Question 1

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?
A) issuance of bonds payable
B) issuance of capital stock
C) purchase of treasury stock
D) purchase of noncurrent assets

Accepted Answer

Purchase of noncurrent assets is a cash outflow related to investing activities, such as the purchase of property, plant, and equipment, or long-term investments. Issuance of bonds payable (A) and issuance of capital stock (B) are financing activities, while the purchase of treasury stock (C) can be either a financing or operating activity, depending on the reason for the purchase.

Question 2

A building with a book value of $54,000 is sold for $63,000 cash.Using the indirect method,this transaction should be shown on the statement of cash flows as follows:
A) an increase of $54,000 from investing activities
B) an increase of $63,000 from investing activities and a deduction from net income of $9,000
C) an increase of $9,000 from investing activities
D) an increase of $54,000 from investing activities and an addition to net income of $9,000

Accepted Answer

The sale of the building for $63,000 cash results in an increase of $63,000 in cash from investing activities. However, since the book value of the building was $54,000, there is a gain on the sale of $9,000 ($63,000 - $54,000). This gain should be deducted from net income, resulting in a deduction of $9,000. Therefore, the transaction should be shown as an increase of $63,000 from investing activities and a deduction from net income of $9,000.

Question 3

If a gain of $11,000 is realized in 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) $44,000
B) $11,000
C) $55,000
D) $66,000

Accepted Answer

The total amount reported in the cash flows from investing activities section would be the cash received from the sale, which is the book value of $55,000 plus the gain of $11,000, totaling $66,000.

Question 4

The current period statement of cash flows includes the following: ​
 The cash balance at the end of the period is
A) $45,000
B) $635,000
C) $355,000
D) $125,000

Accepted Answer

The ending cash balance is typically found at the bottom of the statement of cash flows. Based on the information given, the cash balance at the end of the period is $355,000.

Question 5

Cash dividends of $45,000 were declared during the year.Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year.The amount of cash for the payment of dividends during the year is
A) $50,000
B) $40,000
C) $55,000
D) $35,000

Accepted Answer

To calculate the cash paid for dividends during the year, start with the dividends declared ($45,000), then adjust for the change in dividends payable. The dividends payable increased by $5,000 ($15,000 - $10,000), so subtract this increase from the declared dividends: $45,000 - $5,000 = $40,000.

Question 6

Cash paid for equipment would be reported on the statement of cash flows in
A) the cash flows from operating activities section
B) the cash flows from financing activities section
C) the cash flows from investing activities section
D) a separate schedule

Accepted Answer

Cash paid for equipment is a capital expenditure and would be reported in the cash flows from investing activities section, which reports cash flows related to the purchase and sale of long-term assets such as property, plant, and equipment.

Question 7

On the statement of cash flows,the cash flows from financing activities section would include
A) receipts from the sale of investments
B) payments for the acquisition of investments
C) receipts from a note receivable
D) receipts from the issuance of capital stock

Accepted Answer

The cash flows from financing activities section includes transactions that involve the company's owners and creditors. Receipts from the issuance of capital stock are a financing activity, as it represents an inflow of cash from investors. The other choices are either related to investing activities (buying and selling investments) or operating activities (receipts from a note receivable).

Question 8

Cash dividends of $50,000 were declared during the year.Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year,respectively.The amount of cash for the payment of dividends during the year is
A) $55,000
B) $50,000
C) $65,000
D) $60,000

Accepted Answer

Cash dividends declared during the year = $50,000
Cash dividends payable at the beginning of the year = $10,000
Cash dividends payable at the end of the year = $5,000
Total cash for the payment of dividends during the year = Cash dividends declared - Cash dividends payable at the beginning + Cash dividends payable at the end
= $50,000 - $10,000 + $5,000
= $45,000 + $10,000
= $55,000
Therefore, the correct answer is A) $55,000.

Question 9

The net income reported on the income statement for the current year was $250,000.Depreciation recorded on fixed assets and amortization of patents for the year were $40,000,and $9,000,respectively.Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: ​
 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
A) $271,000
B) $279,000
C) $327,000
D) $256,000

Accepted Answer

The answer of The net income reported on the income...

Question 10

Land costing $71,000 was sold for $50,000 cash.The loss on the sale was reported on the income statement as other expense.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?
A) $50,000
B) $71,000
C) $121,000
D) $21,000

Accepted Answer

The amount realized from the sale of land is $50,000 cash, which is reported as a cash inflow under investing activities on the statement of cash flows. The original cost of the land is irrelevant for determining the cash inflow or outflow from the sale. The loss on the sale is reported on the income statement as an other expense, but it does not affect the cash flow from the sale.

Question 11

The following information is available from the current period financial statements: ​
 The net cash flow from operating activities using the indirect method is
A) $166,000
B) $184,000
C) $110,000
D) $240,000

Accepted Answer

The answer of The following information is available from the...

Question 12

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?
A) a decrease in inventory
B) a decrease in accounts payable
C) preferred dividends declared and paid
D) a decrease in accounts receivable

Accepted Answer

The answer of Which of the following should be deducted...

Question 13

On the statement of cash flows,a $7,500 gain on the sale of fixed assets would be
A) added to net income in converting the net income reported on the income statement to cash flows from operating activities
B) deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
C) added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
D) deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

Accepted Answer

Gains on the sale of fixed assets are deducted from net income in the operating activities section of the cash flow statement because these gains are included in the net income figure on the income statement but do not represent cash flows from operating activities.

