Question 1

The following data are available for Springer Corporation.  Net cash provided by operating activities is:

Accepted Answer

The net cash provided by operating activities is calculated as the sum of operating cash inflows minus operating cash outflows. In this case, operating cash inflows are ₤820,000 (sales revenue ₤840,000 minus decrease in accounts receivable ₤20,000), and operating cash outflows are ₤440,000 (cost of goods sold ₤400,000 plus increase in accounts payable ₤40,000). Therefore, the net cash provided by operating activities is ₤820,000 minus ₤440,000, which equals ₤380,000.

Question 2

Free cash flow equals cash provided by

Accepted Answer

The answer of Free cash flow equals cash provided by
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Question 3

A measure that describes the cash remaining from operations after adjustment for capital expenditures and dividends is

Accepted Answer

Free cash flow is the measure that describes the cash remaining from operations after adjustment for capital expenditures and dividends. It is calculated as cash from operations minus capital expenditures and dividends. Options A, B, and D do not take into account the capital expenditures and dividends, which are important factors in determining the company's financial health and ability to grow.

Question 4

In Rooney Company, Treasury Shares increased $20,000 from a cash purchase, and Retained Earnings increased $80,000 as a result of net income of $124,000 and cash dividends paid of $44,000. Net cash used by financing activities is:

Accepted Answer

The increase in Treasury Shares is a financing activity that used $20,000 of cash.

To calculate net cash used by financing activities, we need to add the increase in Treasury Shares to the cash dividends paid, which results in a total of $64,000 ($20,000 + $44,000).

Therefore, the correct answer is D, $64,000.

Question 5

LF's Pest Control Products has the following information available:  What is LF's free cash flow?

Accepted Answer

The answer of LF's Pest Control Products has the following...

Question 6

The following data are available for Nichols Corporation. Sale of land $300,000
Sale of equipment 150,000
Issuance of ordinary shares 210,000
Purchase of equipment 90,000
Payment of cash dividends 180,000
Net cash provided by investing activities is:

Accepted Answer

Net cash provided by investing activities is calculated by adding cash inflows from investing activities and subtracting cash outflows. Cash inflows include the sale of land ($300,000) and sale of equipment ($150,000), totaling $450,000. Cash outflows include the purchase of equipment ($90,000). Therefore, net cash provided by investing activities is $450,000 - $90,000 = $360,000.

Question 7

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Accepted Answer

To determine the net cash provided (used) by operating activities, it is necessary to analyze the current year's income statement, a comparative statement of financial position, and additional information, as all these elements provide insights into cash flows from operations.

Question 8

Which of the following would not be needed to determine net cash provided by operating activities?

Accepted Answer

Payment of cash dividends is an activity classified as financing, not operating. The other options are all related to operating activities and would be needed to determine net cash provided by operating activities.

Question 9

The statement of cash flows will not provide insight into

Accepted Answer

The statement of cash flows provides information about the sources and uses of cash for a given period and does not provide insight into the exact proceeds of a future bond issue.

Question 10

The following data are available for Cole Company. Increase in accounts payable $200,000
Increase in bonds payable 500,000
Sale of investments 250,000
Issuance of ordinary shares 300,000
Payment of cash dividends 150,000
Net cash provided by financing activities is:

Accepted Answer

Net cash provided by financing activities is calculated by adding the increases in bonds payable and ordinary shares issuance, and subtracting the cash dividends paid. 
Net cash provided by financing activities = (Increase in bonds payable + Issuance of ordinary shares) - Payment of cash dividends 
= (500,000 + 300,000) - 150,000 
= $650,000

Question 11

In Wallace Company, net income is $290,000. If accounts receivable increased $140,000 and accounts payable decreased $40,000, net cash provided by operating activities using the indirect method is:

Accepted Answer

The increase in accounts receivable ($140,000) is subtracted from net income, and the decrease in accounts payable ($40,000) is also subtracted. Thus, $290,000 - $140,000 - $40,000 = $110,000.

Question 12

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Accepted Answer

A comparative statement of financial position is used to determine the changes in cash by comparing the current period's financial position with the previous period's, highlighting the net increase or decrease in cash.

Question 13

Land acquired from the issuance of ordinary shares is reported

Accepted Answer

Land acquired through the issuance of ordinary shares is a non-cash transaction and is typically disclosed in a separate note or supplementary schedule to the financial statements, rather than in the cash flow statement.

Question 14

Which of the following transactions would not be classified as a financing activity?

Accepted Answer

Purchasing a long-term investment in bonds would fall under investing activities, not financing activities. Choice A, purchase of treasury shares, is a financing activity because it involves a company buying back its own shares. Choice B, payment of dividends, is also a financing activity because it involves distributing profits to shareholders. Choice C, issuance of bonds at a discount, is a financing activity because it involves raising funds by issuing debt.

Question 15

During 2014, Klugman Industries reported cash provided by operations of €890,000, cash used in investing of €1,029,000, and cash used in financing of €135,000. In addition, cash spent for fixed assets during the period was €414,000. No dividends were paid. Based on this information, what was Klugman's free cash flow?

Accepted Answer

Free cash flow is calculated by subtracting capital expenditures (cash spent on fixed assets) from operating cash flow. Therefore, Klugman's free cash flow is: €890,000 - €414,000 = €476,000.

Question 16

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?

Accepted Answer

The declaration of a cash dividend paid during the period is a financing activity because it involves the distribution of company funds to the shareholders. Net income for the period is not a financing activity, but is reported in the operating activities section of the statement of cash flows.

Question 17

If $350,000 of bonds are issued during the year but $140,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Accepted Answer

The statement of cash flows will show an increase in cash of $350,000 from the issuance of new bonds, and a decrease in cash of $140,000 from the retirement of old bonds. Therefore, the net effect on cash is an increase of $210,000.

Question 18

In Shannon Company, there was an increase in the land account during the year of $38,000. Analysis reveals that the change resulted from a cash sale of land at a cost $120,000, and a cash purchase of land for $158,000. In the statement of cash flows, the change in the land account should be reported in the investment section:

Accepted Answer

The increase in the land account is comprised of both a cash sale of land and a cash purchase of land. In the statement of cash flows, the change in the land account should be reported as a purchase of land for $158,000 and a sale of land for $120,000 in the investment section. Therefore, the correct choice is C.

Question 19

When equipment is sold for cash, the amount received is reflected as a cash

Accepted Answer

When equipment is sold for cash, it is considered an investing activity because it involves the sale of a long-term asset, which is a cash inflow in the investing section of the statement of cash flows.

Question 20

The statement of cash flows

Accepted Answer

The statement of cash flows is used to assess an entity's ability to generate cash flows, pay dividends, and meet obligations. It is a separate financial statement that complements the income statement and balance sheet. The other options are incorrect: A is false as an income statement is still required under IFRS; C is incorrect as the statement of cash flows is prepared from the balance sheet, not just comparative income statements; and D is incorrect as the statement of cash flows does not typically include earnings per share figures.

Quiz 13: Statement of Cash Flows

The following data are available for Springer Corporation. Net cash provided by operating activities is: