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Exam 13: Statement of Cash Flows

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Question 21

True/False

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Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, a loss on the sale of an asset would be added to net income.

A) True
B) False

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Question 22

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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 question 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) A) and D)
F) C) and D)

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Question 23

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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.

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

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

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:

Financial statements of Rukavina Corporation follow: Cash dividends were $8. 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 question pertain to the company's statement of cash flows. -The net cash provided by (used in) investing activities for the year was:

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.

An increase in accounts receivable of $1,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:

The collection of a loan made to a supplier would be treated as an investing activity on a statement of cash flows.

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. -The company's net cash used in investing activities is:

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. -The company's net cash provided by operating activities is:

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 question pertain to the company's statement of cash flows. -The net cash provided by (used in) financing activities for the year was:

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) operating activities for the year was:

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?

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

Shoshoni Corporation prepares its statement of cash flows using the indirect method. Which of the following would be added to net income in the operating activities section of the statement?

Sonier Corporation's most recent balance sheet appears below: The net income for the year was $97. Cash dividends were $19. The company did not issue any bonds or repurchase any of its common stock during the year. The net cash provided by (used in) financing activities for the year was:

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:

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.