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Last year Cumberland Corporation reported a cost of goods sold of $120,000. Inventories increased by $35,000 during the year, and accounts payable increased by $20,000. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:


A) $135,000
B) $100,000
C) $155,000
D) $105,000

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

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Under the direct method of determining the net cash provided by operating activities on the statement of cash flows, a decrease in prepaid expenses would be added to selling and administrative expenses to convert selling and administrative expenses to a cash basis.

A) True
B) False

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Last year Lawn Corporation reported sales of $115,000 on its income statement. During the year, accounts receivable decreased by $10,000 and accounts payable increased by $15,000. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The sales revenue adjusted to a cash basis for the year would be:


A) $125,000
B) $90,000
C) $140,000
D) $100,000

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

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Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the income tax expense adjusted to a cash basis would be: A) $39,000 B) $69,000 C) $9,000 D) $25,000 Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the income tax expense adjusted to a cash basis would be: A) $39,000 B) $69,000 C) $9,000 D) $25,000 The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the income tax expense adjusted to a cash basis would be:


A) $39,000
B) $69,000
C) $9,000
D) $25,000

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

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Last year, Knox Corporation reported on its income statement sales of $375,000 and cost of goods sold of $140,000. During the year, the balance in accounts receivable increased $30,000, the balance in accounts payable decreased $25,000, and the balance in inventory increased $10,000. The company uses the direct method to determine the net cash provided by operating activities on its statement of cash flows. -Under the direct method, sales adjusted to a cash basis would be:


A) $295,000
B) $345,000
C) $405,000
D) $355,000

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

Correct Answer

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The most recent balance sheet and income statement of Oldaker Corporation appear below: The most recent balance sheet and income statement of Oldaker Corporation appear below: The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was: A) $(127) B) $(138) C) $138 D) $127 The most recent balance sheet and income statement of Oldaker Corporation appear below: The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was: A) $(127) B) $(138) C) $138 D) $127 The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was:


A) $(127)
B) $(138)
C) $138
D) $127

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

Correct Answer

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Under the direct method of determining the net cash provided by operating activities on the statement of cash flows, an increase in accounts receivable would be added to sales revenue to convert revenue to a cash basis.

A) True
B) False

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Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be: A) $360,000 B) $350,000 C) $370,000 D) $381,000 Van Beeber Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be: A) $360,000 B) $350,000 C) $370,000 D) $381,000 The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be:


A) $360,000
B) $350,000
C) $370,000
D) $381,000

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

Correct Answer

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The most recent balance sheet and income statement of Oldaker Corporation appear below: The most recent balance sheet and income statement of Oldaker Corporation appear below: The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) financing activities for the year was: A) $(42) B) $3 C) $11 D) $(28) The most recent balance sheet and income statement of Oldaker Corporation appear below: The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) financing activities for the year was: A) $(42) B) $3 C) $11 D) $(28) The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) financing activities for the year was:


A) $(42)
B) $3
C) $11
D) $(28)

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

Correct Answer

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Kilduff Corporation's balance sheet and income statement appear below: Kilduff Corporation's balance sheet and income statement appear below: The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue 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) $19 B) $(118) C) $(137) D) $118 Kilduff Corporation's balance sheet and income statement appear below: The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue 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) $19 B) $(118) C) $(137) D) $118 The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue 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) $19
B) $(118)
C) $(137)
D) $118

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

Correct Answer

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During the year the balance in the Prepaid Expenses account increased by $6,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to:


A) subtract the $6,000 from the selling and administrative expenses reported on the income statement.
B) add the $6,000 to the selling and administrative expenses reported on the income statement.
C) subtract the $6,000 from the cost of goods sold reported on the income statement.
D) add the $6,000 to the cost of goods sold reported on the income statement.

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

Correct Answer

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Kilduff Corporation's balance sheet and income statement appear below: Kilduff Corporation's balance sheet and income statement appear below: The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue 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) $(44) B) $(71) C) $2 D) $(29) Kilduff Corporation's balance sheet and income statement appear below: The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue 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) $(44) B) $(71) C) $2 D) $(29) The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue 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) $(44)
B) $(71)
C) $2
D) $(29)

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

Correct Answer

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If accounts receivable increase during a period, then the amount of cash collected from customers will be less than the amount of sales reported on the income statement for the period.

A) True
B) False

Correct Answer

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The changes in Northrup Corporation's balance sheet account balances for last year appear below: The changes in Northrup Corporation's balance sheet account balances for last year appear below: The company's income statement for the year appears below: The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be: A) $546,000 B) $536,000 C) $544,000 D) $540,000 The company's income statement for the year appears below: The changes in Northrup Corporation's balance sheet account balances for last year appear below: The company's income statement for the year appears below: The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be: A) $546,000 B) $536,000 C) $544,000 D) $540,000 The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. -On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be:


A) $546,000
B) $536,000
C) $544,000
D) $540,000

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

Correct Answer

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Freeport Corporation's income statement for last year appears below: Freeport Corporation's income statement for last year appears below: The beginning and ending balances for last year are available for the following selected accounts (the company did not dispose of any property, plant, and equipment during the year): Required: Using the direct method, prepare in good form the operating activities section of the statement of cash flows. The beginning and ending balances for last year are available for the following selected accounts (the company did not dispose of any property, plant, and equipment during the year): Freeport Corporation's income statement for last year appears below: The beginning and ending balances for last year are available for the following selected accounts (the company did not dispose of any property, plant, and equipment during the year): Required: Using the direct method, prepare in good form the operating activities section of the statement of cash flows. Required: Using the direct method, prepare in good form the operating activities section of the statement of cash flows.

Correct Answer

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Wister Corporation had net sales of $462,000 for the just completed year. Shown below are the beginning and ending balances of various Wister accounts: Wister Corporation had net sales of $462,000 for the just completed year. Shown below are the beginning and ending balances of various Wister accounts: Wister prepares its statement of cash flows using the direct method. On its statement of cash flows, what amount should Wister show for its net sales adjusted to a cash basis (i.e., cash received from sales) ? A) $488,000 B) $436,000 C) $462,000 D) $445,000 Wister prepares its statement of cash flows using the direct method. On its statement of cash flows, what amount should Wister show for its net sales adjusted to a cash basis (i.e., cash received from sales) ?


A) $488,000
B) $436,000
C) $462,000
D) $445,000

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

Correct Answer

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Shimko Corporation's most recent comparative balance sheet and income statement appear below: Shimko Corporation's most recent comparative balance sheet and income statement appear below: The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was: A) $57 B) $(57) C) $33 D) $(33) Shimko Corporation's most recent comparative balance sheet and income statement appear below: The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was: A) $57 B) $(57) C) $33 D) $(33) The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was:


A) $57
B) $(57)
C) $33
D) $(33)

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

Correct Answer

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Cridberg Corporation's selling and administrative expenses for last year totaled $260,000. During the year the company's prepaid expense account balance increased by $18,000 and accrued liabilities decreased by $12,000. Depreciation for the year was $25,000. Based on this information, selling and administrative expenses adjusted to a cash basis under the direct method on the statement of cash flows would be:


A) $255,000
B) $315,000
C) $205,000
D) $265,000

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

Correct Answer

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Last year Marton Corporation reported a cost of goods sold of $720,000 on its income statement. The following additional data were taken from the company's comparative balance sheet for the year: Last year Marton Corporation reported a cost of goods sold of $720,000 on its income statement. The following additional data were taken from the company's comparative balance sheet for the year: The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be: A) $740,000 B) $767,000 C) $747,000 D) $673,000 The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:


A) $740,000
B) $767,000
C) $747,000
D) $673,000

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

Correct Answer

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During the year the balance in the Accounts Receivable account increased by $6,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to:


A) subtract the $6,000 from the sales revenue reported on the income statement.
B) add the $6,000 to the sales revenue reported on the income statement.
C) subtract the $6,000 from the cost of goods sold reported on the income statement.
D) add the $6,000 to the cost of goods sold reported on the income statement.

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

Correct Answer

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