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Bowers Corporation reported the following ($ in 000s) for the year: Bowers Corporation reported the following ($ in 000s) for the year: Sales on account were $1,900 for the year. How much cash was collected from customers on account? A) $1,627. B) $1,642. C) $1,638. D) $2,142. Sales on account were $1,900 for the year. How much cash was collected from customers on account?


A) $1,627.
B) $1,642.
C) $1,638.
D) $2,142.

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

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Pickering Company's prepaid insurance was $8,000 at December 31, 2012, and $10,000 at December 31, 2013. Pickering reported insurance expense of $15,000 on the 2013 income statement. What amount would be reported in the statement of cash flows as insurance paid using the direct method?


A) $13,000.
B) $17,000.
C) $15,000.
D) $23,000.

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

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Which of the following does not represent a cash flow relating to operating activities?


A) Cash dividends paid to stockholders.
B) Cash received from customers.
C) Interest paid to bondholders.
D) Cash paid for salaries.

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

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How is the amortization of patents reported in a statement of cash flows that is prepared using the indirect method?


A) A decrease in cash flows from investing activities.
B) An increase in cash flows from investing activities.
C) A deduction from net income in arriving at cash flows from operations.
D) An addition to net income in arriving at cash flows from operations.

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

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The purchase of treasury stock is:


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

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

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Kinney reported cost of goods sold of $168,114,150 in its fiscal 2012 income statement. Compute its net inventory purchases during the year.

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Assuming that there were no inventory wr...

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Following are the income statement and some additional information for Carolina Consulting Company. Following are the income statement and some additional information for Carolina Consulting Company. All sales were on credit and accounts receivable decreased by $900 in 2013 compared to 2012. Merchandise purchases were on credit with a decrease in accounts payable of $700 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. All sales were on credit and accounts receivable decreased by $900 in 2013 compared to 2012. Merchandise purchases were on credit with a decrease in accounts payable of $700 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.

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Proceeds from the sale of a plant site are:


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 the above is correct.

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

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In its 2013 income statement, WME reported $58,000 for insurance expense. WME paid $72,000 in insurance premiums during 2013. In its reconciliation schedule, WME should:


A) Show a $14,000 positive adjustment to net income under the indirect method for the increase in prepaid insurance.
B) Show a $14,000 negative adjustment to net income under the indirect method for the decrease in prepaid insurance.
C) Show a $14,000 negative adjustment to net income under the indirect method for the increase in prepaid insurance.
D) Show a $14,000 positive adjustment to net income under the indirect method for the decrease in prepaid insurance.

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

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Creble Company reported net income for 2013 in the amount of $40,000. The company's financial statements also included the following: Creble Company reported net income for 2013 in the amount of $40,000. The company's financial statements also included the following: In the statement of cash flows what is net cash provided by operating activities under the indirect method? A) $36,000. B) $41,000. C) $40,000. D) $38,000. In the statement of cash flows what is net cash provided by operating activities under the indirect method?


A) $36,000.
B) $41,000.
C) $40,000.
D) $38,000.

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

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The statement of cash flows has been a required financial statement since 1988, but is the reporting of cash flows a relatively new concept? Explain.

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No. Financial reporting on a cash basis ...

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When a company purchases a security it considers a cash equivalent, the cash outflow is:


A) Reported as an operating activity.
B) Reported as an investing activity.
C) Reported as a financing activity.
D) Not reported on a statement of cash flows.

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

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


A) The purchase of long-lived assets.
B) The acquisition of treasury stock.
C) The retirement of bonds.
D) The payment of prepaid insurance.

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

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A purchase of equipment for cash is:


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 the above is correct.

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

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Which of the following would not be a component of cash flows from investing activities?


A) Sale of land.
B) Purchase of securities.
C) Purchase of equipment.
D) Dividends paiD.Dividends paid is not a component of cash flow from investing; it is a component of cash flow from financing.The other items are all components of cash flow from investing.

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

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An analyst compiled the following information for U Inc. for the year ended December 31, 2013: ▪ Net income was $1,700,000. ▪ Depreciation expense was $400,000. ▪ Interest paid was $200,000. ▪ Income taxes paid were $100,000. ▪ Common stock was sold for $200,000. ▪ Preferred stock (8% annual dividend) was sold at par value of $250,000. ▪ Common stock dividends of $50,000 were paid. ▪ Preferred stock dividends of $20,000 were paid. ▪ Equipment with a book value of $100,000 was sold for $200,000. Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2013?


A) $2,000,000.
B) $2,030,000.
C) $2,080,000.
D) $2,100,000.

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

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On December 31, 2013, Wellstone Company reported net income of $70,000 and sales of $210,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Wellstone will report cash collected from customers in its 2013 statement of cash flows (direct method) in the amount of:


A) $215,000.
B) $285,000.
C) $135,000.
D) $205,000.

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

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

A) True
B) False

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Explain why Sisters Corporation subtracts equity income from its net income in its measurement of cash flows.

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Under the equity method, income accrues ...

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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:


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.

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

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