Question 1

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 answer of The current period statement of cash flows...

Question 2

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 common stock
C)purchase of treasury stock
D)purchase of long-term assets

Accepted Answer

Purchase of long-term assets is considered a cash outflow from investing activities as it involves the acquisition of property, plant, and equipment or investments in other companies. Issuance of bonds payable and common stock result in cash inflows from financing activities, while the purchase of treasury stock is reported as a cash outflow from financing activities.

Question 3

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 4

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.

Question 5

On the statement of cash flows, the cash flows from investing activities section would include
A)receipts from the issuance of common 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 includes all activities related to the acquisition and sale of long-term assets and investments. Receipts from the sale of investments are included in this section. Choices A, B, and C are incorrect because they relate to financing activities and operating activities.

Question 6

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 exchanging one form of financing for another (bonds payable for preferred stock) and does not involve cash flows. Therefore, it would not appear in the operating, investing, or financing sections of the cash flow statement but might be disclosed in a separate schedule or note to the financial statements to provide more detail about the company's financing activities.

Question 7

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 would be $66,000, which is the cash received from the sale. This is calculated as the book value of $55,000 plus the gain of $11,000.

Question 8

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 9

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 10

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 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

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 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 added back to net income on the income statement to calculate cash flows from operating activities because these gains are considered non-cash items. However, since the gain increases net income but does not affect cash, it needs to be deducted to arrive at the actual cash flow from operating activities.

Question 14

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 that should be reported as an investing activity from the sale of land on the statement of cash flows is the cash received from the sale, which is $50,000. The cost of the land being sold is not included in the investing activity section because it was previously reported as a fixed asset on the balance sheet, and therefore is not a cash transaction.

Question 15

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 is an investing activity, and the cash received from the sale should be shown as an increase of $63,000 on the statement of cash flows. However, since the building had a book value of $54,000, there is a gain on the sale of $9,000 that must be deducted from net income. Therefore, the correct choice is B, which shows an increase of $63,000 from investing activities and a deduction from net income of $9,000.

Question 16

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 17

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 common stock

Accepted Answer

The cash flows from financing activities section of the statement of cash flows includes activities related to the company's financing, such as issuing and repurchasing stock, issuing and repaying debt, and paying dividends. Receipts from the issuance of common stock would be included in this section. Choices A and B would be included in the cash flows from investing activities section, while choice C would be included in the cash flows from operating activities section.

Question 18

Cash dividends paid on common 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 common stock are considered a financing activity because they represent a return of investment to the shareholders. Therefore, they are reported in the cash flows from financing activities section of the statement of cash flows.

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

The cash paid for equipment would be considered an investing activity, as it involves the acquisition of a long-term asset. Therefore, it would be reported on the statement of cash flows in the cash flows from investing activities section.

Question 20

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.

Quiz 13: Statement of Cash Flows

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

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

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

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

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

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

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

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

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

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

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 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:

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

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

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

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