Question 1

Partial balance sheets and additional information are listed below for Julius Company.
Additional information for 2009:
Net income was $70,000.
Depreciation expense was $30,000.
Sales totaled $600,000.
Cost of goods sold totaled $325,000.
Required:
Calculate the amount of cash received from customers during 2009.
 Julius Company
Partial Balance Sheets
as of December 31
$\begin{array} { l r r } \text { Assets } & \mathbf { 2 0 0 9 } & \mathbf { 2 0 0 8 } \ \text { Cash } & \$ 20,000 & \$ 40,000 \ \text { Accounts receivable } & 90,000 & 60,000 \ \text { Inventory } & 40,000 & 25,000 \ \text { Liabilities } & & \ \text { Accounts payable } & \$ 72,000 & \$ 58,000 \end{array}$

Accepted Answer

The answer of Partial balance sheets and additional information are...

Question 2

Which one of the following financial statements does not report amounts primarily on an accrual basis?

Accepted Answer

A)  Income statement.
B)  Balance sheet.
C)  Statement of cash flows.
D)  Statement of shareholders' equity.E) A) and D)
F) A) and B)

Question 3

A purchase of equipment for cash is:

Accepted Answer

A)  Reported as an operating activity in the statement of cash flows.
B)  Reported as an investing activity in the statement of cash flows.
C)  Reported as a financing activity in the statement of cash flows.
D)  None of these is correct.E) All of the above
F) C) and D)

Question 4

In its 2009 income statement, WME reported $440,000 for the cost of goods sold. WME paid inventory suppliers $380,000 in 2009, and its inventory balance decreased by $41,000 during the year. In its reconciliation schedule, WME should:

Accepted Answer

A)  Show a $19,000 positive adjustment to net income under the indirect method for the increase in accounts payable.
B)  Show a $19,000 positive adjustment to net income under the indirect method for the decrease in accounts payable.
C)  Show a $19,000 negative adjustment to net income under the indirect method for the increase in accounts payable.
D)  Show a $19,000 negative adjustment to net income under the indirect method for the decrease in accounts payable.Decrease in inventory balance by $41,000 indicates that purchases were less than cost of goods sold by $41,000, totaling $399,000.If cash paid to suppliers was $380,000, accounts payable increased by $19,000.E) A) and B)
F) None of the above

Question 5

In a statement of cash flows using the indirect method, an increase in available-for-sale securities not due to an increase in their fair value should be reported as:

Accepted Answer

A)  A deduction from net income in determining cash flows from operating activities.
B)  An addition to net income in determining cash flows from operating activities.
C)  A net cash outflow from investing activity.
D)  A net cash inflow from investing activity.The increase would indicate an investment in the securities.E) B) and C)
F) C) and D)

Question 6

Which of the following would be an example of an investing activity on a statement of cash flows?

Accepted Answer

A)  Sale of equipment.
B)  Issuance of long-term bonds.
C)  Receipt of investment revenue.
D)  Conversion of a cash equivalent into cash.E) B) and C)
F) C) and D) A

Question 7

Transactions that represent noncash investing and financing activities must be reported in the statement of cash flows or in disclosure notes.

Accepted Answer

A) True 
 B)False

Question 8

Partial balance sheets for ABC Company and additional information are provided below.
Additional information for 2009:
July 1: Issued 8,000 shares of common stock for cash.
July 1: Purchased new equipment for cash.
December 31: Paid cash dividends of $20,000.
Required:
Prepare the financing activities section of the statement of cash flows for 2009.

Accepted Answer

The answer of Partial balance sheets for ABC Company and...

Question 9

Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

Accepted Answer

A)  $12,750.
B)  $13,800.
C)  $12,900.
D)  $13,200.E) A) and B)
F) A) and C)

Question 10

Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?

Accepted Answer

A)  Cash dividends paid.
B)  A change in accounts receivable.
C)  Depreciation.
D)  A change in a prepaid expense.E) C) and D)
F) None of the above A

Question 11

Which of the following is reported as an investing activity in the statement of cash flows?

Accepted Answer

A)  The receipt of dividend revenue.
B)  The payment of cash dividends.
C)  The payment of interest on bonds.
D)  The sale of machinery.E) A) and B)
F) A) and D) D

Question 12

When preparing a statement of cash flows using the direct method, accrual of payroll expense is:

Accepted Answer

A)  Reported as an operating activity.
B)  Reported as an investing activity.
C)  Reported as a financing activity.
D)  None of these is correct.Accruing expenses does not affect cash flows.E) C) and D)
F) None of the above

Question 13

The amortization of bond discount is included in the statement of cash flows (indirect method)  as:

Accepted Answer

A)  A financing cash inflow.
B)  An investing activity.
C)  An addition to net income.
D)  A deduction from net income.E) A) and C)
F) A) and D)

Question 14

What are the general guidelines for an investment to be considered a cash equivalent?

Accepted Answer

To be classified as a cash equivalent, a...

Question 15

In its 2009 income statement, WME reported $11,000 of interest expense on its outstanding bonds. During the year, WME paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, WME should:

Accepted Answer

A)  Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond premium.
B)  Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond premium.
C)  Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond discount.
D)  Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond discount.When interest expense exceeds the cash paid, the effective interest rate exceeds the stated interest rate; therefore, the bond was sold at a discount.E) A) and B)
F) None of the above

Question 16

Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 17

If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, a reconciliation of net income to net cash flows from operating activities also is required.

