Question 1

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) A) and B)
F) A) and C)

Question 2

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

Accepted Answer

A)  added to net income.
B)  deducted from net income.
C)  ignored because it does not affect cash.
D)  not reported on a statement of cash flows.E) A) and B)
F) B) and C)

Question 3

Cline Company issued ordinary shares for proceeds of $372,000 during 2011.The company paid dividends of $66,000 and issued a non-current note payable for $90,000 in exchange for equipment during the year.The company also purchased treasury shares that had a cost of $14,000.The financing section of the statement of cash flows will report net cash inflows of

Accepted Answer

A)  $292,000.
B)  $404,000.
C)  $306,000.
D)  $358,000.E) None of the above
F) B) and C)

Question 4

Free cash flow equals cash provided by

Accepted Answer

A)  operations less capital expenditures and cash dividends.
B)  operations less cash dividends.
C)  investing activities less capital expenditures and cash dividends.
D)  operations less capital expenditures.E) A) and B)
F) All of the above

Question 5

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 D)
F) A) and D)

Question 6

In Gentry Company, land decreased $140,000 because of a cash sale for $140,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value.The net cash provided by investing activities is

Accepted Answer

A)  $140,000.
B)  $230,000.
C)  $100,000.
D)  $110,000.E) All of the above
F) A) and B)

Question 7

If $250,000 of bonds are issued during the year but $100,000 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 $150,000.
B)  net decrease in cash of $150,000.
C)  increase in cash of $250,000 and a decrease in cash of $100,000.
D)  net gain on retirement of bonds of $150,000.E) A) and B)
F) B) and C)

Question 8

For external reporting, a company must prepare either an income statement or a statement of cash flows, but not both.

Accepted Answer

A) True 
 B)False

Question 9

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Accepted Answer

A)  subtraction from net income.
B)  addition to net income.
C)  addition to cash flow from investing activities.
D)  subtraction from cash flow from investing activities.E) C) and D)
F) None of the above

Question 10

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Accepted Answer

A) True 
 B)False

Question 11

Buster Company reported a net loss of $6,000 for the year ended December 31, 2011.During the year, accounts receivable increased $14,000, merchandise inventory decreased $10,000, accounts payable decreased by $20,000, and depreciation expense of $10,000 was recorded.During 2011, operating activities

Accepted Answer

A)  used net cash of $20,000.
B)  used net cash of $28,000.
C)  provided net cash of $28,000.
D)  provided net cash of $18,000.E) A) and B)
F) C) and D)

Question 12

The third (final)  step in preparing the statement of cash flows is to

Accepted Answer

A)  analyze changes in non-current asset and liability accounts.
B)  compare the net change in cash with the change in the cash account reported on the statement of financial position.
C)  determine net cash provided by operating activities.
D)  list the non-cash activities.E) C) and D)
F) B) and C)

Question 13

The sale of land for cash would be classified as a cash inflow from an investing activity.

Accepted Answer

A) True 
 B)False

Question 14

Generally, the most important category on the statement of cash flows is cash flows from

Accepted Answer

A)  operating activities.
B)  investing activities.
C)  financing activities.
D)  significant non-cash activities.E) C) and D)
F) A) and B)

Question 15

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Accepted Answer

The answer of Which of the following adjustments to convert...

Question 16

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

Accepted Answer

A)  two cash effects can be netted and presented as one item in the investing activities section.
B)  cash inflow and cash outflow should be reported separately in the investing activities section.
C)  two cash effects can be netted and presented as one item in the financing activities section.
D)  cash inflow and cash outflow should be reported separately in the financing activities section.E) B) and C)
F) A) and D)

Question 17

Indicate where the event ordinary shares issued for cash would appear, if at all, on the indirect statement of cash flows.

Accepted Answer

A)  Operating activities section
B)  Investing activities section
C)  Financing activities section
D)  Does not represent a cash flowE) B) and D)
F) A) and B)

Question 18

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 D)
F) B) and D)

Question 19

Which of the following transactions does not affect cash during a period?

Accepted Answer

A)  Write-off of an uncollectible account
B)  Collection of an accounts receivable
C)  Sale of treasury shares
D)  Exercise of the call option on bonds payableE) A) and B)
F) C) and D)

Question 20

If accounts payable have increased during a period,

Accepted Answer

A)  revenues on an accrual basis are less than revenues on a cash basis.
B)  expenses on an accrual basis are less than expenses on a cash basis.
C)  expenses on an accrual basis are greater than expenses on a cash basis.
D)  expenses on an accrual basis are the same as expenses on a cash basis.E) B) and D)
F) None of the above

Exam 13: Statement of Cash Flows

Buster Company reported a net loss of $6,000 for the year ended December 31, 2011.During the year, accounts receivable increased $14,000, merchandise inventory decreased $10,000, accounts payable decreased by $20,000, and depreciation expense of $10,000 was recorded.During 2011, operating activities

Correct Answer
verified

For external reporting, a company must prepare either an income statement or a statement of cash flows, but not both.

Correct Answer
verified

If $250,000 of bonds are issued during the year but $100,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Correct Answer
verified

The sale of land for cash would be classified as a cash inflow from an investing activity.

Correct Answer
verified

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

Correct Answer
verified

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Correct Answer
verified

Indicate where the event ordinary shares issued for cash would appear, if at all, on the indirect statement of cash flows.

Correct Answer
verified

Which of the following transactions does not affect cash during a period?

Correct Answer
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The third (final) step in preparing the statement of cash flows is to

Correct Answer
verified

In Gentry Company, land decreased $140,000 because of a cash sale for $140,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value.The net cash provided by investing activities is

Correct Answer
verified

Free cash flow equals cash provided by

Correct Answer
verified

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

Correct Answer
verified

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

Correct Answer
verified

Generally, the most important category on the statement of cash flows is cash flows from

Correct Answer
verified

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Correct Answer
verified

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Correct Answer
verified

The statement of cash flows

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

If accounts payable have increased during a period,

Correct Answer
verified

Exam 13: Statement of Cash Flows

Correct AnswerverifiedShow Answer

For external reporting, a company must prepare either an income statement or a statement of cash flows, but not both.

Correct AnswerverifiedShow Answer

If $250,000 of bonds are issued during the year but $100,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Correct AnswerverifiedShow Answer

The sale of land for cash would be classified as a cash inflow from an investing activity.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Correct AnswerverifiedShow Answer

Indicate where the event ordinary shares issued for cash would appear, if at all, on the indirect statement of cash flows.

Correct AnswerverifiedShow Answer

Which of the following transactions does not affect cash during a period?

Correct AnswerverifiedShow Answer

The third (final) step in preparing the statement of cash flows is to

Correct AnswerverifiedShow Answer

In Gentry Company, land decreased $140,000 because of a cash sale for $140,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value.The net cash provided by investing activities is

Correct AnswerverifiedShow Answer

Free cash flow equals cash provided by

Correct AnswerverifiedShow Answer

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

Correct AnswerverifiedShow Answer

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

Correct AnswerverifiedShow Answer

Generally, the most important category on the statement of cash flows is cash flows from

Correct AnswerverifiedShow Answer

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

Correct AnswerverifiedShow Answer

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Correct AnswerverifiedShow Answer

The statement of cash flows

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If accounts payable have increased during a period,

Correct AnswerverifiedShow Answer

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