Question 14

On the statement of cash flows,the cash flows from investing activities section would include
A) receipts from the issuance of capital stock
B) payments for dividends
C) payments for retirement of bonds payable
D) receipts from the sale of investments

Accepted Answer

The cash flows from investing activities section relates to the purchase and sale of long-term assets and investments. Therefore, receipts from the sale of investments would be included in this section. A, B, and C are incorrect because they would be included in the financing activities and/or operating activities sections of the statement of cash flows.

Question 15

A business issues 20-year bonds payable in exchange for preferred stock.This transaction would be reported on the statement of cash flows in
A) a separate schedule
B) the cash flows from financing activities section
C) the cash flows from investing activities section
D) the cash flows from operating activities section

Accepted Answer

This transaction involves an exchange of one type of financing for another without the use of cash. Therefore, it does not appear in the main sections of the cash flow statement (operating, investing, or financing activities) but is disclosed in a separate schedule or note to provide details of non-cash financing and investing activities.

Question 16

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000.As a result of this transaction,cash would
A) increase by $48,000
B) decrease by $7,000
C) increase by $55,000
D) decrease by $27,000

Accepted Answer

The equipment's book value is calculated as the original cost ($75,000) minus accumulated depreciation ($20,000), resulting in $55,000. Selling it at a loss of $7,000 means it was sold for $48,000 ($55,000 - $7,000), which increases cash by $48,000.

Question 17

Land costing $140,000 was sold for $173,000 cash.The gain on the sale was reported on the income statement as other income.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?
A) $173,000
B) $140,000
C) $313,000
D) $33,000

Accepted Answer

The statement of cash flows reports cash inflows and outflows from operating, investing, and financing activities. The sale of land is an investing activity, and the cash received from the sale should be reported under the "Investing Activities" section. Therefore, the amount reported should be $173,000, which is the cash received from the sale. The cost of the land is not relevant to the statement of cash flows.

Question 18

The following information is available from the current period financial statements: ​
 The net cash flow from operating activities using the indirect method is
A) $230,000
B) $188,000
C) $198,000
D) $156,000

Accepted Answer

The answer of The following information is available from the...

Question 19

Cash dividends paid on capital stock would be reported in the statement of cash flows in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section

Accepted Answer

Cash dividends paid on capital stock are considered a financing activity, as they involve distributions of funds to shareholders. Therefore, they would be reported in the cash flows from financing activities section of the statement of cash flows.

Question 20

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?
A) depreciation expense
B) an increase in inventory
C) a gain on the sale of equipment
D) dividends declared and paid

Accepted Answer

Depreciation expense is added back to net income in the indirect method of calculating cash flows from operating activities because it is a non-cash expense that reduces net income but does not affect cash.

Quiz 13: Statement of Cash Flows

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

A building with a book value of $54,000 is sold for $63,000 cash.Using the indirect method,this transaction should be shown on the statement of cash flows as follows:

If a gain of $11,000 is realized in 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

The current period statement of cash flows includes the following: The cash balance at the end of the period is

Cash dividends of $45,000 were declared during the year.Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year.The amount of cash for the payment of dividends during the year is

Cash paid for equipment would be reported on the statement of cash flows in

On the statement of cash flows,the cash flows from financing activities section would include

Cash dividends of $50,000 were declared during the year.Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year,respectively.The amount of cash for the payment of dividends during the year is

Land costing $71,000 was sold for $50,000 cash.The loss on the sale was reported on the income statement as other expense.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?

The following information is available from the current period financial statements: The net cash flow from operating activities using the indirect method is

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

On the statement of cash flows,a $7,500 gain on the sale of fixed assets would be

On the statement of cash flows,the cash flows from investing activities section would include

A business issues 20-year bonds payable in exchange for preferred stock.This transaction would be reported on the statement of cash flows in

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000.As a result of this transaction,cash would

Land costing $140,000 was sold for $173,000 cash.The gain on the sale was reported on the income statement as other income.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?

The following information is available from the current period financial statements: The net cash flow from operating activities using the indirect method is

Cash dividends paid on capital stock would be reported in the statement of cash flows in

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Quiz 13: Statement of Cash Flows

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

A building with a book value of $54,000 is sold for $63,000 cash.Using the indirect method,this transaction should be shown on the statement of cash flows as follows:

If a gain of $11,000 is realized in 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

The current period statement of cash flows includes the following: ​ The cash balance at the end of the period is

Cash dividends of $45,000 were declared during the year.Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year.The amount of cash for the payment of dividends during the year is

Cash paid for equipment would be reported on the statement of cash flows in

On the statement of cash flows,the cash flows from financing activities section would include

Cash dividends of $50,000 were declared during the year.Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year,respectively.The amount of cash for the payment of dividends during the year is

Land costing $71,000 was sold for $50,000 cash.The loss on the sale was reported on the income statement as other expense.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?

The following information is available from the current period financial statements: ​ The net cash flow from operating activities using the indirect method is

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

On the statement of cash flows,a $7,500 gain on the sale of fixed assets would be

On the statement of cash flows,the cash flows from investing activities section would include

A business issues 20-year bonds payable in exchange for preferred stock.This transaction would be reported on the statement of cash flows in

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000.As a result of this transaction,cash would

Land costing $140,000 was sold for $173,000 cash.The gain on the sale was reported on the income statement as other income.On the statement of cash flows,what amount should be reported as an investing activity from the sale of land?

The following information is available from the current period financial statements: ​ The net cash flow from operating activities using the indirect method is

Cash dividends paid on capital stock would be reported in the statement of cash flows in

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

The current period statement of cash flows includes the following: The cash balance at the end of the period is

The following information is available from the current period financial statements: The net cash flow from operating activities using the indirect method is

The following information is available from the current period financial statements: The net cash flow from operating activities using the indirect method is