Question 1

A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The total amount that should be reported in the operating section of the statement of cash flow as per indirect method is:
A)$17,000.
B)$22,000.
C)$57,000.
D)$4,000.
E)$21,000.

Accepted Answer

The answer of A machine with a cost of $130,000,...

Question 2

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:
A)$50,000.
B)Zero. This is a financing activity.
C)$45,000.
D)Zero. This is an investing activity.
E)$5,000.

Accepted Answer

The sale of a machine is considered an investing activity, not an operating activity. Therefore, it should not be reported in the operating activities section.

Question 3

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array} { l  }
 \text {Cost of goods sold. } &\$226,000\
 \text {Merchandise inventory, January 1. } &54,800\
 \text {Merchandise inventory, December 31 } &57,400\
 \text {Accounts payable, January 1. } &54,400\
 \text {Accounts payable, December 31. } &59,800\
\end{array}$

A)$234,000.
B)$220,000.
C)$223,200.
D)$218,000.
E)$228,800.

Accepted Answer

The cash paid for merchandise is equal to the cost of goods sold plus the increase in accounts payable minus the increase in merchandise inventory.Cash paid for merchandise = Cost of goods sold + (Accounts payable, December 31 - Accounts payable, January 1) - (Merchandise inventory, December 31 - Merchandise inventory, January 1)Cash paid for merchandise = $226,000 + ($59,800 - $54,400) - ($57,400 - $54,800)Cash paid for merchandise = $226,000 + $5,400 - $2,600Cash paid for merchandise = $223,200

Question 4

Use the following information to calculate cash received from dividends: $\begin{array}{lr}
\text { Dividends revenue } & \$ 29,800 \
\text { Dividends receivable, January 1 } & 2,600 \
\text { Dividends receivable, December 31 } & 3,400
\end{array}$
A)$26,400.
B)$32,400.
C)$29,000.
D)$29,800.
E)$30,600.

Accepted Answer

Cash received from dividends is calculated as: Dividends revenue + Beginning Dividends Receivable - Ending Dividends Receivable = $29,800 + $2,600 - $3,400 = $29,000.

Question 5

A company's income statement showed the following: net income, $124,000 and depreciation expense, $30,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; and accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.
A)$148,800.
B)$178,000.
C)$159,200.
D)$118,000.
E)$123,200.

Accepted Answer

The answer of A company's income statement showed the following:...

Question 6

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: $\begin{array}{lr}
\text { Net income for the year was } & \$ 52,000 \
\hline \text { Accounts payable increased by } & 18,000 \
\hline \text { Accounts receivable decreased by } & 25,000 \
\hline\text { Inventories decreased by } & 5,000 \
\hline \text { Cash dividends paid were } & 14,000 \
\hline \text { Depreciation expense was } & 20,000
\end{array}$
Net cash provided by operating activities was:
A) $ \$ 120,000 $.
B) $ \$ 110,000 $.
C) $ \$ 71,000 $.
D) $ \$ 70,000 $.
E) $ \$ 24,000 $.

Accepted Answer

The answer of In preparing a company's statement of cash...

Question 7

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
A)$5,000.
B)$45,000.
C)Zero. This is an operating activity.
D)Zero. This is a financing activity.
E)$50,000.

Accepted Answer

The answer of A machine with a cost of $130,000...

Question 8

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array} { l  }
 \text {Cost of goods sold. } &\$735,000\
 \text {Merchandise inventory, January 1. } &84,700\
 \text {Merchandise inventory, December 31 } &82,400\
 \text {Accounts payable, January 1. } &54,500\
 \text {Accounts payable, December 31. } &60,200\
\end{array}$

A)$727,000.
B)$726,300.
C)$732,700.
D)$737,700.
E)$737,300.

Accepted Answer

The cash paid for merchandise is calculated as follows:Cost of goods sold + Beginning merchandise inventory - Ending merchandise inventory = Cash paid for merchandise$735,000 + $84,700 - $82,400 = $737,300

Question 9

A company's income statement showed the following: net income, $134,000; depreciation expense, $30,000; and gain on sale of plant assets, $4,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses increased $6,200; accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.
A)$96,600.
B)$141,000.
C)$88,600.
D)$156,600.
E)$148,600.

Accepted Answer

The answer of A company's income statement showed the following:...

Question 10

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Addams's statement of cash flows?
A)In operating activities as a source of funds.
B)In investing activities as a source of funds.
C)In financing activities as a use of funds.
D)In financing activities as a source of funds.
E)In investing activities as a use of funds.

Accepted Answer

Cash dividends are a distribution of earnings to shareholders and are considered a financing activity. Therefore, the $75,000 in cash dividends should be reported on the statement of cash flows as a use of funds in financing activities.

Question 11

When preparing a statement of cash flows using the indirect method, which of the following is correct?
A)The declaration of a cash dividend should be a use of cash in the financing activities section.
B)The issuance of a stock dividend should be a use of cash in the financing activities section.
C)The purchase of land and a building by issuing a long-term note payable should be a source of cash in the financing activities section.
D)Proceeds from the sale of equipment should be added to net income in the operating activities section.
E)A loss on the sale of land should be added to net income in the operating activities section.

Accepted Answer

The answer of When preparing a statement of cash flows...

Question 12

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array} { l  }
 \text {Cost of goods sold. } &\$500,000\
 \text {Merchandise inventory, January 1. } &85,000\
 \text {Merchandise inventory, December 31 } &97,000\
 \text {Accounts payable, January 1. } &68,000\
 \text {Accounts payable, December 31. } &60,000\
\end{array}$

A)$585,000.
B)$508,000.
C)$480,000.
D)$512,000.
E)$520,000.

