Question 1

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by the accounting constraints of recognition and measurement for net income.

Accepted Answer

A) True 
 B)False

Question 2

Based on the information provided below, complete the following worksheet to be used to prepare the statement of cash flows using the indirect method.
(a) Net income for the year was $30,000.
(b) Dividends of $10,000 were declared and paid.
(c) Stylish's only noncash expense was depreciation which totaled $50,000.
(d) The company purchased plant assets for $70,000.
(e) Notes payable in the amount of $40,000 were issued during the year for cash.

Accepted Answer

The answer of Based on the information provided below, complete...

Question 3

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  The amount of cash dividends paid during the year would be:

Accepted Answer

A)  $70,000. 
B)  $46,000. 
C)  $22,000. 
D)  $39,000. 
E)  $24,000.

Question 4

The payment of cash dividends to shareholders is classified as a financing activity.

Accepted Answer

A) True 
 B)False

Question 5

The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements.

Accepted Answer

A) True 
 B)False

Question 6

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period.

Accepted Answer

A) True 
 B)False

Question 7

Cash flows from interest received on loans are reported in the statement of cash flows as part of:

Accepted Answer

A)  Operating activities. 
B)  Financing activities. 
C)  Investing activities. 
D)  Noncash activities. 
E)  None of these. This is not reported in the statement of cash flows.

Question 8

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

Accepted Answer

A)  $(168,000). 
B)  $200,000. 
C)  $168,000. 
D)  $(191,700). 
E)  $191,700.

Question 9

The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column.

Accepted Answer

The answer of The following transactions and events occurred during...

Question 10

Explain how cash flows from investing and financing activities are determined.

Accepted Answer

The answer of Explain how cash flows from investing and...

Question 11

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Becker's statement of cash flows?

Accepted Answer

A)  In operating activities as a source of funds. 
B)  In investing activities as a source of funds. 
C)  In investing activities as a use of funds. 
D)  In financing activities as a source of funds. 
E)  In financing activities as a use of funds.

Question 12

The direct method of reporting operating cash flows:

Accepted Answer

A)  Is recommended but not required by the FASB. 
B)  Must be used by all companies. 
C)  Is used by most companies. 
D)  Is considered supplementary disclosure. 
E)  Is not recommended by the FASB, but is commonly used.

Question 13

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 14

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users on the statement of cash flows and/or in the notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Stojko Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was provided (used) in operating activities?

Accepted Answer

A)  $100,000 provided. 
B)  $(100,000) used. 
C)  $80,000 provided. 
D)  $(80,000) used. 
E)  $(10,000) useD.$10,000 - $52,000 - $38,000 = $80,000

Question 16

Receipts of cash dividends and interest earned on loans are classified as investing activities.

Accepted Answer

A) True 
 B)False

Question 17

Preparation of the statement of cash flows involves:

Accepted Answer

A)  Computing the net increase or decrease in cash. 
B)  Computing and reporting net cash provided or used by operations. 
C)  Computing and reporting net cash provided or used by investing activities. 
D)  Computing and reporting net cash provided or used by financing activities. 
E)  All of these.

Question 18

For each of the following separate cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

Accepted Answer

The answer of For each of the following separate cases,...

Question 19

The following information is available for the Ehrens Corporation:   Additional information:
(1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.
(2) Old equipment with an original cost of $37,550 was sold for $2,100 cash.
(3) New equipment was purchased for $67,550 cash.
(4) Cash dividends of $33,600 were paid.
(5) Additional shares of stock were issued for cash.
Prepare a complete statement of cash flows for calendar-year 2011 using the indirect method.

Accepted Answer

The answer of The following information is available for the...

Question 20

Investing activities include the:

Accepted Answer

A)  Purchase of plant assets. 
B)  Lending and collecting on notes receivable. 
C)  Sale of short-term investments other than cash equivalents. 
D)  Sale of plant assets. 
E)  All of these.

Exam 16: Reporting the Statement of Cash Flows

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by the accounting constraints of recognition and measurement for net income.

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The amount of cash dividends paid during the year would be:

The payment of cash dividends to shareholders is classified as a financing activity.

The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements.

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period.

Cash flows from interest received on loans are reported in the statement of cash flows as part of:

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column.

Explain how cash flows from investing and financing activities are determined.

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Becker's statement of cash flows?

The direct method of reporting operating cash flows:

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users on the statement of cash flows and/or in the notes to the financial statements.

Stojko Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was provided (used) in operating activities?

Receipts of cash dividends and interest earned on loans are classified as investing activities.

Preparation of the statement of cash flows involves:

For each of the following separate cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

Investing activities include the: