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The purchase of equity securities is classified as an investing activity.

A) True
B) False

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Explain the value of separating cash flows into operating activities,investing activities,and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

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By separating cash flows into three cate...

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Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

A) True
B) False

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A purchase of land in exchange for a long-term note payable must be disclosed as a noncash investing and financing activity.

A) True
B) False

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________ activities include those transactions that affect long-term liabilities and equity.

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Use the information provided to calculate the missing cash received for interest for the period. Use the information provided to calculate the missing cash received for interest for the period.

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Use the following information to calculate the net cash provided or used by financing activities for the Hulu Corporation: (a)Net income,$10,000 (b)Sold common stock for $40,000 cash (c)Paid cash dividend of $13,000 (d)Paid bond payable,$28,000 (e)Purchased equipment for $12,000 cash

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Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

A) True
B) False

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Match each of the following items with the appropriate definitions.

Premises
A method of computing and reporting the net cash provided (used)by operating activities that lists the major items of operating cash receipts,and then subtracts the major items of operating cash payments.
A financial statement that reports the cash inflows and cash outflows for an accounting period,and classifies those cash flows as operating,investing,or financing activities.
Transactions with a company's owners and creditors that include obtaining cash from issuing debt and repaying the amounts borrowed,and distributing cash to owners.
Transactions that include purchasing and selling plant assets and investments in debt and equity securities.
Activities that involve the production or purchase of merchandise and the sale of goods or services to customers,including expenditures related to administering the business.
A method of computing and reporting that involves adjusting net income by adding and subtracting items that that do not affect cash provided (used)by operating activities.
Responses
Direct method
Statement of cash flows
Operating activities
Indirect method
Investing activities
Financing activities

Correct Answer

A method of computing and reporting the net cash provided (used)by operating activities that lists the major items of operating cash receipts,and then subtracts the major items of operating cash payments.
A financial statement that reports the cash inflows and cash outflows for an accounting period,and classifies those cash flows as operating,investing,or financing activities.
Transactions with a company's owners and creditors that include obtaining cash from issuing debt and repaying the amounts borrowed,and distributing cash to owners.
Transactions that include purchasing and selling plant assets and investments in debt and equity securities.
Activities that involve the production or purchase of merchandise and the sale of goods or services to customers,including expenditures related to administering the business.
A method of computing and reporting that involves adjusting net income by adding and subtracting items that that do not affect cash provided (used)by operating activities.

The purchase of equity securities is classified as a financing activity.

A) True
B) False

Correct Answer

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Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. A) $585,000. B) $520,000. C) $480,000. D) $508,000. E) $512,000.


A) $585,000.
B) $520,000.
C) $480,000.
D) $508,000.
E) $512,000.

F) D) and E)
G) None of the above

Correct Answer

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

A) True
B) False

Correct Answer

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The cash flows from operating activities section of an indirect method of cash flows begins with net income or loss.

A) True
B) False

Correct Answer

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When preparing the operating activities section of the statement of cash flows using the direct method,expenses and losses with no cash outflows are added back to net income.

A) True
B) False

Correct Answer

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Based on the information in the following income statement and balance sheet for Monterey Corporation,determine the cash flows from operating activities using the direct method. Based on the information in the following income statement and balance sheet for Monterey Corporation,determine the cash flows from operating activities using the direct method. Based on the information in the following income statement and balance sheet for Monterey Corporation,determine the cash flows from operating activities using the direct method.

Correct Answer

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Use the following information to calculate cash paid for wages and salaries: Use the following information to calculate cash paid for wages and salaries: A) $157,400. B) $163,800. C) $168,000. D) $172,200. E) $174,400.


A) $157,400.
B) $163,800.
C) $168,000.
D) $172,200.
E) $174,400.

F) A) and D)
G) A) and C)

Correct Answer

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Northeast Inc.is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information: Northeast Inc.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: A) ($168,000) . B) $200,000. C) $168,000. D) ($191,700) . E) $191,700. -Determine the amount of cash flows from financing activities:


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

F) None of the above
G) A) and B)

Correct Answer

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In preparing a company's statement of cash flows for the most recent year,the following information is available: In preparing a company's statement of cash flows for the most recent year,the following information is available: -Net cash flows from financing activities for the year were: A) $147,000 of net cash used. B) $26,000 of net cash used. C) $347,000 of net cash used. D) $51,000 of net cash used. E) $340,000 of net cash used. -Net cash flows from financing activities for the year were:


A) $147,000 of net cash used.
B) $26,000 of net cash used.
C) $347,000 of net cash used.
D) $51,000 of net cash used.
E) $340,000 of net cash used.

F) B) and E)
G) A) and D)

Correct Answer

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Use the information provided to calculate the cash paid for insurance for the period Use the information provided to calculate the cash paid for insurance for the period

Correct Answer

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When preparing the operating section of the statement of cash flows using the indirect method,noncash expenses are ________ net income.

Correct Answer

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