Accepted Answer

The answer of Use the following information about the current...

Question 13

Use the following information to calculate cash paid for salaries: $\begin{array}{l|r}
\text { Salaries expense } & \$ 175,000 \
\hline \text { Salaries payable, January } 1 & 20,000 \
\hline \text { Salaries payable, December } 31 & 12,000
\end{array}$
A)$183,000.
B)$175,000.
C)$143,000.
D)$167,000.
E)$155,000.

Accepted Answer

The cash paid for salaries is calculated as: Salaries Expense + Beginning Salaries Payable - Ending Salaries Payable = $175,000 + $20,000 - $12,000 = $183,000.

Question 14

Use the following information to calculate cash paid for income taxes: $\begin{array}{l|r}
\text { Income tax expense } & \$ 43,000 \
\hline \text { Income tax payable, January 1 } & 9,100 \
\hline \text { Income tax payable, December 31 } & 10,200
\end{array}$
A)$43,000.
B)$52,100.
C)$23,700.
D)$41,900.
E)$53,200.

Accepted Answer

Cash paid for income taxes is calculated as: Income tax expense + Beginning income tax payable - Ending income tax payable = $43,000 + $9,100 - $10,200 = $41,900.

Question 15

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:
A)$(7,000).
B)$7,000.
C)$(57,000).
D)$(60,000).
E)$(3,000).

Accepted Answer

The answer of A company reported that its bonds with...

Question 16

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: $$\begin{array} { l | r } 
\text { Net income } & \$ 85,300 \
\hline \text { Depreciation expense } & 12,000 \
\hline \text { Increase in merchandise inventory } & 2,050 \
\hline \text { Increase in accounts payable } & 6,150 \
\hline
\end{array}$$
A)$85,700.
B)$69,900.
C)$93,900.
D)$108,900.
E)$81,600.

Accepted Answer

Net cash provided by operating activities is calculated as: Net income + Depreciation expense - Increase in merchandise inventory + Increase in accounts payable = $85,300 + $12,000 - $2,050 + $6,150 = $93,900.

Question 17

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: $$\begin{array} { l | r } 
\text { Net income for the year was } & \$ 52,000 \
\hline \text { Accounts payable increased by } & 18,000 \
\hline \text { Accounts receivable decreased by } & 25,000 \
\hline \text { Inventories increased by } & 5,000 \
\hline \text { Depreciation expense was } & 30,000
\end{array}$$ Net cash provided by operating activities was:
A)$60,000.
B)$70,000.
C)$130,000.
D)$80,000.
E)$120,000.

Accepted Answer

The answer of In preparing a company's statement of cash...

Question 18

Use the following information to calculate cash paid for income taxes: $\begin{array}{ll}\text { Income tax expense }&\$50,000\
\text { Income tax payable, January } 1 & 9,000 \
\text { Income tax payable, December 31 } & 7,000
\end{array}$
A) $ \$ 57,000 $.
B) $ \$ 50,000 $.
C) $ \$ 59,000 $.
D) $ \$ 52,000 $.
E) $ \$ 48,000 $.

Accepted Answer

The answer of Use the following information to calculate cash...

Question 19

A machine with a cost of $130,000, accumulated depreciation of $85,000, and current year depreciation expense of $17,000 is sold for $40,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
A)$5,000.
B)$17,000.
C)$40,000.
D)$28,000.
E)$45,000.

Accepted Answer

The answer of A machine with a cost of $130,000,...

Question 20

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: $$\begin{array} { l | r } 
\text { Net income for the year was } & \$ 52,000 \
\hline \text { Accounts payable decreased by } & 18,000 \
\hline \text { Accounts receivable increased by } & 25,000 \
\hline \text { Inventories increased by } & 5,000 \
\hline \text { Depreciation expense was } & 30,000
\end{array}$$ Net cash provided by operating activities was:
A)$60,000.
B)$34,000.
C)$80,000.
D)$52,000.
E)$70,000.

Accepted Answer

To calculate net cash provided by operating activities using the indirect method, start with net income and adjust for changes in working capital and non-cash expenses:  Net income: $52,000  Add back depreciation (non-cash expense): $30,000  Subtract increase in accounts receivable: -$25,000  Subtract decrease in accounts payable: -$18,000  Subtract increase in inventories: -$5,000  Net cash provided by operating activities: $52,000 + $30,000 - $25,000 - $18,000 - $5,000 = $34,000.

Quiz 16: Reporting the Statement of Cash Flows

A machine with a cost of $130,000, current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash. The total amount that should be reported in the operating section of the statement of cash flow as per indirect method is:

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:

Use the following information to calculate cash received from dividends: $\begin{array}{lr}\text { Dividends revenue } & \$ 29,800 \\\text { Dividends receivable, January 1 } & 2,600 \\\text { Dividends receivable, December 31 } & 3,400\end{array}$

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year. How should this information be reported on Addams's statement of cash flows?

When preparing a statement of cash flows using the indirect method, which of the following is correct?

Use the following information to calculate cash paid for salaries: $\begin{array}{l|r}\text { Salaries expense } & \$ 175,000 \\\hline \text { Salaries payable, January } 1 & 20,000 \\\hline \text { Salaries payable, December } 31 & 12,000\end{array}$

Use the following information to calculate cash paid for income taxes: $\begin{array}{l|r}\text { Income tax expense } & \$ 43,000 \\\hline \text { Income tax payable, January 1 } & 9,100 \\\hline \text { Income tax payable, December 31 } & 10,200\end{array}$

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:

A machine with a cost of $130,000, accumulated depreciation of $85,000, and current year depreciation expense of $17,000 is sold for $40,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: