Filters
Question type
Study Flashcards

Treasury stock purchases made with cash are cash outflows in the financing activities section of the statement of cash flows.Repurchases of stock made with cash are financing activities.

A) True
B) False

Correct Answer

verifed

verified

Assume a company uses the direct method to prepare its statement of cash flows.If the company's accounts receivable increase during the accounting period,the change in accounts receivable is:


A) added to the change in the cash account to calculate cash collected from customers.
B) subtracted from sales revenue to calculate the cash collected from customers.
C) added to sales revenue to calculate the cash collected from customers.
D) subtracted from the change in the cash account to calculate cash collected from customers.

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

Correct Answer

verifed

verified

Which of the following would not be added to net income in calculating cash flows from operating activities on a statement of cash flows prepared using the indirect method?


A) Amortization expense.
B) A decrease in accounts receivable.
C) An increase in wages payable.
D) A gain on the sale of equipment.

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

Correct Answer

verifed

verified

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


A) notes receivable and bonds payable.
B) the cash account.
C) contributed capital and retained earnings.
D) interest expense and dividend income.

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

Correct Answer

verifed

verified

Using the T-account approach:


A) Net income appears on the debit side of the cash account under operating activities.
B) Payment of long-term debt appears on the debit side of the cash account under financing activities.
C) Purchase of equipment appears on the credit side of the cash account under operating activities.
D) An increase in accounts receivable appears on the debit side of the cash account.

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

Correct Answer

verifed

verified

The spreadsheet approach to preparing a statement of cash flows includes all of the following except:


A) a debit to intangible assets and a credit to cash flow from investing activities for the purchase of licensing rights.
B) a decrease in cash flow from operating activities if prepayments exceed amounts expensed.
C) an increase in cash flow from operating activities if more inventory is purchased than sold.
D) a credit to contributed capital and a debit to cash flow from investing activities for proceeds of a stock issuance.

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

Correct Answer

verifed

verified

When the indirect method is used,if accounts receivable increases during the accounting period,the change in accounts receivable is:


A) added to the change in the cash account.
B) subtracted from net income.
C) added to net income.
D) subtracted from the change in the cash account.

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

Correct Answer

verifed

verified

Depreciation is added back to net income in a statement of cash flows prepared using the indirect method because it:


A) reduces net income but not cash.
B) is a cash inflow.
C) is a revenue.
D) is a valuation concept.

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

Correct Answer

verifed

verified

A corporation had a net increase in retained earnings of $65,000 for the year.The corporation also paid $20,000 of cash dividends that had been declared in the previous year.This year,the corporation declared $18,000 of dividends but has not paid them as of year-end.Given this information,the net income for the current year must have been:


A) $63,000.
B) $85,000.
C) $65,000.
D) $83,000.

E) None of the above
F) All of the above

Correct Answer

verifed

verified

The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413.Net income is $40,251.Which of the following statements is true?


A) $5,813 would be subtracted when determining cash flows from financing activities.
B) $40,251 would be added when determining cash flows from financing activities.
C) $34,438 would be added when determining cash flows from financing activities.
D) $321,975 would be added when determining cash flows from operating activities.

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

Correct Answer

verifed

verified

Cash flows from financing activities:


A) are always negative because the company pays dividends as well as interest and principal on debt.
B) includes all cash inflows and outflows between a company and its stockholders.
C) includes all cash inflows and outflows associated with a company's lending activities.
D) are always positive unless the company is experiencing serious financial trouble.

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

Correct Answer

verifed

verified

Which of the following would be included in cash flows from operating activities?


A) Cash proceeds from sales.
B) Cash received from an issuance of bonds.
C) Dividends paid to stockholders.
D) Cash used for purchases of equipment.

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

Correct Answer

verifed

verified

Use the information above to answer the following question.The company would report net cash provided by (used in) investing activities of: Use the information above to answer the following question.The company would report net cash provided by (used in) investing activities of: A) $(1,000) . B) $(2,000) . C) $5,000. D) $7,000.


A) $(1,000) .
B) $(2,000) .
C) $5,000.
D) $7,000.

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

Correct Answer

verifed

verified

In general,the cash flow from operating activities is considered by many to be the most important component of the statement of cash flows.Most analysts believe the cash flows from operating activities section of the statement is the most important because,in the long run,operations are the only continuing source of cash.

A) True
B) False

Correct Answer

verifed

verified

When preparing the operating activities section of the statement of cash flows using the indirect method,a decrease in accounts receivable is subtracted from net income.To convert net income to cash flows from operating activities,a decrease in accounts receivable means that sales revenue on the income statement is less than the amount of cash collected from customers;therefore,the decrease should be added to net income.

A) True
B) False

Correct Answer

verifed

verified

A company bought $250,000 of equipment with an expected life of ten years and no residual value.After six years the company sold the equipment for $94,000.If it uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities,which of the following reflects how the sale of the equipment would be reported in the statement of cash flows?


A) $94,000 is recorded as a cash inflow from investing activities and no other sections of the statement are affected.
B) $94,000 is recorded as a cash inflow from investing activities and $6,000 is added to convert net income to net cash flow from operating activities.
C) $94,000 is recorded as a cash inflow from investing activities and $6,000 is subtracted to convert net income to net cash flow from operating activities.
D) $94,000 is recorded as a cash inflow from operating activities.

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

Correct Answer

verifed

verified

Which of the following would be reported as a cash outflow from investing activities?


A) Donating an old piece of equipment to charity.
B) Repaying the principal of a bond.
C) Buying another company's bonds with cash.
D) Paying for an investment asset by issuing company stock.

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

Correct Answer

verifed

verified

If sales are $850,000 and the beginning and ending balances of accounts receivable are $43,000 and $48,000,respectively,the cash collected from customers is:


A) $850,000.
B) $802,000.
C) $845,000.
D) $855,000.

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

Correct Answer

verifed

verified

Which of the following are used to determine cash flows from financing activities?


A) Short-term debt,accrued liabilities,contributed capital,and notes payable.
B) Long-term debt,contributed capital,and retained earnings.
C) Short-term debt,accrued liabilities,retained earnings,and bonds payable.
D) Long-term debt,notes payable,interest expense,and bonds payable.

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

Correct Answer

verifed

verified

Company X paid Company Y $1.35 million for a new plant.During the same accounting period,Company X experienced the following changes in its balance sheet: Cash decreased by $350,000,Accounts Receivable increased by $321,300,Inventory increased by $275,800,Property,Plant,and Equipment increased by $752,900,and Bonds Payable increased by $1 million.The net cash flow from financing activities is:


A) An inflow of $1.35 million.
B) An outflow of $350,000.
C) An inflow of $1 million.
D) An inflow of $752,900.

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

Correct Answer

verifed

verified

Showing 41 - 60 of 138

Related Exams

Exam 1

Introduction to Managerial Accounting

113 Questions

Exam 2

Job Order Costing

112 Questions

Exam 3

Process Costing

112 Questions

Exam 4

Activity-Based Costing and Cost Management

104 Questions

Exam 5

Cost Behavior

100 Questions

Exam 6

Cost-Volume-Profit Analysis

96 Questions

Exam 7

Incremental Analysis for Short-Term Decision Making

91 Questions

Exam 8

Budgetary Planning

100 Questions

Exam 9

Standard Costing and Variances

100 Questions

Exam 10

Decentralized Performance Evaluation

100 Questions

Exam 11

Capital Budgeting

100 Questions

Exam 13

Measuring and Evaluating Financial Performance

110 Questions

Show Answer