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Exam 5: The Statement of Cash Flows

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Question 71

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Assume cash paid to suppliers for 2012 is $350,000, merchandise inventory increased by $5,000 during the year, and accounts payable decreased by $10,000 during the year. The COGS for 2012 is $335,000.

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B) False

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Question 72

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Cost of goods sold plus an increase in inventory minus an increase in accounts payable would equal cash paid to suppliers.

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B) False

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Question 73

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Which of the following is not an adjustment to reconcile net income to cash from operating activities?

SDB reported sales of $300,000, write-offs of uncollectible accounts of $10,000 against the allowance, and a decrease in net accounts receivable of $40,000 during 2011. Calculate what would be SDB's cash collected from customers during 2011.

Sale of an asset and issuance of long-term debt will each cause an outflow of cash.

A corporation is preparing a Statement of Cash Flows. Complete the following part of it in the spaces provided (be sure to indicate + or -): $\begin{array} { | l | l | } \hline \text { Operating Activities } & \text { Amount } \\\hline \text { Net income (accrual), } \$ 45,000 & \$ \\\hline \text { Adjustments to convert net income to cash from operating activities: } & \\\hline \text { Depreciation Expense, } \$ 6,000 & \\\hline \text { Decrease in Accounts Receivable balance, } \$ 2,000 & \\\hline \text { Decrease in Accrued wages payable balance, } \$ 1,000 & \\\hline \text { Amortization of patent, } \$ 500 & \\\hline \text { Increase in Inventory balance, } \$ 4,000 & \\\hline \text { Decrease in Accounts Payable balance, } \$ 1,500 & \\\hline \text { Net cash inflow (outflow) from operations } &\$ \\\hline\end{array}$

MDB reported sales of $800,000, bad debt expense (allowance method) of $30,000, and an increase in net accounts receivable of $120,000 during 2013. What is MDB's cash collected from customers for 2013 if MDB did not record any write-offs during the period?

Salary expense plus amortization of deferred compensation expense for the year would equal cash paid for salaries.

If cash collected from customers for 2011 is $780,000 and accounts receivable increased by $20,000 during the year, calculate the amount of sales for 2011.

Given the following data: Income Statement For the Year Ended DeC. 31, 2011 $\begin{array} { | l | l | } \hline \text { Net sales } & \$ 750,000 \\\hline \text { Cost of goods sold } & ( 400,000 ) \\\hline \text { Cash operating expenses } & ( 200,000 ) \\\hline \text { Depreciation and amortization expense } & ( 50,000 ) \\\hline \text { Gain on sale of equipment } & 30,000 \\\hline \text { Net income } & \$ 130,000 \\\hline\end{array}$ Additional information: 1. Increase in accounts receivable during 2011 - $25,000 2. Decrease in inventory during 2011 - $13,000 3. Decrease in accounts payable during 2001 - $28,000 4. Sale of old equipment for cash - $65,000 5. Dividends declared - $45,000; dividends paid - $40,000 6. New building acquired by issuing common shares - $42,000 7. Sold bonds for cash - proceeds of $75,000 What was net cash inflow (outflow) from operating activities during 2011?

A firm's dividends payable account increased $10,000 during the year. The firm also declared $35,000 of dividends. Present the complete disclosure of these events in the direct format Statement of Cash Flows.

Choose the combination that best reflects the appropriate classification of cash paid for operating, investing, and financing activities. $\begin{array}{l}\text { Cash paid for: }\\\begin{array} { | l | l | l | l | } \hline & \text { Operating } & \text { Inwesting } & \text { Financing } \\\hline \text { A) } & \text { Cash to suppliers } & \text { nterest } & \text { Dividends } \\\hline \text { B) } & \text { Interest } & \text { Cash to suppliers } & \text { Income taxes } \\\hline \text { C) } & \text { nncome taxes } & \text { Investment securities } & \text { Dividends } \\\hline \text { D) } & \text { Dividends } & \text { Income taxes } & \text { Cash to suppliers } \\\hline\end{array}\end{array}$

Under IFRS, dividends paid may be classified as operating or financing activities.

The amortization of bond discount on long-term debt should be presented in a Statement of Cash Flows as a(n) :

ABC acquired some land (independently appraised at $12,000) and paid for it by issuing 1,000 shares of its common shares; no market price was quoted) . How should this transaction be reported on the Statement of Cash Flows?

Which of the following is not an inflow of cash?

The following information was provided by the records of QRS for the current reporting year: $\begin{array} { | l | l | } \hline \text { Cost of goods sold (as reported on the income statement } & \$ 80,000 \\\hline \text { Inventory increase } & 20,000 \\\hline \text { Accounts payable increase } & 3,000 \\\hline\end{array}$ The cash paid to suppliers was:

Accrual based net sales plus a decrease in accounts receivable for the year would equal cash from customers.

Net income was $50,000 and cost of goods sold was $150,000. Inventories increased by $10,000 and trade accounts payable increased by $12,000. The cash paid to suppliers was:

Complete the cash column based on the following data for the Statement of Cash Flows: $\begin{array} { | l | l | l | } \hline & & \text { Cash Inflow } \\\hline & & \text { (Outflow) } \\\hline \text { Revenues (accrual) } & \$ 188 & \\\hline \text { Increases in accounts receivable } & 6 & \$ \\\hline \text { Expenses (accrual) } & \$ 116 & \\\hline \text { Depletion expense } & 12 & \\\hline \text { Inventory increase } & 8 & \\\hline \text { Accounts payable increase } & 14 & \$ \\\hline \text { Net cash inflow (outflow) } & & \$ \\\hline\end{array}$