Question 1

Based solely on the above information, Kenny's net cash flow from investing activities for 2010 is:

Accepted Answer

A)   $215,000 net cash used by investing activities.
B)   $165,000 net cash provided by investing activities.
C)   $265,000 net cash used by investing activities.
D)   $290,000 net cash provided by investing activities.E) B) and D)
F) A) and C)

Question 2

Which of the following indicates a cash receipt?

Accepted Answer

A)   A decrease in accrued expenses, such as wages payable.
B)   A decrease in accounts receivable.
C)   An increase in inventory.
D)   A decrease in accounts payable.E) B) and C)
F) All of the above

Question 3

Monarch Company uses the indirect method to prepare its statement of cash flows. The following information has been gathered for the current period: On the basis of the above information only, Monarch Company's statement of cash flows shows net cash flow from operating activities to be:

Accepted Answer

A)   $187,000.
B)   $333,000.
C)   $225,000.
D)   $361,000.E) None of the above
F) All of the above

Question 4

Dividends paid belong in the operating section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 5

Depreciation is a non-cash expense.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not true regarding the direct and indirect methods of computing net cash flow from operating activities?

Accepted Answer

A)   Both methods result in the same dollar amount of cash flow from operating activities.
B)   Both methods involve adjusting entries to the company's books so that the accounting records reflect the figures shown in the statement of cash flows.
C)   Both methods are acceptable to the FASB for reporting purposes.
D)   Both methods convert accrual-based income statement amounts to cash flow results.E) C) and D)
F) B) and D)

Question 7

The 2010 statement of cash flows of Dickens Corporation shows $500,000 cash paid for dividends. If dividends in Dickens' statement of retained earnings are reported at $550,000 then:

Accepted Answer

A)   Dickens' dividends payable account must amount to $50,000 at the end of 2010.
B)   Dickens' Cash account must have increased by $50,000 in 2010.
C)   Dickens' dividends payable account must have increased by $50,000 in 2010.
D)   Dickens' dividends payable account must have decreased by $50,000 in 2010.E) A) and D)
F) A) and B)

Question 8

If cash increased during the year and there was also a net loss for the year, there must be positive cash flows from financing and investing activities.

Accepted Answer

A) True 
 B)False

Question 9

When equipment is purchased entirely through a loan:

Accepted Answer

A)   The equipment is shown as an increase in the investing activities section.
B)   The equipment is shown as a decrease in the investing activities section.
C)   The loan is shown as an increase in the financing section.
D)   Neither the loan nor the purchase of equipment is shown in the investing or the financing sections.E) None of the above
F) B) and C)

Question 10

The statement of cash flows is designed to assist users in assessing each of the following, except:

Accepted Answer

A)   The ability of a company to remain liquid.
B)   The major sources of cash receipts during the period.
C)   The company's profitability.
D)   The reasons why net cash flow from operating activities differ from net income.E) All of the above
F) A) and C)

Question 11

Cash flows and accounting records
In a business with an accrual-based accounting system, is a statement of cash flows based upon account balances shown in the adjusted trial balance? Explain.

Accepted Answer

No. In an accrual-based accounting syste...

Question 12

How should purchases, sales, and depreciation of plant assets be classified in Johnson's statement of cash flows for the current year? (Assume the direct method is used by Johnson.)

Accepted Answer

A)   Purchases of plant assets are classified as investing activities; sales of plant assets are classified as financing activities; depreciation is classified as an operating activity.
B)   Purchases of plant assets and depreciation are classified as investing activities; sales of plant assets are classified as financing activities.
C)   Purchases and sales of plant assets are classified as investing activities; depreciation does not appear as an operating, financing, or investing activity.
D)   Since plant assets are used to generate income from operations, purchases, sales, and depreciation of plant assets are all classified as operating activities.E) None of the above
F) A) and B)

Question 13

The following balance sheets are provided for Socrates Foods:
 
a. Compute the following:
(1) Cash received from customers during the year $__________
(2) Cash payments for merchandise during the year $__________
(3) Wages paid to employees during the year $__________
(4) In Socrates Foods' statement of cash flows, what amount would be reported as the net change in cash and cash equivalents? $__________ (increase/decrease)
b. Socrates Foods recorded the sale of equipment as follows:

How would this transaction be reported in Socrates Foods' statement of cash flows? (Assume the direct method is being used.)

Accepted Answer

a. (1) $1,650,000(sales) - $15,000 (incr...

Question 14

Seldin's net cash flow from operating activities for the current year is:

Accepted Answer

A)   $57,000.
B)   $59,000.
C)   $61,000.
D)   $67,000.E) All of the above
F) A) and B)

Question 15

Cash flows are grouped in the statement of cash flows into the following major categories:

Accepted Answer

A)   Operating activities, investing activities, and financing activities.
B)   Cash receipts, cash disbursements, and noncash activities.
C)   Direct cash flows and indirect cash flows.
D)   Operating activities, investing activities, and collecting activities.E) All of the above
F) A) and D)

Question 16

Cash flows from operating activities include all of the following except:

Accepted Answer

A)   Collections from customers for sales of goods.
B)   Interest and dividends received.
C)   Payments of interest.
D)   Payments of dividends.E) All of the above
F) C) and D)

Question 17

If a company's accounts payable has increased over a year, it is an indication that the company is buying more goods.

Accepted Answer

A) True 
 B)False

Question 18

In a statement of cash flows, the term cash includes:

Accepted Answer

A)   Only money on deposit in bank accounts.
B)   Only bank accounts and cash on hand.
C)   Bank accounts, cash on hand, and cash equivalents.
D)   Bank accounts, cash on hand, cash equivalents, and marketable securities classified as current assets.E) A) and B)
F) A) and C)

Question 19

Compute the amount of New World's cash payments for operating expenses.

