Question 1

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 reported on the statement of cash flows for the sale of land is the cash received from the sale, which in this case is $50,000. The original cost of the land is not relevant for the statement of cash flows, which only reports cash transactions. The fact that there was a loss on the sale is accounted for in the income statement as other expense, but it does not affect the amount reported in the investing activities section of the statement of cash flows. Therefore, the correct answer is A) $50,000.

Question 2

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 3

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 financing activities because they involve the payment of cash to the company's shareholders. Therefore, they should be reported in the Cash flows from financing activities section of the statement of cash flows.

Question 4

On the statement of cash flows prepared using the indirect method, 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

The gain on the sale of fixed assets is a non-operating activity and should be accounted for in the cash flows from investing activities section of the statement of cash flows. It should be deducted from net income in converting the net income reported on the income statement to cash flows from operating activities since it is not cash generated by operating activities.

Question 5

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 6

The net income reported on the income statement for the current year was $275,000. 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) $198,000
B) $324,000
C) $352,000
D) $296,000

Accepted Answer

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

Question 7

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 and represents an investing activity. Issuance of bonds payable and capital stock represent financing activities, while the purchase of treasury stock is a financing or operating activity (depending on the reason for the purchase).

Question 8

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 an increase of
A) $54,000 from investing activities
B) $63,000 from investing activities and a deduction from net income of $9,000
C) $9,000 from investing activities
D) $54,000 from investing activities and an addition to net income of $9,000

Accepted Answer

The sale of the building resulted in a cash inflow of $63,000, which should be reported as an increase in investing activities. However, since the building had a book value of $54,000, the difference of $9,000 should be deducted from net income as a loss from the sale of the asset. Therefore, the transaction should be reported as an increase of $63,000 from investing activities and a deduction from net income of $9,000 on the statement of cash flows using the indirect method.

Question 9

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

The dividends payable at the beginning of the year is not to be included in the payment of dividends during the year because it was already included in the previous year's payment of dividends. Therefore, the amount of cash for the payment of dividends during the year is:
Dividends declared: $45,000
Add: Dividends payable at the end of the year: $15,000
Less: Dividends payable at the beginning of the year: $10,000
Total payment of dividends during the year: $50,000 - $10,000 = $40,000.

Question 10

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

Cash flows from investing activities include receipts and payments related to the acquisition and disposal of long-term assets and investments. Option D represents receipts from the sale of investments and is the only choice that is related to investing activities. Options A and B are cash flows from financing activities, while option C represents a cash flow from operating activities.

Question 11

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 flow.

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

A decrease in accounts payable indicates that cash was used to pay off liabilities, which reduces cash flow from operating activities.

Question 13

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 $66,000, which is the sum of the gain ($11,000) and the book value of the office equipment ($55,000), representing the total cash received from the sale.

Question 14

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 cash balance at the beginning of the period is given as $250,000. The net increase in cash for the period is calculated as ($550,000 - $250,000 - $50,000) = $250,000. Therefore, the cash balance at the end of the period is $250,000 + $250,000 = $500,000. However, the period statement also shows that there was an outstanding bank loan of $145,000 repaid during the period. Therefore, the final cash balance at the end of the period is $500,000 - $145,000 = $355,000. Hence, the correct answer is option C.

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 is a non-cash financing activity and would be reported in a separate schedule or note to the statement of cash flows, as it does not involve cash inflow or outflow.

Question 16

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 17

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

To calculate net cash flow from operating activities using the indirect method, we start with net income and make adjustments for non-cash items such as depreciation and changes in current assets and liabilities. Based on the information provided in the financial statements, the net cash flow from operating activities is $166,000. Other options are incorrect as they do not match with the given information.

Question 18

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 amount reported as an investing activity on the statement of cash flows for the sale of land is the cash received from the sale, which is $173,000.

Question 19

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 represents a capital expenditure and would be reported in the Cash flows from investing activities section of the statement of cash flows.

Question 20

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 section of cash flows from financing activities includes all transactions related to the issuance and repayment of debt, and the issuance and repurchase of equity securities. Receipts from the issuance of capital stock is a financing activity and would be included in this section of the statement of cash flows. The other choices are related to investing or operating activities and would not be included in this section.

Quiz 16: Statement of Cash Flows

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?

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

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

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

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 an increase of

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

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

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

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

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

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

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

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?

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

Quiz 16: Statement of Cash Flows

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?

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

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

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

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 an increase of

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

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

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

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

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

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

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

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?

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

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