Question 1

On the statement of cash flows, the cash flows from financing activities section would include all of the following except
A) receipts from the sale of bonds payable
B) payments for dividends
C) payments for purchase of treasury stock
D) payments of interest on bonds payable

Accepted Answer

The cash flows from financing activities section of the statement of cash flows includes transactions related to the company's borrowing and issuing of funds, as well as payments to shareholders. Receipts from the sale of bonds payable (A), payments for dividends (B), and payments for purchase of treasury stock (C) are all examples of cash flows from financing activities. However, payments of interest on bonds payable (D) would be included in the cash flows from operating activities section since it relates to the company's core operations.

Question 2

Baxter Company reported a net loss of $13,000 for the year ended December 31. During the year, accounts receivable decreased by $5,000, merchandise inventory increased by $8,000, accounts payable increased by $10,000, and depreciation expense of $4,000 was recorded. During the year, operating activities
A) provided net cash of $8,000
B) provided net cash of $2,000
C) used net cash of $8,000
D) used net cash of $2,000

Accepted Answer

The answer of Baxter Company reported a net loss of...

Question 3

Cash collections from customers were
A) $56,000
B) $52,000
C) $60,000
D) $45,000

Accepted Answer

Cash collections from customers can be calculated using the given information, which typically involves starting with sales revenue and adjusting for changes in accounts receivable. Without specific numbers provided in the question, the correct answer cannot be determined through calculation. However, based on the format of the question, it seems like a specific scenario was intended to be discussed. Since the necessary details to perform calculations are missing, the selection of option C ($60,000) is based on the assumption that it was intended to be the correct answer in the context of the missing information.

Question 4

Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is
A) $118,000
B) $110,000
C) $102,000
D) $150,000

Accepted Answer

The net cash flows from operating activities can be calculated by adjusting the income reported on the income statement for changes in working capital accounts, such as accounts receivable. Here, accounts receivable decreased by $8,000 ($40,000 - $32,000) during the year, which means that cash collected was greater than the revenue recognized, thus this decrease should be added back to the income. Therefore, the net cash flows from operating activities is $110,000 (income) + $8,000 (decrease in accounts receivable) = $118,000.

Question 5

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the
A) operating activities
B) financing activities
C) investing activities
D) separate schedule of noncash activities

Accepted Answer

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the operating activities section as they are directly related to the company's operations. The operating activities section shows the cash inflows and outflows from the company's primary business activities.

Question 6

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash provided by operating activities for the year is
A) $53,000
B) $47,000
C) $33,000
D) $37,000

Accepted Answer

Net cash provided by operating activities can be calculated using the indirect method: 
Net Income + Depreciation expense - Increase in accounts receivable + Decrease in accounts payable
$35,000 + $8,000 - $7,000 + $3,000 = $39,000 - $6,000 = $33,000. Therefore, the correct answer is C.

Question 7

Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year. The amount of cash Norris Co. used for payment of dividends during the year was
A) $55,000
B) $80,000
C) $105,000
D) $65,000

Accepted Answer

Cash used for payment of dividends = Dividends payable at the beginning of the year + Dividends declared during the year - Dividends payable at the end of the year = $20,000 + $60,000 - $25,000 = $55,000

Question 8

Sales for the year were $600,000. 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 statement of cash flows using the direct method is
A) $700,000
B) $600,000
C) $580,000
D) $620,000

Accepted Answer

To calculate cash received from customers using the direct method, start with sales and adjust for the change in accounts receivable: $600,000 - ($100,000 - $80,000) = $620,000.

Question 9

Under GAAP, cash receipts from interest and dividends are classified as
A) financing activities
B) operating activities.
C) investing activities.
D) either financing or investing activities.

Accepted Answer

Cash receipts from interest and dividends are considered to be part of a company's regular operations and are therefore classified as operating activities under GAAP.

Question 10

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 11

On the statement of cash flows, the cash flows from operating activities section would include
A) receipts from the issuance of capital stock
B) payment for interest on short-term notes payable
C) payments for the purchase of investments
D) payments for cash dividends

Accepted Answer

Cash flows from operating activities are related to the day-to-day operations of the business and include cash inflows and outflows from transactions such as sales, purchases, and payments to suppliers and employees. Payment for interest on short-term notes payable is an operating activity as it relates to the cost of borrowing funds to support ongoing operations. Receipts from the issuance of capital stock, payments for the purchase of investments, and payments for cash dividends are financing or investing activities, and would not be included in the operating activities section of the statement of cash flows.

Question 12

A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for $25,000 representing a gain of $4,500. The value in the operating activities section regarding this event would be
A) $25,000
B) $4,500)
C) $29,500
D) $4,500

Accepted Answer

The gain on the sale of the fixed asset is an investing activity, not an operating activity. Therefore, the value in the operating activities section would be negative the amount of the gain, or $(4,500).

Question 13

The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A) $49,000
B) $47,000
C) $51,000
D) $53,000

Accepted Answer

The answer of The cost of merchandise sold during the...

Question 14

Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?
A) $225,000
B) $275,000
C) $50,000
D) $500,000

Accepted Answer

The amount reported in the statement of cash flows for investing activities reflects the cash inflow or outflow from the sale or purchase of an asset. In this case, Firefly Inc. received $225,000 cash from the sale of the land, which is the amount that should be reported as an investing activity. The loss of $50,000 ($275,000 purchase price - $225,000 sale price) is relevant for the income statement but does not affect the cash flow statement's reporting of the transaction.

Question 15

Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12,500 the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $5,300. The value of this transaction in the investing section of the statement of cash flows is
A) $12,500
B) $5,300
C) $2,750
D) $2,550

Accepted Answer

The answer of Zenith Corporation sells some of its used...

Question 16

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
A) added to net income
B) deducted from net income
C) ignored because it does not affect cash
D) reported supplementally as a noncash investing and financing activity

Accepted Answer

A gain on the sale of equipment represents a non-operating item and does not result in an inflow of cash. Therefore, it should be deducted from net income when calculating cash flows from operating activities using the indirect method.

Question 17

If accounts payable have increased during a period,
A) revenues on an accrual basis are less than revenues on a cash basis
B) expenses on an accrual basis are less than expenses on a cash basis
C) expenses on an accrual basis are the same as expenses on a cash basis
D) expenses on an accrual basis are greater than expenses on a cash basis

Accepted Answer

An increase in accounts payable means that the company has purchased goods or services on credit and has not yet paid for them. This increases the amount of expenses the company has accrued, which will be reflected in the financial statements on an accrual basis. Therefore, expenses on an accrual basis are greater than expenses on a cash basis.

Question 18

Net income for the year was $45,500. Accounts receivable increased $5,500, and account payable increased by $11,200. Under the indirect method, the cash flow from operations is
A) $51,200
B) $45,500
C) $62,200
D) $28,800

Accepted Answer

The answer of Net income for the year was $45,500....

Question 19

Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is
A) $120,000
B) $129,000
C) $151,000
D) $111,000

Accepted Answer

The net cash flows from operating activities can be calculated by starting with the income reported on the income statement ($120,000) and adjusting it for the change in accounts receivable. The accounts receivable decreased from $40,000 at the beginning of the year to $31,000 at the end of the year, which means that $9,000 more cash was collected than was recognized as income. Therefore, the net cash flows from operating activities is $120,000 + $9,000 = $129,000.

Question 20

A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?
A) $217,000.
B) $224,000.
C) $284,000.
D) $305,000.

Accepted Answer

Using the indirect method, we start with net income and adjust for the non-cash expenses and changes in working capital. 
Net income: $252,000
Add back depreciation: $26,000
Adjustment for increase in accounts receivable: - $15,000
Adjustment for increase in inventory: - $40,000
Adjustment for decrease in prepaid expenses: + $2,000
Adjustment for decrease in accounts payable: + $4,000
Add back loss on sale of equipment: + $3,000
Net cash flow from operating activities: $224,000.

Quiz 14: Statement of Cash Flows

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

Cash collections from customers were

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash provided by operating activities for the year is

Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year. The amount of cash Norris Co. used for payment of dividends during the year was

Sales for the year were $600,000. 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 statement of cash flows using the direct method is

Under GAAP, cash receipts from interest and dividends are classified as

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

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

A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for $25,000 representing a gain of $4,500. The value in the operating activities section regarding this event would be

Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

If accounts payable have increased during a period,

Net income for the year was $45,500. Accounts receivable increased $5,500, and account payable increased by $11,200. Under the indirect method, the cash flow from operations is