Accepted Answer

A) True 
 B)False

Question 18

In using a spreadsheet to prepare the statement of cash flows, the summary entries duplicate the actual journal entries used to record the transactions during the year.

Accepted Answer

A) True 
 B)False

Question 19

When one enters a $50,000 credit entry to the Land account in a spreadsheet for the statement of cash flows, it represents a negative change in that account and probably is due to selling such assets.

Accepted Answer

A) True 
 B)False

Question 20

Hanson Company had the following account balances for 2009: Hanson reported net income of $90,000 for 2009. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2009 reported in the statement of cash flows?

Accepted Answer

A)  $ 70,000.
B)  $ 80,000.
C)  $100,000.
D)  $110,000.E) B) and C)
F) A) and D)

Exam 21: The Statement of Cash Flows

Correct Answer
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Which one of the following financial statements does not report amounts primarily on an accrual basis?

Correct Answer
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A purchase of equipment for cash is:

Correct Answer
verified

In its 2009 income statement, WME reported $440,000 for the cost of goods sold. WME paid inventory suppliers $380,000 in 2009, and its inventory balance decreased by $41,000 during the year. In its reconciliation schedule, WME should:

Correct Answer
verified

In a statement of cash flows using the indirect method, an increase in available-for-sale securities not due to an increase in their fair value should be reported as:

Correct Answer
verified

Which of the following would be an example of an investing activity on a statement of cash flows?

Correct Answer
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A

Transactions that represent noncash investing and financing activities must be reported in the statement of cash flows or in disclosure notes.

Correct Answer
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Correct Answer
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Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

Correct Answer
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Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?

Correct Answer
verified
A

Which of the following is reported as an investing activity in the statement of cash flows?

Correct Answer
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D

When preparing a statement of cash flows using the direct method, accrual of payroll expense is:

Correct Answer
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The amortization of bond discount is included in the statement of cash flows (indirect method) as:

Correct Answer
verified

What are the general guidelines for an investment to be considered a cash equivalent?

Correct Answer
verified
To be classified as a cash equivalent, a...
View Answer

In its 2009 income statement, WME reported $11,000 of interest expense on its outstanding bonds. During the year, WME paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, WME should:

Correct Answer
verified

Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows.

Correct Answer
verified

If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, a reconciliation of net income to net cash flows from operating activities also is required.

Correct Answer
verified

In using a spreadsheet to prepare the statement of cash flows, the summary entries duplicate the actual journal entries used to record the transactions during the year.

Correct Answer
verified

When one enters a $50,000 credit entry to the Land account in a spreadsheet for the statement of cash flows, it represents a negative change in that account and probably is due to selling such assets.

Correct Answer
verified

Hanson Company had the following account balances for 2009: Hanson reported net income of $90,000 for 2009. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2009 reported in the statement of cash flows?

Correct Answer
verified

Exam 21: The Statement of Cash Flows

Correct AnswerverifiedShow Answer

Which one of the following financial statements does not report amounts primarily on an accrual basis?

Correct AnswerverifiedShow Answer

A purchase of equipment for cash is:

Correct AnswerverifiedShow Answer

In its 2009 income statement, WME reported $440,000 for the cost of goods sold. WME paid inventory suppliers $380,000 in 2009, and its inventory balance decreased by $41,000 during the year. In its reconciliation schedule, WME should:

Correct AnswerverifiedShow Answer

In a statement of cash flows using the indirect method, an increase in available-for-sale securities not due to an increase in their fair value should be reported as:

Correct AnswerverifiedShow Answer

Which of the following would be an example of an investing activity on a statement of cash flows?

Correct AnswerverifiedA

Transactions that represent noncash investing and financing activities must be reported in the statement of cash flows or in disclosure notes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

Correct AnswerverifiedShow Answer

Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?

Correct AnswerverifiedA

Which of the following is reported as an investing activity in the statement of cash flows?

Correct AnswerverifiedD

When preparing a statement of cash flows using the direct method, accrual of payroll expense is:

Correct AnswerverifiedShow Answer

The amortization of bond discount is included in the statement of cash flows (indirect method) as:

Correct AnswerverifiedShow Answer

What are the general guidelines for an investment to be considered a cash equivalent?

Correct AnswerverifiedTo be classified as a cash equivalent, a...View AnswerShow Answer

In its 2009 income statement, WME reported $11,000 of interest expense on its outstanding bonds. During the year, WME paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, WME should:

Correct AnswerverifiedShow Answer

Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows.

Correct AnswerverifiedShow Answer

If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, a reconciliation of net income to net cash flows from operating activities also is required.

Correct AnswerverifiedShow Answer

In using a spreadsheet to prepare the statement of cash flows, the summary entries duplicate the actual journal entries used to record the transactions during the year.

Correct AnswerverifiedShow Answer

When one enters a $50,000 credit entry to the Land account in a spreadsheet for the statement of cash flows, it represents a negative change in that account and probably is due to selling such assets.

Correct AnswerverifiedShow Answer

Hanson Company had the following account balances for 2009: Hanson reported net income of $90,000 for 2009. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2009 reported in the statement of cash flows?

Correct AnswerverifiedShow Answer

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A

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A

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D

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To be classified as a cash equivalent, a...
View Answer

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