Question 1

The direct exchange of debt for equipment would be shown:

Accepted Answer

A)   on the statement of cash flows as an operating activity.
B)   on the statement of cash flows as an investing activity.
C)   on the statement of cash flows as a financing activity.
D)   as a supplementary disclosure to the statement of cash flows.E) A) and D)
F) A) and C)

Question 2

Which of the following represents a cash inflow from financing activities?

Accepted Answer

A)   Issuing stock in exchange for another company's stock.
B)   Paying a bond's face value at maturity.
C)   Issuing long-term bonds at a discount.
D)   Receiving interest on promissory notes.E) A) and C)
F) C) and D)

Question 3

Cash and cash equivalents include assets that:

Accepted Answer

A)   have stable long-term value.
B)   are short-term, highly liquid, and purchased by the entity within three months of maturity.
C)   consistently grow in value over the long run.
D)   are expected to be used up within a year.E) B) and D)
F) All of the above

Question 4

Assume that the indirect method is used to determine net cash provided by (used in)  operating activities and that Accounts Receivable balance decreased by $10 million during the year. That $10 million should be:

Accepted Answer

A)   added to net income.
B)   subtracted from net income.
C)   added to investing activities.
D)   subtracted from investing activities.E) A) and B)
F) All of the above

Question 5

Using the T-account approach to preparing the statement of cash flows, an increase in Accounts Payable would appear on the debit side of the Cash account

Accepted Answer

A) True 
 B)False

Question 6

Material noncash investing and financing transactions are:

Accepted Answer

A)   reported within the body of the statement of cash flows.
B)   reported in a supplementary schedule to the statement of cash flows.
C)   not reported in any part of the financial statement because cash flow is not affected.
D)   reported in the body of the income statement.E) A) and B)
F) A) and C)

Question 7

Consider the following information:  What is the net cash provided by operating activities?

Accepted Answer

A)   $17,500
B)   $18,500
C)   $21,500
D)   $23,300E) B) and D)
F) B) and C)

Question 8

If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid Insurance are $1,500 and $2,000, respectively, the cash paid for insurance is:

Accepted Answer

A)   $7,000.
B)   $6,500.
C)   $5,000.
D)   $7,500.E) All of the above
F) A) and B)

Question 9

A corporation had a net increase in Retained Earnings of $65,000 for the year. The corporation also paid $20,000 of cash dividends that had been declared in the previous year. This year, the corporation declared $18,000 of dividends but has not paid them as of year-end. Given this information, the net income for the current year must have been:

Accepted Answer

A)   $63,000
B)   $85,000
C)   $65,000
D)   $83,000E) B) and D)
F) A) and D) D

Question 10

Chino Company reported net income of $20,000 for the current year. During the year, Inventory decreased by $7,000, Accounts Payable decreased by $8,000, Depreciation Expense was $10,000, and Accounts Receivable increased by $6,500. If the indirect method is used, what is the net cash provided by operating activities?

Accepted Answer

A)   $10,500
B)   $22,500
C)   $38,500
D)   $51,500E) A) and C)
F) None of the above B

Question 11

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is:

Accepted Answer

A)   $50,000.
B)   $5,000.
C)   $45,000.
D)   $0; this transaction is a financing activity.E) A) and C)
F) B) and D) A

Question 12

Which of the following is the best measure of a company's profitability?

Accepted Answer

A)   Cash-based net income
B)   Accrual-based net income
C)   Accounts Receivable
D)   Sales RevenueE) A) and D)
F) B) and C)

Question 13

Which of the following is not needed to prepare a statement of cash flows?

Accepted Answer

A)   Statement of Retained Earnings
B)   Comparative balance sheets
C)   Additional data concerning selected accounts that increase and decrease as a result of investing and/or financing activities
D)   A complete income statementE) B) and C)
F) None of the above

Question 14

Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows

Accepted Answer

A) True 
 B)False

Question 15

The following information is taken from the income statement of Muir Company:  Based on this information, what is the amount of net cash flow provided by operating activities?

Accepted Answer

A)   $149,000
B)   $140,000
C)   $146,000
D)   $134,000E) A) and B)
F) A) and D)

Question 16

What is the starting point for calculating cash flows from operations when the indirect method is used?

Accepted Answer

A)   Find net income on the income statement.
B)   Calculate the net change in the cash account.
C)   Add the change in accounts receivable to sales revenue.
D)   Identify the balance sheet accounts that relate to operating activities.E) C) and D)
F) B) and D)

Question 17

Repayments of loans will be reported as a:

Accepted Answer

A)   negative cash flow under financing activities.
B)   positive cash flow under financing activities.
C)   negative cash flow under investing activities.
D)   positive cash flow under investing activities.E) A) and B)
F) C) and D)

Question 18

A company bought $250,000 of equipment with an expected life of ten years and no residual value. After six years the company sold the equipment for $94,000. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows?

Accepted Answer

A)   $94,000 is recorded as a cash inflow from investing activities and no other sections of the statement are affected.
B)   $94,000 is recorded as a cash inflow from investing activities and $6,000 is added to convert net income to net cash flow provided by operating activities.
C)   $94,000 is recorded as a cash inflow from investing activities and $6,000 is subtracted to convert net income to net cash flow provided by operating activities.
D)   $94,000 is recorded as a cash inflow from operating activities.E) B) and D)
F) A) and B)

Question 19

Which of the following equations is correct?

Accepted Answer

A)   Change in cash = Change in noncash assets
B)   Change in cash = Change in liabilities + Change in stockholders' equity
C)   Change in cash = Change in liabilities + Change in stockholders' equity - Change in noncash assets
D)   Change cash = Change in liabilities + Change in stockholders' equity + Change in noncash assetsE) A) and B)
F) A) and C)

Question 20

Using the indirect method, which of the following would be added to net income?

Accepted Answer

A)   A decrease in Supplies
B)   An increase in Prepaid Insurance
C)   A decrease in Salaries and Wages Payable
D)   An increase in EquipmentE) B) and C)
F) B) and D)

Exam 12: Statement of Cash Flows

The direct exchange of debt for equipment would be shown:

Correct Answer
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Which of the following represents a cash inflow from financing activities?

Correct Answer
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Cash and cash equivalents include assets that:

Correct Answer
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Assume that the indirect method is used to determine net cash provided by (used in) operating activities and that Accounts Receivable balance decreased by $10 million during the year. That $10 million should be:

Correct Answer
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Using the T-account approach to preparing the statement of cash flows, an increase in Accounts Payable would appear on the debit side of the Cash account

Correct Answer
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Material noncash investing and financing transactions are:

Correct Answer
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Consider the following information: What is the net cash provided by operating activities?

Correct Answer
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If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid Insurance are $1,500 and $2,000, respectively, the cash paid for insurance is:

Correct Answer
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D

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B

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is:

Correct Answer
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A

Which of the following is the best measure of a company's profitability?

Correct Answer
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Which of the following is not needed to prepare a statement of cash flows?

Correct Answer
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Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows

Correct Answer
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The following information is taken from the income statement of Muir Company: Based on this information, what is the amount of net cash flow provided by operating activities?

Correct Answer
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What is the starting point for calculating cash flows from operations when the indirect method is used?

Correct Answer
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Repayments of loans will be reported as a:

Correct Answer
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Which of the following equations is correct?

Correct Answer
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Using the indirect method, which of the following would be added to net income?

Correct Answer
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Exam 12: Statement of Cash Flows

The direct exchange of debt for equipment would be shown:

Correct AnswerverifiedShow Answer

Which of the following represents a cash inflow from financing activities?

Correct AnswerverifiedShow Answer

Cash and cash equivalents include assets that:

Correct AnswerverifiedShow Answer

Assume that the indirect method is used to determine net cash provided by (used in) operating activities and that Accounts Receivable balance decreased by $10 million during the year. That $10 million should be:

Correct AnswerverifiedShow Answer

Using the T-account approach to preparing the statement of cash flows, an increase in Accounts Payable would appear on the debit side of the Cash account

Correct AnswerverifiedShow Answer

Material noncash investing and financing transactions are:

Correct AnswerverifiedShow Answer

Consider the following information: What is the net cash provided by operating activities?

Correct AnswerverifiedShow Answer

If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid Insurance are $1,500 and $2,000, respectively, the cash paid for insurance is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

Correct AnswerverifiedB

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is:

Correct AnswerverifiedA

Which of the following is the best measure of a company's profitability?

Correct AnswerverifiedShow Answer

Which of the following is not needed to prepare a statement of cash flows?

Correct AnswerverifiedShow Answer

Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows

Correct AnswerverifiedShow Answer

The following information is taken from the income statement of Muir Company: Based on this information, what is the amount of net cash flow provided by operating activities?

Correct AnswerverifiedShow Answer

What is the starting point for calculating cash flows from operations when the indirect method is used?

Correct AnswerverifiedShow Answer

Repayments of loans will be reported as a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

Using the indirect method, which of the following would be added to net income?

Correct AnswerverifiedShow Answer

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D

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B

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A

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