Question 1

Did accounts receivable increase or decrease during 2009?

Accepted Answer

The accounts receivable balance decrease...

Question 2

Which of the following causes a change in cash?

Accepted Answer

A)  Accrual of interest payable.
B)  Recording of depreciation expense.
C)  Write-off of an uncollectible account.
D)  Payment of a cash dividend declared in the previous fiscal year.E) B) and D)
F) B) and C)

Question 3

When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities, depreciation is added to net income because:

Accepted Answer

A)  It was deducted as an expense on the income statement, but does not require cash.
B)  It was deducted as an expense on the income statement and affects the amount of cash.
C)  It is a significant portion of the year's expenses.
D)  It represents a source or inflow of cash.E) A) and D)
F) B) and D)

Question 4

During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

Accepted Answer

A)  Inflow of $300 million.
B)  Outflow of $200 million.
C)  Outflow of $300 million.
D)  Inflow of $600 million.$300 $500 = ($200) E) None of the above
F) C) and D)

Question 5

Acquiring land with a long-term note is:

Accepted Answer

A)  Reported as an investing activity in the statement of cash flows.
B)  Reported as a financing activity in the statement of cash flows.
C)  Reported as a noncash investing and financing activity.
D)  None of these is correct.E) A) and B)
F) None of the above

Question 6

Assuming the decrease in accrued expenses during fiscal year 2008 included a $14,000 reduction due to interest on debt, compute the interest expense (net) for Kinney in that year.

Accepted Answer

The reduction in accrued expenses is act...

Question 7

Sneed Corporation reported balances in the following accounts for the current year: Income tax expense was $230 for the year. What was the amount paid for taxes?

Accepted Answer

A)  $280.
B)  $220.
C)  $210.
D)  $190.E) A) and C)
F) B) and C)

Question 8

Which of the following is reported as an operating activity in the statement of cash flows?

Accepted Answer

A)  The payment of dividends.
B)  The sale of office equipment.
C)  The payment of interest on long-term notes.
D)  The issuance of a stock dividend.E) None of the above
F) All of the above

Question 9

In its 2009 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2009. In its reconciliation schedule, WME should:

Accepted Answer

A)  Show a $14,000 negative adjustment to net income under the indirect method for the increase in unearned revenue.
B)  Show a $14,000 negative adjustment to net income under the indirect method for the decrease in unearned revenue.
C)  Show a $14,000 positive adjustment to net income under the indirect method for the increase in unearned revenue.
D)  Show a $14,000 positive adjustment to net income under the indirect method for the decrease in unearned revenue.Unearned revenue, a liability account, increased by the cash received for $681,000 and decreased by the $695,000 revenue recognized.Thus, unearned revenue decreased by $14,000.E) All of the above
F) B) and D)

Question 10

On June 4, White Corporation issued $400 million of bonds for $386 million. During the same year, $1 million of the bond discount was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report:

Accepted Answer

A)  A financing activity of $400 million.
B)  An addition to net income of $1 million.
C)  An investing activity of $386 million.
D)  A deduction from net income of $1 million.It is a financing activity of $386 million and an addition to net income of $1 million.E) A) and B)
F) A) and C)

Question 11

Cash equivalents generally would not include short-term investments in:

Accepted Answer

A)  Commercial paper.
B)  Certificates of deposit.
C)  Held-to-maturity securities.
D)  Money market funds.E) A) and B)
F) None of the above

Question 12

Alpha Company had the following account balances for 2009: Alpha reported net income of $210,000 for 2009. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2009 reported in the statement of cash flows?

Accepted Answer

A)  $224,000.
B)  $206,000.
C)  $214,000.
D)  $196,000.E) B) and C)
F) None of the above

Question 13

Ludwig Company's prepaid rent was $9,000 at December 31, 2008, and $13,000 at December 31, 2009. Ludwig reported rent expense of $19,000 on the 2009 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Accepted Answer

A)  $15,000.
B)  $19,000.
C)  $23,000.
D)  None of these is correct.E) B) and C)
F) C) and D)

Question 14

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Accepted Answer

A)  Depreciation expense.
B)  A bad debt written off under the allowance method.
C)  Amortization of premium on bonds payable.
D)  Dividends declared.E) B) and D)
F) None of the above

Question 15

A company reported interest expense of $540,000 for the year. Interest payable was $35,000 and $75,000 at the beginning and the end of the year, respectively. What was the amount of interest paid?

Accepted Answer

A)  $580,000.
B)  $615,000.
C)  $500,000.
D)  $575,000.E) B) and D)
F) None of the above

Question 16

On December 31, 2009, Tiras Company reported net income of $50,000 and sales of $200,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Tiras will report cash collected from customers in its 2009 statement of cash flows (indirect method)  in the amount of:

Accepted Answer

A)  $0.
B)  $245,000.
C)  $205,000.
D)  $195,000.When using the indirect method to determine cash flows from operating activities, cash collected from customers is not calculated or reported.E) C) and D)
F) A) and B)

Question 17

Determine the amount of cash paid to suppliers for each of the four independent situations below.
 $$\begin{array} { c c c c c } 
\text { Situation } & \begin{array} { c } 
\text { Cost of } \
\text { goods sold }
\end{array} & \text { Inventory } & \begin{array} { c } 
\text { Accounts } \
\text { payable }
\end{array} & \text { Cash paid to suppliers } \
1 & \$ 300,000 & \$ 6,000 & \$ \quad 0 & \$ \
2 & 300,000 & 0 & 7,000 & \$ \
3 & 400,000 & 6,000 & 7,000 & \$ \
4 & 400,000 & ( 6,000 ) & ( 7,000 ) & \$
\end{array}$$

Accepted Answer

1) $300,000 + $6,000 = $306,00...

