the issuance of stock as a financing activity. 
B) Yen should report $65,000 as a noncash investing and financing activity for the acquisition of land by issuing common stock. 
C) Yen should report the issuance of common stock to acquire land in the financing activity section with a net cash flow effect of zero. 
D) Yen should report the acquisition of land by issuing common stock in the investing activity section with a net cash flow effect of zero

Question 13

Utah Corp.
Use the following selected data and additional information from the records of Utah Corp.to answer the questions that follow.
   Additional information:
  Review the data for Utah Corp.
REQUIRED:
Prepare the operating activities section of a statement of cash flows for Utah Corp.for 2014 if the indirect method is used to determine net cash flow from operating activities

Accepted Answer

The answer of Utah Corp.
Use the following selected data and...

Question 14

Utah Corp.
Use the following selected data and additional information from the records of Utah Corp.to answer the questions that follow.
   Additional information:
  Review the data for Utah Corp.
REQUIRED:
Prepare the operating activities section of statement of cash flows for Utah Corp.for 2014 if the direct method is used to determine net cash flow from operating activities.

Accepted Answer

The answer of Utah Corp.
Use the following selected data and...

Question 15

The direct method of reporting cash flows from operating activities involves reconciling net income and cash flow from operations.

Accepted Answer

A) True 
 B)False

Question 16

Bradenton Corp.reported accounts receivable of $38,000 on its December 31,2013,balance sheet.On December 31,2014,accounts receivable had decreased to $29,000.Sales for the year amounted to $57,000.What is the amount of cash collections that Bradenton will report in the Operating Activities section of its 2014 statement of cash flows assuming that the direct method is used?

Accepted Answer

The answer of Bradenton Corp.reported accounts receivable of $38,000 on...

Question 17

When using the direct method,how is depreciation expense recorded on the statement of cash flows?

Accepted Answer

A) Operating activity 
B) Investing activity 
C) Financing activity 
D) Not reported on the statement of cash flows

Question 18

Which balance sheet accounts are most affected by investing activities?

Accepted Answer

A) Current assets and current liabilities. 
B) Long-term assets. 
C) Long-term liabilities. 
D) Stockholders' equity.

Question 19

Under the indirect method,a loss from the retirement of bonds is _________________________ to net income in the operating activities section of the statement of cash flows.

Accepted Answer

The answer of Under the indirect method,a loss from the...

Question 20

Which method of preparing the operating activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?

Accepted Answer

A) The direct method 
B) The indirect method 
C) Both the direct method and the indirect method 
D) Neither the direct method nor the indirect method

Exam 12: The Statement of Cash Flows

Companies can use two different methods to report the amount of cash flow from their investing and financing activities.

The objective of the indirect method is to reconcile net income to net cash flow from _______________________________.

The term cash on the statement of cash flows includes ________________________.

A building with a cost of $163,000 and accumulated depreciation of $32,000 was sold for a $11,000 gain.When using the indirect method,the cash generated from this investing activity was $131,000.

The repurchase of a company's own stock should be reported on the statement of cash flows as an investing activity.

Almed Company reported the following information for 2013 and 2014. How much cash was paid for insurance during 2014?

Where would you tell someone to find the information needed to compute the cash flow adequacy ratio?

When using the indirect method,how is an increase in accounts receivable during the year shown on the statement of cash flows?

When using the indirect method,where is the gain from selling a long-term investment recognized? (The proceeds from selling the investment are considered separately. )

Which balance sheet accounts are most affected by financing activities

Yen Co.reported the following information at the end of 2013 and 2014: An analysis of Yen's records indicated that there were no cash flow effects resulting from the changes in the two accounts presented above.How should Yen report the changes in these accounts on a statement of cash flows?

The direct method of reporting cash flows from operating activities involves reconciling net income and cash flow from operations.

When using the direct method,how is depreciation expense recorded on the statement of cash flows?

Which balance sheet accounts are most affected by investing activities?

Under the indirect method,a loss from the retirement of bonds is _________________________ to net income in the operating activities section of the statement of cash flows.

Which method of preparing the operating activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?