Accounting 101 AF Ch 13

Which of the following is reported on the statement of cash flows? a. Cash flows from investing activities b. Total changes in stockholders' equity c. Changes in retained earnings d. Total assets

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a a. cash inflow in the Operating Activities section. b. cash inflow in the Investing Activities section. c. separate schedule. d. cash inflow in the Financing Activities section.

Cash dividends paid would be shown on the statement of cash flows under __________ activities. a. investing b. directing c. operating d. financing

On the statement of cash flows, the Cash Flows from Operating Activities section would include a. receipts from the sale of investments. b. receipts from the issuance of capital stock. c. payments for the acquisition of investments. d. cash payments for salaries. Feedback

Which of the following would be shown on a statement of cash flows under the Financing Activities section? a. The issuance of bonds b. Issuance of a long-term note to acquire land c. Purchase of a building d. Sale of a long-term investment in exchange for the common stock of another company

A mortgage incurred in the purchase of an office building would be reported on the statement of cash flows in a. the Cash Flows from Investing Activities section. b. the Cash Flows from Operating Activities section. c. a separate section that appears at the bottom of the statement. d. the Cash Flows from Financing Activities section.

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. An increase in accounts payable b. A gain on a sale of a building c. A decrease in accounts receivable d. A loss on a sale of equipment

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method? a. An increase in inventory b. An increase in accrued expenses payable c. A decrease in inventory d. A decrease in prepaid expenses

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in accounts payable b. An increase in accounts receivable c. A decrease in inventory d. Common stock dividends declared and paid Feedback

The net income reported on the income statement for the current year was $295,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $5,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $ 50,000 $ 60,000 Accounts receivable 112,000 108,000 Inventories 105,000 93,000 Prepaid expenses 4,500 6,500 Accounts payable (merchandise creditors) 75,000 89,000 What is the net cash flow from operating activities reported on the statement of cash flows prepared by the indirect method? a. $368,000 b. $208,000 c. $312,000 d. $302,000

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. A decrease in accounts payable b. Dividends paid on common stock c. A loss on the sale of land d. A decrease in accrued liabilities

Step 1 of reconciling net income to net cash flow from operating activities is to a. add gains or subtract losses from investing activities. b. subtract gains or add losses from investing activities. c. subtract depreciation expense. d. add depreciation expense.

Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Purchase of inventory b. Purchase of land for cash c. Discard of fully depreciated equipment with no salvage value d. Payment of bond interest

Cash proceeds of $72,000 include a $12,000 gain on the sale of land and the $60,000 cost (book value) of the land. Which of the following is true? a. The book value does not appear as a cash inflow or outflow anywhere on the statement. b. The entire cash proceeds appear as a cash inflow in the Investing Activities section. c. The $12,000 gain is deducted from net income in the Operating Activities section. d. All of these choices are correct.

Which of the following is not included in the Investing Activities section of the statement of cash flows? a. The purchase of equipment for cash b. Depreciation on equipment c. The sale of a building for cash d. The purchase of land for cash

The following information is available from the land account Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. cash paid for purchase of land, $(120,000). b. increase in notes payable, $20,000. c. cash paid for purchase of land, $(100,000). d. loss from land transactions, $(50,000).

In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account is analyzed for changes? a. Current assets b. Stockholders' equity c. Long-term assets d. Current liabilities

Which of the following would not appear in the Cash Flows from Investing Activities section of the statement of cash flows? a. Purchase of land for $70,000 cash b. Sale of fully depreciated equipment with $5,000 salvage value for $5,000 cash c. Cash paid to retire bonds, $2,000 d. Purchase of building for $20,000 cash and a $160,000 note payable

If a gain of $7,000 results from selling (for cash) office equipment having a book value of $55,000, the total amount reported in the Cash Flows from Investing Activities section of the statement of cash flows is a. $7,000. b. $55,000. c. $48,000. d. $62,000

The following information is available from the land account: Opening balance $270,000 Sold for $200,000 cash 170,000 credit entry Purchased for $120,000 cash 120,000 debit entry Ending balance 220,000 Items in the Investing Activities section of the statement of cash flows should include a. cash received from sale of land, $170,000. b. cash received from sale of land, $200,000. c. loss from land transactions, $(50,000). d. gain on sale of land, $30,000.

In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which types of accounts are analyzed for changes? a. Long-term assets b. All liabilities and stockholders' equity c. Long-term liabilities and stockholders' equity d. Current liabilities and stockholders' equity

Which of the following would indicate a cash outflow to appear in the Financing Activities section of the statement of cash flows? a. Increase in retained earnings account b. Increase in paid-in capital account c. Increase in common stock account d. Increase in treasury stock account

Which of the following is not included in the Financing Activities section of the statement of cash flows? a. A stock split b. The payment of dividends c. The purchase of treasury stock d. The retirement of bonds

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the Financing Activities section of the statement of cash flows? a. Cash paid for dividends, $(62,000) b. Cash paid for dividends, $(46,000) c. Dividends declared, $(54,000) d. Change in dividends payable, $(8,000)

Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows? a. Decrease in retained earnings account b. Increase in common stock account c. Increase in treasury stock account d. Decrease in dividends payable account

The following changes occurred in accounts over the year: Accounts Payable increased by $6,000, Bonds Payable decreased by $12,000, Common Stock increased by $10,000, Paid-In Capital increased by $10,000, and Retained Earnings increased by $20,000. No dividends were paid during the year. What is the net cash flow from financing activities? a. $8,000 b. $22,000 c. $20,000 d. $(8,000)

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance 50,000 What is the net change in cash for the period? a. $(75,000) b. $75,000 c. $125,000 d. $115,000

