Question 1

If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Accepted Answer

A)  net increase in cash of $120,000.
B)  net decrease in cash of $120,000.
C)  increase in cash of $250,000 and a decrease in cash of $130,000.
D)  net gain on retirement of bonds of $120,000.E) B) and C)
F) None of the above

Question 2

Which of the following would not be needed to determine net cash provided by operating activities?

Accepted Answer

A)  Depreciation expense
B)  Change in accounts receivable
C)  Payment of cash dividends
D)  Change in prepaid expensesE) A) and B)
F) A) and C)

Question 3

Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were

Accepted Answer

A)  $39,000.
B)  $51,000.
C)  $305,000.
D)  $285,000.E) A) and D)
F) B) and C)

Question 4

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Accepted Answer

A) True 
 B)False

Question 5

The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities?

Accepted Answer

A)  $296,000
B)  $339,000
C)  $323,000
D)  $311,000E) All of the above
F) C) and D)

Question 6

Which one of the following items is not generally used in preparing a statement of cash flows?

Accepted Answer

A)  Adjusted trial balance
B)  Comparative balance sheets
C)  Current income statement
D)  Additional informationE) B) and C)
F) A) and C)

Question 7

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Accepted Answer

A)  $185,000.
B)  $197,000.
C)  $222,000.
D)  $148,000.E) B) and C)
F) A) and D)

Question 8

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Accepted Answer

A) True 
 B)False

Question 9

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 10

The statement of cash flows will not provide insight into

Accepted Answer

A)  why dividends were not increased.
B)  whether cash flow is greater than net income.
C)  the exact proceeds of a future bond issue.
D)  how the retirement of debt was accomplished.E) A) and D)
F) A) and C)

Question 11

Financing activities involve

Accepted Answer

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

Question 12

During 2014, Harvey Industries reported cash provided by operations of $670,000, cash used in investing of $1,039,000, and cash used in financing of $145,000. In addition, cash spent for fixed assets during the period was $404,000. No dividends were paid. Based on this information, what was Harvey's free cash flow?

Accepted Answer

A)  ($369,000) 
B)  $1,450,000
C)  $266,000
D)  ($918,000) E) A) and B)
F) B) and C)

Question 13

In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

Accepted Answer

A)  credit to Land $50,000 and a debit to Sale of Land $50,000 under investing activities.
B)  debit to Land $92,000 and a credit to Purchase of Land $92,000 under financing activities.
C)  net debit to Land $42,000 and a credit to Purchase of Land $42,000 under investing activities.
D)  credit to Land $50,000 and a debit to Sale of Land $50,000 under financing activities.E) None of the above
F) A) and B)

Question 14

Each of the following is added to net income in computing net cash provided by operating activities except

Accepted Answer

A)  amortization expense.
B)  an increase in accrued expenses payable.
C)  a gain on sale of equipment.
D)  a decrease in inventory.E) A) and B)
F) A) and C)

Question 15

Net income for the period.

Accepted Answer

A)  1
B)  2
C)  Neither 1 nor 2.
D)  Both 1 and 2.E) None of the above
F) B) and D)

Question 16

In developing the cash flows from operating activities, most companies in the U. S.

Accepted Answer

A)  use the direct method.
B)  use the indirect method.
C)  present both the indirect and direct methods in their financial reports.
D)  prepare the operating activities section on the accrual basis.E) B) and C)
F) A) and D)

Question 17

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Accepted Answer

A)  deducted from net income.
B)  added to net income.
C)  ignored because it does not affect income.
D)  ignored because it does not affect expenses.E) A) and C)
F) A) and B)

Question 18

In the bottom portion of the statement of cash flows worksheet,

Accepted Answer

A)  inflows of cash are debits in the reconciling columns.
B)  outflows of cash are debits in the reconciling columns.
C)  information pertaining to investing and financing activities only is entered.
D)  only significant noncash transactions are entered.E) A) and B)
F) A) and C)

Question 19

In addition to the three basic financial statements, which of the following is also a required financial statement?

Accepted Answer

A)  the "Cash Budget"
B)  the Statement of Cash Flows
C)  the Statement of Cash Inflows and Outflows
D)  the "Cash Reconciliation"E) B) and C)
F) All of the above

Question 20

The statement of cash flows

Accepted Answer

A)  must be prepared on a daily basis.
B)  summarizes the operating, financing, and investing activities of an entity.
C)  is another name for the income statement.
D)  is a special section of the income statement.E) None of the above
F) B) and C)

Exam 13: Statement of Cash Flows

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Correct Answer
verified

Which of the following would not be needed to determine net cash provided by operating activities?

Correct Answer
verified

Correct Answer
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Which one of the following items is not generally used in preparing a statement of cash flows?

Correct Answer
verified

The statement of cash flows will not provide insight into

Correct Answer
verified

Each of the following is added to net income in computing net cash provided by operating activities except

Correct Answer
verified

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Correct Answer
verified

In addition to the three basic financial statements, which of the following is also a required financial statement?

Correct Answer
verified

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Correct Answer
verified

Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were

Correct Answer
verified

The statement of cash flows

Correct Answer
verified

Financing activities involve

Correct Answer
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If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Correct Answer
verified

Correct Answer
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Net income for the period.

Correct Answer
verified

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Correct Answer
verified

In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

Correct Answer
verified

In developing the cash flows from operating activities, most companies in the U. S.

Correct Answer
verified

In the bottom portion of the statement of cash flows worksheet,

Correct Answer
verified

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Correct Answer
verified

Exam 13: Statement of Cash Flows

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Correct AnswerverifiedShow Answer

Which of the following would not be needed to determine net cash provided by operating activities?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following items is not generally used in preparing a statement of cash flows?

Correct AnswerverifiedShow Answer

The statement of cash flows will not provide insight into

Correct AnswerverifiedShow Answer

Each of the following is added to net income in computing net cash provided by operating activities except

Correct AnswerverifiedShow Answer

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Correct AnswerverifiedShow Answer

In addition to the three basic financial statements, which of the following is also a required financial statement?

Correct AnswerverifiedShow Answer

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Correct AnswerverifiedShow Answer

Hogan Company uses the direct method in determining net cash provided by operating activities, During the year, operating expenses were $295,000, prepaid expenses increased $23,000, and accrued expenses payable increased $33,000. Cash payments for operating expenses were

Correct AnswerverifiedShow Answer

The statement of cash flows

Correct AnswerverifiedShow Answer

Financing activities involve

Correct AnswerverifiedShow Answer

If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Net income for the period.

Correct AnswerverifiedShow Answer

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Correct AnswerverifiedShow Answer

In the Garnet Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $50,000 was sold for $50,000 cash, and land costing $92,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

Correct AnswerverifiedShow Answer

In developing the cash flows from operating activities, most companies in the U. S.

Correct AnswerverifiedShow Answer

In the bottom portion of the statement of cash flows worksheet,

Correct AnswerverifiedShow Answer

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Correct AnswerverifiedShow Answer

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