Question 1

Under the indirect method,changes in current assets are used in determining cash flows from operating activities and changes in current liabilities are used in determining cash flows from financing activities.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Accrual-based net income can be manipulated because it is based on estimates.
B)  Cash flows are easily manipulated because they are based on estimates.
C)  Accrual-based net income is not easily manipulated because valuation for such items as bad debts and inventory are precise and based on objectively verifiable information.
D)  Cash flows are not easily manipulated because they are generated by internal transactions and do not involve external parties.E) A) and B)
F) A) and C)

Question 3

Which of the following represent cash outflows from financing activities?

Accepted Answer

A)  Distributing a stock dividend.
B)  Paying a bond's face value at maturity.
C)  Issuing long-term bonds at a discount.
D)  Paying interest on promissory notes.E) A) and B)
F) C) and D)

Question 4

Accrual-basis accounting is superior to cash-basis accounting in that:

Accepted Answer

A)  it provides a better measure of profitability.
B)  a statement of cash flows is not needed.
C)  the cash balance reported will be greater.
D)  there is only one method of preparing the operating activities of the statement of cash flows.E) None of the above
F) All of the above

Question 5

The introductory phase of a company's life cycle will most likely have net cash:

Accepted Answer

A)  provided by investing activities.
B)  used in financing activities.
C)  used in investing activities.
D)  provided by operating activities.E) B) and D)
F) A) and B)

Question 6

Two years ago,Bethel,Inc.bought $80,000 in bonds from another company.This month,it sold half of those bonds for $41,280 and purchased the common stock of another company for $2,000.On the statement of cash flows for this accounting period,Bethel would report a net cash:

Accepted Answer

A)  outflow of $39,280 from investing activities.
B)  inflow of $39,280 from investing activities.
C)  inflow of $41,280 from investing activities.
D)  outflow of $41,280 from investing activities.E) None of the above
F) A) and C)

Question 7

Which phrase below best describes the direct method for reporting operating cash flows?

Accepted Answer

A)  A method that incorporates financing and investing activities into cash flows from operations.
B)  A method employing accrual-based accounting to convert cash flows to GAAP Net Income.
C)  A summary of operating transactions resulting in either a debit or credit to cash.
D)  A series of adjustments to Net Income to arrive at operating cash flows.E) A) and B)
F) B) and C)

Question 8

Marathon,Inc.showed Salaries and Wages Expense of $244,000 on its income statement.If the Salaries and Wages Payable account was $27,000 at the beginning of the year and $18,500 at the end of the year,how much cash was paid to employees?

Accepted Answer

A)  $217,000
B)  $225,500
C)  $252,500
D)  $235,500E) None of the above
F) B) and C)

Question 9

Supplemental disclosures required by companies using the indirect method include all of the following except:

Accepted Answer

A)  cash paid for interest.
B)  cash paid for income tax.
C)  cash paid for dividends.
D)  noncash investing and financing activities.E) A) and B)
F) None of the above

Question 10

Which of the following statements about financing activities is not correct?

Accepted Answer

A)  Cash dividends paid to a company's stockholders are reported as cash outflows from financing activities.
B)  When a company issues stock for cash,it reports a cash inflow from financing activities.
C)  When a company repurchases stock with cash,it reports a cash outflow for financing activities.
D)  When a company repays a loan,it reports a cash inflow from financing activities.E) B) and C)
F) A) and C)

Question 11

Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

Accepted Answer

A)  increased net income,but did not impact cash this period.
B)  decreased net income,but did not impact cash this period.
C)  increased net income and increased cash flow this period.
D)  decreased net income and decreased cash flow this period.E) All of the above
F) A) and B)

Question 12

In the decline phase,the company continues to enjoy positive operating cash flows but stops spending cash on investing activities and instead uses its cash for financing activities such as repaying lenders and returning excess cash to shareholders.

Accepted Answer

A) True 
 B)False

Question 13

Castle Company's sales revenue was $584,696 and cash collected from customers was $587,003,which of the following would be consistent with this difference?

Accepted Answer

A)  Accounts Receivable could have increased.
B)  Cash payments could have been larger than the related expense accounts.
C)  Accounts Receivable could have decreased.
D)  Cash payments could have been smaller than the related expense accounts.E) A) and C)
F) A) and B)

Question 14

To determine net cash provided by or used in financing activities,one must analyze the:

Accepted Answer

A)  Notes Receivable and Bonds Payable accounts.
B)  Cash account.
C)  Common Stock and Retained Earnings accounts.
D)  Interest Expense and Dividend Income accounts.E) A) and B)
F) B) and C)

Question 15

The purchase of $100,000 of equipment by issuing a note would be reported:

Accepted Answer

A)  as a $100,000 investing inflow,and a $100,000 financing outflow.
B)  as a $100,000 investing outflow,and a $100,000 financing inflow.
C)  as a $100,000 operating inflow,and a $100,000 financing outflow.
D)  in a supplementary schedule.E) B) and C)
F) A) and D)

Question 16

Match between columns
                        Premises: Increase in Dividends Payable
Decrease in Accrued Liabilities
Decrease in Property,Plant,and Equipment
Increase in Accounts Receivable
Gain on Sales of Property,Plant and Equipment
Decrease in Income Tax Payable
Decrease in Inventory
Decrease in Prepaid Expenses
Depreciation Expense
Increase in Accounts Payable

Accepted Answer

The Answer of Subtract item from net income and No is...

Question 17

Selected balance sheet information and the income statement for Pioneer Industries for the current year are presented below.
Selected Balance Sheet Accounts

Required:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Accepted Answer

The answer of Selected balance sheet information and the income...

Question 18

Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following items below will be subtracted in the financing cash flow portion of the statement of cash flows?

Accepted Answer

A)  Net income earned.
B)  Bank loans obtained.
C)  Payment of dividends.
D)  Disposal of equipment.E) All of the above
F) None of the above

Question 20

Bracken,Inc.uses the direct method to determine its cash flow from operations.During the year,it had sales revenue of $480,000.Its beginning Accounts Receivable balance was $48,000,and its ending Accounts Receivable balance was $64,000.Its cash collected from customers for the year was:

Accepted Answer

A)  $480,000.
B)  $464,000.
C)  $496,000.
D)  $592,000.E) All of the above
F) C) and D)

Exam 12: Statement of Cash Flows

The purchase of $100,000 of equipment by issuing a note would be reported:

Correct Answer
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The introductory phase of a company's life cycle will most likely have net cash:

Correct Answer
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Under the indirect method,changes in current assets are used in determining cash flows from operating activities and changes in current liabilities are used in determining cash flows from financing activities.

Correct Answer
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Supplemental disclosures required by companies using the indirect method include all of the following except:

Correct Answer
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Which of the following statements about financing activities is not correct?

Correct Answer
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Which of the following represent cash outflows from financing activities?

Correct Answer
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Bracken,Inc.uses the direct method to determine its cash flow from operations.During the year,it had sales revenue of $480,000.Its beginning Accounts Receivable balance was $48,000,and its ending Accounts Receivable balance was $64,000.Its cash collected from customers for the year was:

Correct Answer
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Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows.

Correct Answer
verified

Castle Company's sales revenue was $584,696 and cash collected from customers was $587,003,which of the following would be consistent with this difference?

Correct Answer
verified

Two years ago,Bethel,Inc.bought $80,000 in bonds from another company.This month,it sold half of those bonds for $41,280 and purchased the common stock of another company for $2,000.On the statement of cash flows for this accounting period,Bethel would report a net cash:

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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Choose the appropriate letter to match the account balance change with the type of adjustment made to net income when using the indirect method to determine net cash flow provided by operating activities.

To determine net cash provided by or used in financing activities,one must analyze the:

Correct Answer
verified

Accrual-basis accounting is superior to cash-basis accounting in that:

Correct Answer
verified

Selected balance sheet information and the income statement for Pioneer Industries for the current year are presented below. Selected Balance Sheet Accounts Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Correct Answer
verified

Marathon,Inc.showed Salaries and Wages Expense of $244,000 on its income statement.If the Salaries and Wages Payable account was $27,000 at the beginning of the year and $18,500 at the end of the year,how much cash was paid to employees?

Correct Answer
verified

In the decline phase,the company continues to enjoy positive operating cash flows but stops spending cash on investing activities and instead uses its cash for financing activities such as repaying lenders and returning excess cash to shareholders.

Correct Answer
verified

Which phrase below best describes the direct method for reporting operating cash flows?

Correct Answer
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Which of the following items below will be subtracted in the financing cash flow portion of the statement of cash flows?

Correct Answer
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Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

Correct Answer
verified

Exam 12: Statement of Cash Flows

The purchase of $100,000 of equipment by issuing a note would be reported:

Correct AnswerverifiedShow Answer

The introductory phase of a company's life cycle will most likely have net cash:

Correct AnswerverifiedShow Answer

Under the indirect method,changes in current assets are used in determining cash flows from operating activities and changes in current liabilities are used in determining cash flows from financing activities.

Correct AnswerverifiedShow Answer

Supplemental disclosures required by companies using the indirect method include all of the following except:

Correct AnswerverifiedShow Answer

Which of the following statements about financing activities is not correct?

Correct AnswerverifiedShow Answer

Which of the following represent cash outflows from financing activities?

Correct AnswerverifiedShow Answer

Bracken,Inc.uses the direct method to determine its cash flow from operations.During the year,it had sales revenue of $480,000.Its beginning Accounts Receivable balance was $48,000,and its ending Accounts Receivable balance was $64,000.Its cash collected from customers for the year was:

Correct AnswerverifiedShow Answer

Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows.

Correct AnswerverifiedShow Answer

Castle Company's sales revenue was $584,696 and cash collected from customers was $587,003,which of the following would be consistent with this difference?

Correct AnswerverifiedShow Answer

Two years ago,Bethel,Inc.bought $80,000 in bonds from another company.This month,it sold half of those bonds for $41,280 and purchased the common stock of another company for $2,000.On the statement of cash flows for this accounting period,Bethel would report a net cash:

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Choose the appropriate letter to match the account balance change with the type of adjustment made to net income when using the indirect method to determine net cash flow provided by operating activities.

To determine net cash provided by or used in financing activities,one must analyze the:

Correct AnswerverifiedShow Answer

Accrual-basis accounting is superior to cash-basis accounting in that:

Correct AnswerverifiedShow Answer

Selected balance sheet information and the income statement for Pioneer Industries for the current year are presented below. Selected Balance Sheet Accounts Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Correct AnswerverifiedShow Answer

Marathon,Inc.showed Salaries and Wages Expense of $244,000 on its income statement.If the Salaries and Wages Payable account was $27,000 at the beginning of the year and $18,500 at the end of the year,how much cash was paid to employees?

Correct AnswerverifiedShow Answer

In the decline phase,the company continues to enjoy positive operating cash flows but stops spending cash on investing activities and instead uses its cash for financing activities such as repaying lenders and returning excess cash to shareholders.

Correct AnswerverifiedShow Answer

Which phrase below best describes the direct method for reporting operating cash flows?

Correct AnswerverifiedShow Answer

Which of the following items below will be subtracted in the financing cash flow portion of the statement of cash flows?

Correct AnswerverifiedShow Answer

Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

Correct AnswerverifiedShow Answer

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