The ending figure on the statement of cash flows should match what figure on the balance sheet? a. Total assets b. Total stockholders' equity c. Retained earnings balance d. Cash balance

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from financing activities? a. Cash flows from investing activities b. Change in cash c. Beginning cash balance d. Ending cash balance

Given the following framework for the statement of cash flows, what is missing? Cash flows from operating activities $XXX Cash flows from investing activities XXX Change in cash $XXX Beginning cash balance XXX Ending cash balance $XXX a. Total stockholders' equity b. Free cash flow c. Beginning retained earnings balance d. Cash flows from financing activities

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Beginning cash balance b. Cash flows from financing activities c. Cash flows from operating activities d. Ending cash balance

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance 100,000 What was the beginning cash balance? a. $25,000 b. $65,000 c. $(25,000) d. $75,000

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $ 35,000 Net cash flow used for investing activities (20,000) Net cash flow used for financing activities 60,000 Ending cash balance 45,000 What was the ending cash balance? a. $75,000 b. $160,000 c. $120,000 d. $30,000

Which of the following is not a cash flow element that would be found on the statement of cash flows? a. Change in cash b. Ending cash balance c. Free cash flow d. Net cash flow from operating activities

On the statement of cash flows, which of the following cash flow elements should be presented immediately after the net cash flow from operating activities? a. Ending cash balance b. Cash flows from financing activities c. Beginning cash balance d. Cash flows from investing activities

Which of the following is correct concerning the entries made on the spreadsheet used to prepare the statement of cash flows? a. The entries are not posted to the ledger. b. The entries are used in summarizing the data on the spreadsheet. c. The entries are used in preparing the data on the spreadsheet. d. All of these choices are correct.

Income tax was $200,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the cash flow statement using the direct method are a. $190,000. b. $210,000. c. $200,000. d. $230,000.

The formula to calculate free cash flow is a. cash flows from financing activities + cash used to purchase property, plant, and equipment to maintain current production. b. cash flows from operating activities − cash used to purchase property, plant, and equipment to maintain current production. c. cash flows from operating activities + cash used to purchase property, plant, and equipment to maintain current production. d. cash flows from financing activities − cash used to purchase property, plant, and equipment to maintain current production.

If the free cash flow changed from $60,000 to $80,000, the change a. is indicative of a favorable trend. b. is not indicative. c. is indicative of an unfavorable trend. d. could be considered favorable or unfavorable depending on other surrounding circumstances.

Sanchez Inc. reported the following on the company's cash flow statement: Net cash flow from operating activities $ 500,000 Net cash flow used for investing activities (200,000) Net cash flow used for financing activities 150,000 Thirty percent of the net cash flow used for investing activities was to maintain existing productive capacity. What is the company's free cash flow? a. $440,000 b. $500,000 c. $300,000 d. $650,000

If the free cash flow changed from $50,000 to $40,000, the change a. is indicative of a favorable trend. b. is indicative of an unfavorable trend. c. is not indicative. d. could be considered favorable or unfavorable depending on other surrounding circumstances.

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry in the Transactions columns involving a a. credit to Operating Activities—Net Income. b. debit to Operating Activities—Net Income. c. debit to Financing Activities—Net Income. d. debit to Retained Earnings.

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to net loss would require an entry in the Transactions columns involving a a. debit to Operating Activities—Net Loss. b. credit to Retained Earnings. c. credit to Operating Activities—Net Loss. d. debit to Financing Activities—Net Loss.

Which of the following is used in calculating cash payments for merchandise using the direct method? a. Net income b. An increase in accounts receivable c. A decrease in accounts receivable d. An increase in accounts payable

Step 1 of preparing a spreadsheet for the statement of cash flows is to a. add the column totals. b. enter the balance of each balance sheet account. c. analyze the change during the year in each noncash account and classify the change. d. list the title of each balance sheet account in the Accounts column.

Income tax was $200,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the cash flow statement using the direct method are a. $200,000. b. $230,000. c. $190,000. d. $210,000.

The following selected account balances appeared on the financial statements of Sanchez Company: Accounts Receivable, January 1 $13,000 Accounts Receivable, December 31 9,000 Accounts Payable, January 1 4,000 Accounts Payable, December 31 7,000 Inventory, January 1 10,000 Inventory, December 31 15,000 Sales 62,000 Cost of Goods Sold 31,000 Sanchez Company uses the direct method to calculate net cash flow from operating activities. Cash received from customers is a. $58,000. b. $75,000. c. $66,000. d. $62,000.

Dora Inc. reported the following on the company's cash flow statement: Sales $3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales? a. 8.3% b. 12.0% c. 1.4% d. 10.0%

Which of the following is used in calculating cash received from customers using the direct method? a. An increase in accounts payable b. A decrease in accounts receivable c. An increase in inventory d. A decrease in inventory

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to cash dividends declared would require an entry in the Transactions columns involving a a. debit to Financing Activities—Declared Cash Dividends. b. debit to Operating Activities—Declared Cash Dividends. c. credit to Operating Activities—Declared Cash Dividends. d. debit to Retained Earnings.

Analysts often use free cash flow, rather than cash flows from _________ activities, to measure the financial strength of a business. a. noncash investing and financing b. investing c. operating d. financing

Sales for the year were $500,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the cash flow statement using the direct method is a. $520,000. b. $480,000. c. $500,000. d. $600,000.

Which of the following statements is true regarding free cash flow? a. Free cash flow measures the operating cash flow of a company after the purchase of inventory. b. Free cash flow ignores productive capacity. c. Free cash flow is a valuable tool for evaluating net income. d. None of these choices are correct.