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Exam 12: Statement of Cash Flows

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Question 71

Multiple Choice

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The accounting records for the Helen Co. show that its cost of goods sold for the year was $600,000. In addition, it had an increase in inventory of $10,000 and a decrease in accounts payable of $12,000. As a result under the direct method, the amount of cash paid to suppliers for the year was:

A) $602,000.
B) $610,000.
C) $612,000.
D) $622,000.

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

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Question 72

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The payment of interest on bonds is classified as a cash outflow from operating activities on the statement of cash flows

A) True
B) False

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Question 73

Multiple Choice

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Braden and Sons, Inc. paid cash to purchase equipment costing $342,000 this year. Also this year, the company sold for $70,000 cash, equipment that originally cost $230,000 five years ago. How should these transactions be listed in the statement of cash flows?

Which of the following statements about the statement of cash flows is not correct?

The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. Other information from the company's records includes the following: • Bought equipment for cash, $50,000. • Paid $10,000 on long-term note payable. • Issued new shares of common stock for $20,000 cash. • Cash dividends of $16,000 were declared and paid to stockholders. • Accounts Payable arose from inventory purchases on credit. • Income 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. Required: Part a. Prepare the statement of cash flows using the indirect method. Include any supplemental disclosures. Part b. Interpret the statement of cash flows by explaining the main sources and uses of cash during the year.

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

Darnell, Inc.'s balance sheet indicated that the cash account increased by $5,400 during the past year. Net cash provided by operating activities was $14,000 and net cash used in investing activities was $6,100. What was the net cash flow effect of the company's financing activities?

Equipment with a cost of $80,000 and accumulated depreciation of $75,000 is sold for $12,000 cash. Required: Part a. Prepare the journal entry to record this transaction. Part b. Explain how this transaction would be reported on the statement of cash flows prepared using the indirect method.

If a company's Cost of Goods Sold is $158,000 for the period, beginning and ending Inventory balances are $18,000 and $13,000, respectively, and the beginning and ending Accounts Payable balances are $19,000 and $7,500, respectively, what is the amount of the cash paid to suppliers?

The starting point for preparing the operating activities section using the indirect method is:

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

Which of the following are used to determine cash flows from financing activities?

How is the change in cash classified on the statement of cash flows?

When preparing the operating activities section of the statement of cash flows using the indirect method, accumulated depreciation is added to net income in the operating section

Which of the following classifications is not used on the statement of cash flows?

The net cash flow provided by operating activities is an inflow of $37,042, the net cash flow used in investing activities is $16,831, and the net cash flow used in financing activities is $26,397. If the beginning cash account balance is $11,283, what is the ending cash account balance?

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

If the calculation of cash flows from operating activities starts with net income, the company:

When the indirect method is used, if a prepaid expense account decreases during the accounting period, the change in the prepaid expense account is:

If Salaries and Wages Expense is $450,000 during the year and the beginning and ending balances of Salaries and Wages Payable are $18,000 and $16,500, respectively, the cash paid to employees is: