Filters
Question type
Study Flashcards

If a company uses the direct method of calculating cash flows from operating activities,it must adjust net income for gains or losses when selling property,plant,and equipment.

A) True
B) False

Correct Answer

verifed

verified

An outdoor water park in the Midwestern states with a calendar year-end is likely to have:


A) unpredictable fluctuations in cash flow from quarter to quarter.
B) the largest cash inflow from operations in the second and third quarters (April - September) .
C) a fairly stable cash flow across all four quarters.
D) the largest cash inflow from operations in the fourth and first quarters (October - March) .

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

Correct Answer

verifed

verified

The reporting of financing activities is identical under the indirect and direct methods for the statement of cash flows.

A) True
B) False

Correct Answer

verifed

verified

Cash and cash equivalents include:


A) assets that have stable long-term value.
B) assets that are short-term,highly liquid,and are purchased by the entity within three months of maturity.
C) assets that consistently grow in value over the long run.
D) assets that are expected to be used up within a year.

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

Correct Answer

verifed

verified

Which of the following would be reported on the statement of cash flows,using the direct method,as a cash flow from operating activities?


A) Payment of income taxes.
B) Payment of dividends.
C) Purchase of a building.
D) Purchase of treasury stock.

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

Correct Answer

verifed

verified

Wickersham Brothers Inc.is developing its annual financial statements at December 31,2014.The statements are complete except for the statement of cash flows.The completed comparative balance sheets and income statements are summarized. Wickersham Brothers Inc.is developing its annual financial statements at December 31,2014.The statements are complete except for the statement of cash flows.The completed comparative balance sheets and income statements are summarized. Additional Data: a.Bought equipment for cash,$50,000. b.Paid $10,000 on long-term note payable. c.Issued new shares of stock for $20,000 cash. d.Cash dividends of $16,000 were declared and paid. e.Accounts payable are exclusively related to inventory purchases on credit. f.Tax expense ($4,000)and interest expense ($3,000)were paid in full at the end of both years and are included in other expenses. a.Prepare the statement of cash flows for 2014 using the indirect method.Include any supplemental disclosures. b.Interpret the statement of cash flows by explaining the main sources and uses of cash during the year. Additional Data: a.Bought equipment for cash,$50,000. b.Paid $10,000 on long-term note payable. c.Issued new shares of stock for $20,000 cash. d.Cash dividends of $16,000 were declared and paid. e.Accounts payable are exclusively related to inventory purchases on credit. f.Tax expense ($4,000)and interest expense ($3,000)were paid in full at the end of both years and are included in other expenses. a.Prepare the statement of cash flows for 2014 using the indirect method.Include any supplemental disclosures. b.Interpret the statement of cash flows by explaining the main sources and uses of cash during the year.

Correct Answer

verifed

verified

a. blured image b.Although operating activities prov...

View Answer

If interest revenue for the period is $14,000 and the beginning and ending interest receivable balances are $1,320 and $5,900,respectively,cash received for interest is:


A) $14,000
B) $9,420
C) $18,500
D) $8,100

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

To determine net cash provided by or used in financing activities,one must analyze


A) notes receivable and bonds payable.
B) the cash account.
C) contributed capital and retained earnings.
D) interest expense and dividend income.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Use the information above to answer the following question.What is the net cash provided by (used in) investing activities?


A) ($200,000)
B) $420,000
C) $410,000
D) ($190,000)

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

Interest and dividends from investments held by a company are reported as cash inflows from investing activities on the statement of cash flows.

A) True
B) False

Correct Answer

verifed

verified

Which of the following statements regarding financing activities is not true?


A) Cash dividends paid to a company's stockholders are reported as cash outflows from financing activities.
B) When a company issues stock for cash,it reports a cash inflow from financing activities.
C) When a company repurchases stock with cash,it reports a cash outflow for financing activities.
D) When a company repays a loan,it reports a cash inflow from financing activities.

E) All of the above
F) None of the above

Correct Answer

verifed

verified

Use the information above to answer the following question.The company would report net cash provided by (used in) investing activities of:


A) $(1,000)
B) $(2,000)
C) $5,000
D) $7,000

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

Correct Answer

verifed

verified

Which of the following statements is true?


A) The change in cash = the change in noncash assets.
B) The change in cash = the change in liabilities + the change in stockholders' equity.
C) The change in cash = the change in liabilities + the change in stockholders' equity - the change in noncash assets.
D) The change in cash = the change in liabilities + the change in stockholders' equity + the change in noncash assets.

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

Correct Answer

verifed

verified

Which of the following statements regarding calculation of cash flows from operating activities under the indirect method is true?


A) When the indirect method is used,changes in current liabilities are subtracted while changes in current assets are added to convert net income to net cash flow from operating activities.
B) When the indirect method is used,depreciation expense is added to net income as a step in the process of calculating net cash flow from operating activities.
C) When the indirect method is used,gains on the sale of property,plant and equipment are added to convert net income to net cash flow from operating activities.
D) When the indirect method is used,changes in long-term liabilities are subtracted to convert net income to net cash flow from operating activities.

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

Correct Answer

verifed

verified

Depreciation expense is not reported on the statement of cash flows when prepared using the direct method.

A) True
B) False

Correct Answer

verifed

verified

Suppose a company generally records revenues and expenses before receiving or making cash payments.Which of the following statements is not true?


A) If sales are falling,net losses could occur even though the company reports a net cash inflow from operating activities.
B) If sales are rising,net profits could occur even though the company reports a net cash outflow from operating activities.
C) Net income and cash flows will always agree because even though revenues and expenses can be recorded in different time periods than their related cash flows the differences will cancel out and the results will be the same.
D) When the indirect method is used,net cash flow from operating activities includes adjustments for non-cash expenses such as depreciation which would cause net cash from operating activities to be different from net income.

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

Brighton,Inc. ,uses the indirect method to determine its net cash flows from operating activities.During the course of the year,the company's accounts receivable increased by $10,000 and its accounts payable decreased by $5,000.As a result of these two items,the calculation to determine cash flows from operating activities will be:


A) increased by $5,000.
B) decreased by $5,000.
C) increased by $15,000.
D) decreased by $15,000.

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

Correct Answer

verifed

verified

Assume a company uses the direct method to prepare its statement of cash flows.If the company's inventory and accounts payable both increase during the accounting period,how would these changes affect cash flow calculations?


A) The changes in each account are both added to net income.
B) The change in inventory is subtracted from cost of goods sold and the change in accounts payable is added to cost of goods sold to find the cash paid to suppliers.
C) The changes in each account are both subtracted from net income.
D) The change in inventory is added to cost of goods sold and the change in accounts payable is subtracted from cost of goods sold to find the cash paid to suppliers.

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

Correct Answer

verifed

verified

Depreciation expense is $20,000 and the beginning and ending accumulated depreciation balances are $150,000 and $155,000,respectively.What is the cash paid for depreciation?


A) $20,000
B) $5,000
C) $0
D) $25,000

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

Correct Answer

verifed

verified

Which of the following statements is true?


A) The accumulated depreciation account includes cash flows that may be categorized as both operating and investing.
B) Inventory includes cash flows that may be categorized as both operating and investing.
C) Retained earnings includes cash flows that may be categorized as both operating and investing.
D) Bonds payable includes cash flows that may be categorized as both operating and financing.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Showing 41 - 60 of 147

Related Exams

Exam 1

Business Decisions and Financial Accounting

142 Questions

Exam 2

The Balance Sheet

147 Questions

Exam 3

The Income Statement

144 Questions

Exam 4

Adjustments, Financial Statements, and Financial Results

147 Questions

Exam 5

Financial Reporting and Analysis

141 Questions

Exam 6

Internal Control, Cash, and Merchandise Sales

144 Questions

Exam 7

Inventories and Cost of Goods Sold

155 Questions

Exam 8

Receivables, Bad Debt Expense, and Interest Revenue

146 Questions

Exam 9

Long-Lived Tangible and Intangible Assets

145 Questions

Exam 10

Liabilities

145 Questions

Exam 11

Stockholders Equity

146 Questions

Exam 13

Measuring and Evaluating Financial Performance

147 Questions

Show Answer