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The most recent comparative balance sheet of Giacomelli Corporation appears below: The most recent comparative balance sheet of Giacomelli Corporation appears below: The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows? A) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income B) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income C) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income D) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows?


A) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income
B) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income
C) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income
D) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income

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

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The amount of depreciation added to net income equals the sum of the debits to the Accumulated Depreciation account.

A) True
B) False

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Free cash flow will increase if a company increases its accounts payable balance by delaying payments to suppliers.

A) True
B) False

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The most recent comparative balance sheet of Giacomelli Corporation appears below: The most recent comparative balance sheet of Giacomelli Corporation appears below: The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows? A) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows?


A) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income
B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income
C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income
D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

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

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Which of the following would be classified as a financing activity on the statement of cash flows?


A) Paying suppliers for inventory purchases.
B) Interest paid to lenders.
C) Lending money to another company.
D) Repurchasing capital stock from owners.

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

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Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, an increase in accounts receivable would be subtracted from net income.

A) True
B) False

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True

Buckley Corporation's most recent comparative balance sheet appears below: Buckley Corporation's most recent comparative balance sheet appears below: The company's net income for the year was $91 and it paid a cash dividend of $22. It did not dispose of any property, plant, and equipment during the year. The company did not retire any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) financing activities for the year was: A) ($22) B) $3 C) $4 D) ($15) The company's net income for the year was $91 and it paid a cash dividend of $22. It did not dispose of any property, plant, and equipment during the year. The company did not retire any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) financing activities for the year was:


A) ($22)
B) $3
C) $4
D) ($15)

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

Correct Answer

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Manila Corporation's comparative balance sheet appears below: Manila Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was $0 and its cash dividends were $2,000. It did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year. Required: Compute the change in each balance sheet account denoted with an asterisk (*). Indicate whether the change in each balance will be recorded in the operating, investing, or financing activities section of the statement of cash flows. For items recorded in the operating activities section, also indicate whether the change will be added to or subtracted from net income. For all other items, indicate whether the change will be added as a cash inflow or subtracted as a cash outflow. The first entry has been filled in as an example. The company's net income (loss) for the year was $0 and its cash dividends were $2,000. It did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year. Required: Compute the change in each balance sheet account denoted with an asterisk (*). Indicate whether the change in each balance will be recorded in the operating, investing, or financing activities section of the statement of cash flows. For items recorded in the operating activities section, also indicate whether the change will be added to or subtracted from net income. For all other items, indicate whether the change will be added as a cash inflow or subtracted as a cash outflow. The first entry has been filled in as an example.

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When computing the net cash provided by operating activities using the indirect approach on the statement of cash flows, which item below would NOT be added to net income?


A) Depreciation.
B) Loss on the sale of an asset.
C) Decrease in accounts payable.
D) Decrease in prepaid expenses.

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

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Carriveau Corporation's most recent balance sheet appears below: Carriveau Corporation's most recent balance sheet appears below: Net income for the year was $172. Cash dividends were $35. The company did not sell or retire any property, plant, and equipment during the year. The net cash provided by (used in) operating activities for the year was: A) $183 B) $246 C) ($11) D) $161 Net income for the year was $172. Cash dividends were $35. The company did not sell or retire any property, plant, and equipment during the year. The net cash provided by (used in) operating activities for the year was:


A) $183
B) $246
C) ($11)
D) $161

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

Correct Answer

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Buying property, plant, or equipment would be reported as a cash outflow on the investing activities section of the statement of cash flows.

A) True
B) False

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Money received from issuing bonds payable would be included as part of a company's financing activities on the statement of cash flows.

A) True
B) False

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The following transactions occurred last year at Jogger Corporation: The following transactions occurred last year at Jogger Corporation: Based solely on the above information, the net cash provided by financing activities for the year on the statement of cash flows would be: A) $424,000 B) ($138,000) C) ($1,000) D) $7,000 Based solely on the above information, the net cash provided by financing activities for the year on the statement of cash flows would be:


A) $424,000
B) ($138,000)
C) ($1,000)
D) $7,000

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

Correct Answer

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Mattix Corporation's balance sheet and income statement appear below: Mattix Corporation's balance sheet and income statement appear below: The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method. Mattix Corporation's balance sheet and income statement appear below: The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method. The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.

Correct Answer

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Kaze Corporation's cash and cash equivalents consist of cash and marketable securities. Last year the company's cash account increased by $25,000 and its marketable securities account decreased by $15,000. Cash provided by operating activities was $38,000. Net cash provided by investing activities was $9,000. Based on this information, the net cash flow from financing activities on the statement of cash flows was:


A) a net $37,000 decrease.
B) a net $37,000 increase.
C) a net $47,000 decrease.
D) a net $47,000 increase.

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

Correct Answer

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Alcoser Corporation's most recent balance sheet appears below: Alcoser Corporation's most recent balance sheet appears below: Net income for the year was $60. Cash dividends were $12. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities for the year was: A) $51 B) $69 C) $9 D) $86 Net income for the year was $60. Cash dividends were $12. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities for the year was:


A) $51
B) $69
C) $9
D) $86

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

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B

Walmouth Corporation's comparative balance sheet and income statement for last year appear below: Walmouth Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities last year was: A) $105,000 B) $58,000 C) $130,000 D) $152,000 Walmouth Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities last year was: A) $105,000 B) $58,000 C) $130,000 D) $152,000 The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities last year was:


A) $105,000
B) $58,000
C) $130,000
D) $152,000

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

Correct Answer

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Last year Burch Corporation's cash account decreased by $6,000. Net cash provided by investing activities was $13,000. Net cash used in financing activities was $30,000. On the statement of cash flows, the net cash flow provided by (used in) operating activities was:


A) ($23,000)
B) ($17,000)
C) ($6,000)
D) $11,000

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

Correct Answer

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Krech Corporation's comparative balance sheet appears below: Krech Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities. Which of the following is correct regarding the operating activities section of the statement of cash flows? A) The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be added to net income B) The change in Accounts Receivable will be added to net income; The change in Inventory will be subtracted from net income C) The change in Accounts Receivable will be added to net income; The change in Inventory will be added to net income D) The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be subtracted from net income The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities. Which of the following is correct regarding the operating activities section of the statement of cash flows?


A) The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be added to net income
B) The change in Accounts Receivable will be added to net income; The change in Inventory will be subtracted from net income
C) The change in Accounts Receivable will be added to net income; The change in Inventory will be added to net income
D) The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be subtracted from net income

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

Correct Answer

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Buckley Corporation's most recent comparative balance sheet appears below: Buckley Corporation's most recent comparative balance sheet appears below: The company's net income for the year was $91 and it paid a cash dividend of $22. It did not dispose of any property, plant, and equipment during the year. The company did not retire any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) investing activities for the year was: A) ($69) B) $69 C) $136 D) ($136) The company's net income for the year was $91 and it paid a cash dividend of $22. It did not dispose of any property, plant, and equipment during the year. The company did not retire any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) investing activities for the year was:


A) ($69)
B) $69
C) $136
D) ($136)

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

Correct Answer

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D

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