Question 1

Using the indirect method, if land costing $85,000 was sold for $145,000, the amount reported in the financing activities section of the statement of cash flows would be $85,000.

Accepted Answer

A) True 
 B)False

Question 2

When using the Spreadsheet work sheet)  method to analyze noncash accounts, it is best to start with

Accepted Answer

A)   cash
B)   net income
C)   retained earnings
D)   revenueE) B) and C)
F) C) and D)

Question 3

Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports

Accepted Answer

A)   the increase or decrease in cash
B)   cash at the end of the year
C)   net cash flow from investing activities
D)   net cash flow from financing activitiesE) A) and B)
F) C) and D)

Question 5

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 6

Financing activities include

Accepted Answer

A)   lending money
B)   acquiring investments
C)   issuing debt
D)   acquiring long-lived assetsE) A) and B)
F) None of the above

Question 7

On the statement of cash flows, a $7,500 gain on the sale of fixed assets would be

Accepted Answer

A)   added to net income in converting the net income reported on the income statement to cash flows from operating activities
B)   deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
C)   added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
D)   deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividendsE) B) and D)
F) B) and C)

Question 8

On the statement of cash flows, the cash flows from financing activities section would include

Accepted Answer

A)   receipts from the sale of investments
B)   payments for the acquisition of investments
C)   receipts from a note receivable
D)   receipts from the issuance of capital stockE) All of the above
F) B) and D)

Question 9

Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Accepted Answer

A)   $173,000
B)   $140,000
C)   $313,000
D)   $33,000E) All of the above
F) A) and B)

Question 10

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

Accepted Answer

Sales
$690,000
Add ...

Question 11

Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is

Accepted Answer

A)   $175,000
B)   $165,000
C)   $205,000
D)   $215,000E) B) and C)
F) A) and B)

Question 12

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows:  Adjust Year 2 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Fortune Corporation's comparative balance sheet for current...

Question 13

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Accepted Answer

A)   a decrease in inventory
B)   a decrease in accounts payable
C)   preferred dividends declared and paid
D)   a decrease in accounts receivableE) C) and D)
F) A) and D)

Question 14

Which of the following would not be classified as an operating activity?

Accepted Answer

A)   interest expense
B)   income taxes
C)   payment of dividends
D)   selling expensesE) A) and B)
F) B) and C)

Question 15

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

Accepted Answer

A)   retirement of bond payable
B)   acquisition of treasury stock
C)   declaration of stock dividends
D)   issuance of long-term debtE) C) and D)
F) All of the above

Question 16

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Accepted Answer

A)   a gain on the sale of land
B)   a decrease in accounts payable
C)   an increase in accrued liabilities
D)   dividends paid on common stockE) A) and B)
F) A) and C)

Question 17

The statement of cash flows is not useful for

Accepted Answer

A)   planning future investing and financing activities
B)   determining a company's ability to pay its debts
C)   determining a company's ability to pay dividends
D)   calculating the net worth of a companyE) All of the above
F) A) and B)

Question 18

When using the spreadsheet work sheet) method to analyzing noncash accounts, no order of analysis is required, but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

Accepted Answer

A) True 
 B)False

Question 19

Under the direct method of reporting cash flows from operations, the primary source of cash is cash received from customers.

Accepted Answer

A) True 
 B)False

Question 20

On the statement of cash flows, the cash flows from operating activities section would include

Accepted Answer

A)   receipts from the issuance of capital stock
B)   payment for interest on short-term notes payable
C)   payments for the purchase of investments
D)   payments for cash dividendsE) B) and C)
F) None of the above

Exam 14: Statement of Cash Flows

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

Correct AnswerverifiedShow Answer

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

Correct AnswerverifiedShow Answer

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows: Adjust Year 2 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

Correct AnswerverifiedShow Answer

Financing activities include

Correct AnswerverifiedShow Answer

Using the indirect method, if land costing $85,000 was sold for $145,000, the amount reported in the financing activities section of the statement of cash flows would be $85,000.

Correct AnswerverifiedShow Answer

On the statement of cash flows, the cash flows from operating activities section would include

Correct AnswerverifiedShow Answer

On the statement of cash flows, a $7,500 gain on the sale of fixed assets would be

Correct AnswerverifiedShow Answer

When using the spreadsheet work sheet) method to analyzing noncash accounts, no order of analysis is required, but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

Correct AnswerverifiedShow Answer

Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Correct AnswerverifiedShow Answer

When using the Spreadsheet work sheet) method to analyze noncash accounts, it is best to start with

Correct AnswerverifiedShow Answer

Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is

Correct AnswerverifiedShow Answer

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports

Correct AnswerverifiedShow Answer

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Correct AnswerverifiedShow Answer

On the statement of cash flows, the cash flows from financing activities section would include

Correct AnswerverifiedShow Answer

Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows.

Correct AnswerverifiedShow Answer

Which of the following would not be classified as an operating activity?

Correct AnswerverifiedShow Answer

The statement of cash flows is not useful for

Correct AnswerverifiedShow Answer

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Correct AnswerverifiedShow Answer

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

Correct Answerverified Sales$690,000Add ...View AnswerShow Answer

Under the direct method of reporting cash flows from operations, the primary source of cash is cash received from customers.

Correct AnswerverifiedShow Answer

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Sales
$690,000
Add ...
View Answer

Correct Answer
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