Accepted Answer

A)   $277,200.
B)   $283,500.
C)   $378,000.
D)   $349,650.E) A) and D)
F) None of the above

Question 20

Under the indirect method, when machinery is sold at a gain, the gain is added in the operating section of the statement of cash flows and the cost is added in the investing section.

Accepted Answer

A) True 
 B)False

Exam 13: Statement of Cash Flows

Which of the following is not true regarding the direct and indirect methods of computing net cash flow from operating activities?

Correct Answer
verified

How should purchases, sales, and depreciation of plant assets be classified in Johnson's statement of cash flows for the current year? (Assume the direct method is used by Johnson.)

Correct Answer
verified

Dividends paid belong in the operating section of the statement of cash flows.

Correct Answer
verified

If a company's accounts payable has increased over a year, it is an indication that the company is buying more goods.

Correct Answer
verified

If cash increased during the year and there was also a net loss for the year, there must be positive cash flows from financing and investing activities.

Correct Answer
verified

Cash flows from operating activities include all of the following except:

Correct Answer
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Correct Answer
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a. (1) $1,650,000(sales) - $15,000 (incr...
View Answer

When equipment is purchased entirely through a loan:

Correct Answer
verified

Cash flows and accounting records In a business with an accrual-based accounting system, is a statement of cash flows based upon account balances shown in the adjusted trial balance? Explain.

Correct Answer
verified
No. In an accrual-based accounting syste...
View Answer

Depreciation is a non-cash expense.

Correct Answer
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In a statement of cash flows, the term cash includes:

Correct Answer
verified

Based solely on the above information, Kenny's net cash flow from investing activities for 2010 is:

Correct Answer
verified

The statement of cash flows is designed to assist users in assessing each of the following, except:

Correct Answer
verified

Compute the amount of New World's cash payments for operating expenses.

Correct Answer
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Seldin's net cash flow from operating activities for the current year is:

Correct Answer
verified

Under the indirect method, when machinery is sold at a gain, the gain is added in the operating section of the statement of cash flows and the cost is added in the investing section.

Correct Answer
verified

The 2010 statement of cash flows of Dickens Corporation shows $500,000 cash paid for dividends. If dividends in Dickens' statement of retained earnings are reported at $550,000 then:

Correct Answer
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Monarch Company uses the indirect method to prepare its statement of cash flows. The following information has been gathered for the current period: On the basis of the above information only, Monarch Company's statement of cash flows shows net cash flow from operating activities to be:

Correct Answer
verified

Which of the following indicates a cash receipt?

Correct Answer
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Cash flows are grouped in the statement of cash flows into the following major categories:

Correct Answer
verified

Exam 13: Statement of Cash Flows

Which of the following is not true regarding the direct and indirect methods of computing net cash flow from operating activities?

Correct AnswerverifiedShow Answer

How should purchases, sales, and depreciation of plant assets be classified in Johnson's statement of cash flows for the current year? (Assume the direct method is used by Johnson.)

Correct AnswerverifiedShow Answer

Dividends paid belong in the operating section of the statement of cash flows.

Correct AnswerverifiedShow Answer

If a company's accounts payable has increased over a year, it is an indication that the company is buying more goods.

Correct AnswerverifiedShow Answer

If cash increased during the year and there was also a net loss for the year, there must be positive cash flows from financing and investing activities.

Correct AnswerverifiedShow Answer

Cash flows from operating activities include all of the following except:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. (1) $1,650,000(sales) - $15,000 (incr...View AnswerShow Answer

When equipment is purchased entirely through a loan:

Correct AnswerverifiedShow Answer

Cash flows and accounting records In a business with an accrual-based accounting system, is a statement of cash flows based upon account balances shown in the adjusted trial balance? Explain.

Correct AnswerverifiedNo. In an accrual-based accounting syste...View AnswerShow Answer

Depreciation is a non-cash expense.

Correct AnswerverifiedShow Answer

In a statement of cash flows, the term cash includes:

Correct AnswerverifiedShow Answer

Based solely on the above information, Kenny's net cash flow from investing activities for 2010 is:

Correct AnswerverifiedShow Answer

The statement of cash flows is designed to assist users in assessing each of the following, except:

Correct AnswerverifiedShow Answer

Compute the amount of New World's cash payments for operating expenses.

Correct AnswerverifiedShow Answer

Seldin's net cash flow from operating activities for the current year is:

Correct AnswerverifiedShow Answer

Under the indirect method, when machinery is sold at a gain, the gain is added in the operating section of the statement of cash flows and the cost is added in the investing section.

Correct AnswerverifiedShow Answer

The 2010 statement of cash flows of Dickens Corporation shows $500,000 cash paid for dividends. If dividends in Dickens' statement of retained earnings are reported at $550,000 then:

Correct AnswerverifiedShow Answer

Monarch Company uses the indirect method to prepare its statement of cash flows. The following information has been gathered for the current period: On the basis of the above information only, Monarch Company's statement of cash flows shows net cash flow from operating activities to be:

Correct AnswerverifiedShow Answer

Which of the following indicates a cash receipt?

Correct AnswerverifiedShow Answer

Cash flows are grouped in the statement of cash flows into the following major categories:

Correct AnswerverifiedShow Answer

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a. (1) $1,650,000(sales) - $15,000 (incr...
View Answer

Correct Answer
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Correct Answer
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No. In an accrual-based accounting syste...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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