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Exam 15: Statement of Cash Flows

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Question 41

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Which of the following would be added to net income in the operating activities section of a statement of cash flows prepared using the indirect method?

A) an increase in accounts receivable.
B) an increase in prepaid expenses.
C) an increase in accrued liabilities.
D) an increase in property, plant, and equipment.

E) C) and D)
F) A) and D)

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Question 42

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The change in each of Kendall Corporation's balance sheet accounts last year follows: Kendall Corporation's income statement for the year was: There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by (used in) operating activities on the statement of cash flows is determined using the direct method.The net cash provided by (used in) investing activities would be:

A) $15,000
B) $(10,000)
C) $(8,000)
D) $5,000

E) B) and D)
F) A) and C)

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Question 43

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Shoshoni Corporation prepares its statement of cash flows using the indirect method. Which of the following would be added to net income in the operating activities section of the statement?

The collection of a loan made to a supplier would be treated as an investing activity on a statement of cash flows.

Last year Marton Corporation reported a cost of goods sold of $720,000 on its income statement. The following additional data were taken from the company's comparative balance sheet for the year: The company uses the direct method to determine the net cash provided by (used in) operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:

The statement of cash flows relies on a fundamental principle of double-entry bookkeeping; namely, the change in the cash balance must equal the change in total liabilities and stockholders' equity.

Last year Lawn Corporation reported sales of $120,000 on its income statement. During the year, accounts receivable increased by $13,000 and accounts payable increased by $18,000. The company uses the direct method to determine the net cash provided by (used in) operating activities on the statement of cash flows. The sales revenue adjusted to a cash basis for the year would be:

Beacham Corporation's net cash provided by operating activities was $115; its net income was $95; its capital expenditures were $65; and its cash dividends were $17. The company's free cash flow was:

Alden Corporation's most recent comparative Balance Sheet is as follows: Alden's net income was $34,000. No equipment was purchased and no long-term investments were sold. There was a gain of $3,000 when equipment was sold. The accumulated depreciation on the equipment that was sold was $12,000. Cash dividends of $20,000 were declared and paid during the year.Required:Prepare Alden's statement of cash flows using the indirect method. Garrison 16e Rechecks 2017-11-18

If accounts receivable increase during a period, then the amount of cash collected from customers will be less than the amount of sales reported on the income statement for the period.

Free cash flow decreases when a company issues common stock for cash.

Norbury Corporation's net income last year was $32,500. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Based solely on this information, the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be:

The ending balance of accounts receivable was $69,000. Sales, adjusted to a cash basis using the direct method on the statement of cash flows, were $354,000. Sales reported on the income statement were $378,000. Based on this information, the beginning balance in accounts receivable was:

Cridberg Corporation's selling and administrative expenses for last year totaled $296,000. During the year the company's prepaid expense account balance increased by $36,000 and accrued liabilities decreased by $30,000. Depreciation for the year was $61,000. Based on this information, selling and administrative expenses adjusted to a cash basis under the direct method on the statement of cash flows would be:

Free cash flow is net cash provided by operating activities less capital expenditures.

Financial statements of Rukavina Corporation follow: Cash dividends were $14. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.The net cash provided by (used in) operating activities for the year was:

Wister Corporation had sales of $462,000 for the just completed year. Shown below are the beginning and ending balances of various Wister accounts: Wister prepares its statement of cash flows using the direct method. On its statement of cash flows, what amount should Wister show for its sales adjusted to a cash basis (i.e., cash received from sales) ?

Alcoser Corporation's most recent balance sheet appears below: Net income for the year was $106. Cash dividends were $26. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.The net cash provided by (used in) operating activities for the year was:

Financial statements of Rukavina Corporation follow: Cash dividends were $8. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) financing activities for the year was:

Negative free cash flow does not automatically signal poor performance.