Question 18

When treasury stock is sold at an amount less than its cost, the sale is classified as:

Accepted Answer

A)  A financing activity.
B)  An operating activity.
C)  A financing activity and an operating activity.
D)  An investing activity.E) A) and D)
F) A) and C)

Question 19

The sale of stock and the sale of bonds are reported as financing activities. Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activities? Explain.

Accepted Answer

The payment of cash dividends to shareho...

Question 20

Cash equivalents have each of the following characteristics except:

Accepted Answer

A)  Little risk of loss.
B)  Highly liquid.
C)  Maturity of at least 3 months.
D)  Short-term.E) C) and D)
F) None of the above

Exam 21: The Statement of Cash Flows

Correct Answer
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1) $300,000 + $6,000 = $306,00...
View Answer

Correct Answer
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Which of the following is reported as an operating activity in the statement of cash flows?

Correct Answer
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When treasury stock is sold at an amount less than its cost, the sale is classified as:

Correct Answer
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Cash equivalents have each of the following characteristics except:

Correct Answer
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The sale of stock and the sale of bonds are reported as financing activities. Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activities? Explain.

Correct Answer
verified
The payment of cash dividends to shareho...
View Answer

Assuming the decrease in accrued expenses during fiscal year 2008 included a $14,000 reduction due to interest on debt, compute the interest expense (net) for Kinney in that year.

Correct Answer
verified
The reduction in accrued expenses is act...
View Answer

Ludwig Company's prepaid rent was $9,000 at December 31, 2008, and $13,000 at December 31, 2009. Ludwig reported rent expense of $19,000 on the 2009 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Correct Answer
verified

Cash equivalents generally would not include short-term investments in:

Correct Answer
verified

During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

Correct Answer
verified

Which of the following causes a change in cash?

Correct Answer
verified

On June 4, White Corporation issued $400 million of bonds for $386 million. During the same year, $1 million of the bond discount was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report:

Correct Answer
verified

When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities, depreciation is added to net income because:

Correct Answer
verified

In its 2009 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2009. In its reconciliation schedule, WME should:

Correct Answer
verified

Acquiring land with a long-term note is:

Correct Answer
verified

Sneed Corporation reported balances in the following accounts for the current year: Income tax expense was $230 for the year. What was the amount paid for taxes?

Correct Answer
verified

A company reported interest expense of $540,000 for the year. Interest payable was $35,000 and $75,000 at the beginning and the end of the year, respectively. What was the amount of interest paid?

Correct Answer
verified

Did accounts receivable increase or decrease during 2009?

Correct Answer
verified
The accounts receivable balance decrease...
View Answer

Alpha Company had the following account balances for 2009: Alpha reported net income of $210,000 for 2009. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2009 reported in the statement of cash flows?

Correct Answer
verified

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Correct Answer
verified

Exam 21: The Statement of Cash Flows

Correct Answerverified1) $300,000 + $6,000 = $306,00...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following is reported as an operating activity in the statement of cash flows?

Correct AnswerverifiedShow Answer

When treasury stock is sold at an amount less than its cost, the sale is classified as:

Correct AnswerverifiedShow Answer

Cash equivalents have each of the following characteristics except:

Correct AnswerverifiedShow Answer

The sale of stock and the sale of bonds are reported as financing activities. Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activities? Explain.

Correct AnswerverifiedThe payment of cash dividends to shareho...View AnswerShow Answer

Assuming the decrease in accrued expenses during fiscal year 2008 included a $14,000 reduction due to interest on debt, compute the interest expense (net) for Kinney in that year.

Correct AnswerverifiedThe reduction in accrued expenses is act...View AnswerShow Answer

Ludwig Company's prepaid rent was $9,000 at December 31, 2008, and $13,000 at December 31, 2009. Ludwig reported rent expense of $19,000 on the 2009 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Correct AnswerverifiedShow Answer

Cash equivalents generally would not include short-term investments in:

Correct AnswerverifiedShow Answer

During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

Correct AnswerverifiedShow Answer

Which of the following causes a change in cash?

Correct AnswerverifiedShow Answer

On June 4, White Corporation issued $400 million of bonds for $386 million. During the same year, $1 million of the bond discount was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report:

Correct AnswerverifiedShow Answer

When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities, depreciation is added to net income because:

Correct AnswerverifiedShow Answer

In its 2009 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2009. In its reconciliation schedule, WME should:

Correct AnswerverifiedShow Answer

Acquiring land with a long-term note is:

Correct AnswerverifiedShow Answer

Sneed Corporation reported balances in the following accounts for the current year: Income tax expense was $230 for the year. What was the amount paid for taxes?

Correct AnswerverifiedShow Answer

A company reported interest expense of $540,000 for the year. Interest payable was $35,000 and $75,000 at the beginning and the end of the year, respectively. What was the amount of interest paid?

Correct AnswerverifiedShow Answer

Did accounts receivable increase or decrease during 2009?

Correct AnswerverifiedThe accounts receivable balance decrease...View AnswerShow Answer

Alpha Company had the following account balances for 2009: Alpha reported net income of $210,000 for 2009. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2009 reported in the statement of cash flows?

Correct AnswerverifiedShow Answer

Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

Correct AnswerverifiedShow Answer

Correct Answer
verified
1) $300,000 + $6,000 = $306,00...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The payment of cash dividends to shareho...
View Answer

Correct Answer
verified
The reduction in accrued expenses is act...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The accounts receivable balance decrease...
View Answer

Correct Answer
verified

Correct Answer
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