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In a statement of cash flows, which of the following would be classified as an investing activity?


A) The sale of the company's own common stock for cash.
B) The sale of equipment.
C) Interest paid to a lender.
D) The issuance of bonds payable.

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

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When a company pays a supplier for inventory it has purchased, the cash outflow is recorded in the investing activities section of the statement of cash flows.

A) True
B) False

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Insurance and utility expenses are considered operating activities on the statement of cash flows.

A) True
B) False

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Dukas Corporation's net cash provided by operating activities was $218,000; its net income was $203,000; its capital expenditures were $146,000; and its cash dividends were $49,000. Required: Determine the company's free cash flow.

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Free cash flow = Net cash from...

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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) investing activities last year was: A) $30,000 B) ($30,000) C) ($40,000) D) $40,000 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) investing activities last year was: A) $30,000 B) ($30,000) C) ($40,000) D) $40,000 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) investing activities last year was:


A) $30,000
B) ($30,000)
C) ($40,000)
D) $40,000

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

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Free cash flow decreases when a company issues common stock for cash.

A) True
B) False

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Hirshberg Corporation's comparative balance sheet appears below: Hirshberg Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was $11,000 and its cash dividends were $4,000. It did not sell or retire any property, plant, and equipment during the year. The company's net cash provided by operating activities is: A) $48,000 B) $18,000 C) $40,000 D) $52,000 The company's net income (loss) for the year was $11,000 and its cash dividends were $4,000. It did not sell or retire any property, plant, and equipment during the year. The company's net cash provided by operating activities is:


A) $48,000
B) $18,000
C) $40,000
D) $52,000

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

Correct Answer

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Excerpts from Deblois Corporation's comparative balance sheet appear below: Excerpts from Deblois Corporation's comparative balance sheet appear below: Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method? A) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is subtracted from net income B) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is added to net income C) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is added to net income D) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is subtracted from net income Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?


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

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

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In a statement of cash flows, issuing bonds payable affects the:


A) operating activities section.
B) financing activities section.
C) investing activities section.
D) free cash flow activities section.

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

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Frankin Corporation's net cash provided by operating activities was $192; its capital expenditures were $154; and its cash dividends were $27. The company's free cash flow was:


A) $38
B) $373
C) $11
D) $165

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

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Majorn Auto Parts Store had net income of $81,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year: Majorn Auto Parts Store had net income of $81,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year: Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided (used) by operating activities? A) $41,000 B) ($53,000) C) $185,000 D) $279,000 Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided (used) by operating activities?


A) $41,000
B) ($53,000)
C) $185,000
D) $279,000

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

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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) financing activities for the year was: A) $10 B) $5 C) ($12) D) $17 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) financing activities for the year was:


A) $10
B) $5
C) ($12)
D) $17

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

Correct Answer

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Which one of the following transactions should be classified as a financing activity on the statement of cash flows?


A) Purchase of equipment.
B) Purchase of the company's own stock.
C) Sale of a long-term investment.
D) Payment of interest to a lender.

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

Correct Answer

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Kaeser Corporation's most recent balance sheet appears below: Kaeser Corporation's most recent balance sheet appears below: The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. The net cash provided by (used in) investing activities for the year was: A) $17 B) $67 C) ($17) D) ($67) The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. The net cash provided by (used in) investing activities for the year was:


A) $17
B) $67
C) ($17)
D) ($67)

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

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 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'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 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) C) and D)
F) A) and B)

Correct Answer

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McCorey Corporation recorded the following events last year: McCorey Corporation recorded the following events last year: On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be: A) $110,000 B) $55,000 C) $150,000 D) $130,000 On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be:


A) $110,000
B) $55,000
C) $150,000
D) $130,000

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

Correct Answer

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In the statement of cash flows, collecting cash from customers is treated as a cash inflow in the financing activities section.

A) True
B) False

Correct Answer

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The statement of cash flows relies on a fundamental principle of double-entry bookkeeping; namely, the change in the cash balance must equal the change in total liabilities and stockholders' equity.

A) True
B) False

Correct Answer

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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) financing activities last year was: A) ($104,000) B) $104,000 C) ($60,000) D) $60,000 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) financing activities last year was: A) ($104,000) B) $104,000 C) ($60,000) D) $60,000 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) financing activities last year was:


A) ($104,000)
B) $104,000
C) ($60,000)
D) $60,000

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

Correct Answer

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An increase in accrued liabilities of $1,000 during a year would be shown on the company's statement of cash flows prepared under the indirect method as:


A) an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.
B) a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities.
C) a deduction of $1,000 under investing activities.
D) an addition of $1,000 under financing activities.

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

Correct Answer

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