Question 1

When a company retires its bonds, which of the following is the correct reporting on the statement of cash flows?

Accepted Answer

When a company retires its bonds, any gain or loss on the retirement is reported in the operating section, as it is not considered an investing or financing activity. The amount of cash paid for the retirement is reported in the financing section, as it relates to the company's financing activities. Therefore, the correct reporting on the statement of cash flows would be a gain or loss in the operating section and the amount of cash paid in the financing section, which is option C.

Question 2

When a company declares a cash dividend, which of the following is the correct reporting on the statement of cash flows?

Accepted Answer

The answer of When a company declares a cash dividend,...

Question 3

For the past two years, Monroe Corporation's statement of cash flows has shown net cash used by financing activities.Which of the following choices could explain this result?

Accepted Answer

Payment of cash dividends to stockholders can result in net cash used by financing activities because it involves an outflow of cash to the company's investors. The other choices (A, B, and C) would result in net cash provided by financing activities.

Question 4

Which of the following is classified as a financing activity?

Accepted Answer

Payment of dividends is classified as a financing activity because it involves distributing profits to the owners or shareholders of the company.

Question 5

During the current year, ABC Corporation did not purchase any property, plant and equipment, but sold land with a book value of $6,000 for $12,000 cash and sold a delivery truck with a cost of $18,000, depreciation of $16,000, and an appraised value of $5,000 for $4,000.What is ABC's net cash flows provided by investing activities for the year?

Accepted Answer

The answer of During the current year, ABC Corporation did...

Question 6

For the past two years, Monroe Corporation's statement of cash flows has shown net cash provided by financing activities.Which of the following choices could explain this result?

Accepted Answer

The issuance of long-term debt would result in an inflow of cash, which would be reflected in the financing section of the statement of cash flows as a source of financing for the company. Option A is related to operating activities, B is related to investing activities, and C is related to investing or operating activities, but none of them would explain the net cash provided by financing activities.

Question 7

On July 31 of the current year, Bridges Industries issued $80,000 of bonds payable.The $80,000 was used to purchase $30,000 of equipment and $50,000 to purchase stock in another company.How will these transactions be reported in the statement of cash flows?

Accepted Answer

The answer of On July 31 of the current year,...

Question 8

For the past two years, Monroe Corporation's statement of cash flows has shown net cash provided by investing activities.Which of the following choices could explain this result?

Accepted Answer

Net cash provided by investing activities is typically a result of buying or selling long-term assets, such as factory equipment. The other choices are more likely to affect operating or financing activities.

Question 9

For the past two years, Monroe Corporation's statement of cash flows has shown net cash used by investing activities.Which of the following choices could explain this result?

Accepted Answer

Purchasing investments in other companies' stock is considered an investing activity, and if Monroe Corporation is spending more cash on such investments than it is receiving from other investing activities, it would result in net cash used by investing activities.

Question 10

When a company repurchases its own stock, which of the following is the correct reporting on the statement of cash flows?

Accepted Answer

Repurchasing its own stock is considered a use of cash in the financing section of the statement of cash flows because it involves the company paying out cash to buy back its shares from its investors.

Question 11

On January 1 of the current year, Bratton Manufacturing borrowed $1,000,000 from the First National Bank.On June 30 and December 31, Bratton made principal payments of $10,000 each.How will these transactions be reported in the statement of cash flows?

Accepted Answer

The borrowing of $1,000,000 is a financing activity, as it relates to the company's capital structure. The repayment of the loan principal ($20,000 in total) is also a financing activity, as it is related to the repayment of debt. Both transactions are therefore reported in the financing section of the statement of cash flows.

Question 12

When a company sells equipment for cash, which of the following amounts is reported in the investing section of the statement of cash flows?

Accepted Answer

The amount of cash received from the sale of equipment is reported in the investing section of the statement of cash flows, as it reflects an inflow of cash from an investing activity.

Question 13

During the current year, ABC Corporation purchased land for $40,000.ABC also sold equipment with a book value of $2,000 for $10,000.What amount is reported in ABC's investing section of its statement of cash flows?

Accepted Answer

The answer of During the current year, ABC Corporation purchased...

Question 14

When a company sells equipment for cash, which of the following is the correct reporting on the statement of cash flows?

Accepted Answer

When a company sells equipment for cash, it is considered an investing activity and the gain or loss on the sale is reported in the investing section of the statement of cash flows. The amount of cash received from the sale is also reported in the investing section. Therefore, the correct reporting on the statement of cash flows is option B, gain or loss in operating section, amount of cash received in investing section.

Question 15

The safest way to make sure that all investing activities have been identified is to

Accepted Answer

Examining a company's balance sheet line by line is the safest way to ensure that all investing activities have been identified because it directly reflects changes in long-term assets and investments, which are the focus of investing activities.

Question 16

During the current year, XYZ Corporation purchased land for $5,000 and sold a piece of factory machinery with a book value of $15,000 for $12,000 cash.What is XYZ's net cash flows provided by investing activities for the year?

Accepted Answer

The answer of During the current year, XYZ Corporation purchased...

Question 17

On July 31 of the current year, Bridges Industries borrowed $60,000 from the First National Bank.The $60,000 was used to pay dividends of $40,000 to stockholders and purchase a $20,000 piece of equipment.How will these transactions be reported in the statement of cash flows?

Accepted Answer

The answer of On July 31 of the current year,...

Question 18

When a company issues new shares of common stock, which of the following is the correct reporting on the statement of cash flows?

Accepted Answer

When a company issues new shares of common stock, it is reported as a source of cash in the financing section of the statement of cash flows because the company receives cash from investors in exchange for the shares.

Question 19

During the current year, ABC Corporation purchased a warehouse for $1,200,000.In order to pay for the warehouse, ABC sold its investment in another company's common stock costing $900,000 for $1,400,000.What amount is reported in ABC's investing section of its statement of cash flows?

Accepted Answer

The investing section of the cash flow statement includes cash inflows and outflows from the purchase and sale of long-term assets and investments. The sale of the investment resulted in a cash inflow of $1,400,000, and the purchase of the warehouse resulted in a cash outflow of $1,200,000. The net cash flow from investing activities is $1,400,000 - $1,200,000 = $200,000.

Question 20

For the past two years, Monroe Corporation's statement of cash flows has shown net cash used by financing activities.Which of the following choices could explain this result?

Accepted Answer

Repayment of debt is a financing activity that uses cash, which would explain why Monroe Corporation's statement of cash flows shows net cash used by financing activities.

Quiz 13: Financial Statement Analysis

When a company retires its bonds, which of the following is the correct reporting on the statement of cash flows?

When a company declares a cash dividend, which of the following is the correct reporting on the statement of cash flows?

For the past two years, Monroe Corporation's statement of cash flows has shown net cash used by financing activities.Which of the following choices could explain this result?

Which of the following is classified as a financing activity?

For the past two years, Monroe Corporation's statement of cash flows has shown net cash provided by financing activities.Which of the following choices could explain this result?

On July 31 of the current year, