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

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Cash equivalents on the statement of cash flows consist of any investment that can be converted into cash within one year.

A) True
B) False

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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) None of the above
F) B) and D)

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Alden Corporation's most recent comparative Balance Sheet is as follows: Alden Corporation's most recent comparative Balance Sheet is as follows: Alden's net income was $34,000. No equipment was purchased and no long-term investments were sold. There was a gain of $3,000 when equipment was sold. The accumulated depreciation on the equipment that was sold was $12,000. Cash dividends of $20,000 were declared and paid during the year. Required: Prepare Alden's statement of cash flows using the indirect method. Alden's net income was $34,000. No equipment was purchased and no long-term investments were sold. There was a gain of $3,000 when equipment was sold. The accumulated depreciation on the equipment that was sold was $12,000. Cash dividends of $20,000 were declared and paid during the year. Required: Prepare Alden's statement of cash flows using the indirect method.

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blured image *Net book value of equipment sold = Ori...

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Klicker Corporation's most recent balance sheet appears below: Klicker Corporation's most recent balance sheet appears below: The company's net income for the year was $152 and it did not issue any bonds or repurchase any of its common stock during the year. Cash dividends were $40. The net cash provided by (used in) financing activities for the year was: A) ($49) B) ($40) C) $4 D) ($13) The company's net income for the year was $152 and it did not issue any bonds or repurchase any of its common stock during the year. Cash dividends were $40. The net cash provided by (used in) financing activities for the year was:


A) ($49)
B) ($40)
C) $4
D) ($13)

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

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Which of the following items would not be classified as an operating activity on the statement of cash flows?


A) Cash received from customers.
B) Dividends paid to the company's own stockholders.
C) Payments to government agencies for taxes.
D) Cash paid to compensate employees.

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

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

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Salsedo Corporation's balance sheet and income statement appear below: Salsedo Corporation's balance sheet and income statement appear below: Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. 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) $(9) B) $(15) C) $(21) D) $3 Salsedo Corporation's balance sheet and income statement appear below: Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. 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) $(9) B) $(15) C) $(21) D) $3 Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. 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) $(9)
B) $(15)
C) $(21)
D) $3

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

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Illies Corporation's comparative balance sheet appears below: Illies Corporation's comparative balance sheet appears below: The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $5,000 and its cash dividends were $4,000. The company did not issue any bonds payable or purchase any of its own common stock during the year. Its net cash provided by operating activities and net cash used in financing activities are: A) net cash provided by operating activities, $33,000; net cash used in financing activities, $1,000 B) net cash provided by operating activities, $35,000; net cash used in financing activities, $7,000 C) net cash provided by operating activities, $33,000; net cash used in financing activities, $7,000 D) net cash provided by operating activities, $35,000; net cash used in financing activities, $1,000 The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $5,000 and its cash dividends were $4,000. The company did not issue any bonds payable or purchase any of its own common stock during the year. Its net cash provided by operating activities and net cash used in financing activities are:


A) net cash provided by operating activities, $33,000; net cash used in financing activities, $1,000
B) net cash provided by operating activities, $35,000; net cash used in financing activities, $7,000
C) net cash provided by operating activities, $33,000; net cash used in financing activities, $7,000
D) net cash provided by operating activities, $35,000; net cash used in financing activities, $1,000

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

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C

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

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Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, a decrease in inventory would be added to net income.

A) True
B) False

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True

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

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Randal Corporation recorded the following activity for the year just ended: Randal Corporation recorded the following activity for the year just ended: -The net cash provided by financing activities for the year was: A) $100,000 B) $550,000 C) $180,000 D) $680,000 -The net cash provided by financing activities for the year was:


A) $100,000
B) $550,000
C) $180,000
D) $680,000

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

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The following transactions occurred last year at Jolly Corporation: The following transactions occurred last year at Jolly 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) $179,000 B) $59,000 C) $(109,000) D) $46,000 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) $179,000
B) $59,000
C) $(109,000)
D) $46,000

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

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The ending and beginning balances of Farmer Corporation's balance sheet accounts for the most recent year are listed below: The ending and beginning balances of Farmer Corporation's balance sheet accounts for the most recent year are listed below: The company's net income (loss) for the year was $0 and its cash dividends were $4,000. It did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. Required: Compute the change in each balance sheet account in the below table. 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 $4,000. It did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. Required: Compute the change in each balance sheet account in the below table. 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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Insurance and utility expenses are considered operating activities on the statement of cash flows.

A) True
B) False

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The net cash provided by operating activities on the statement of cash flows does not include any dividends paid to the company's own shareholders.

A) True
B) False

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True

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 used in investing activities is: A) $6,000 B) $54,000 C) $24,000 D) $44,000 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 used in investing activities is:


A) $6,000
B) $54,000
C) $24,000
D) $44,000

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

Correct Answer

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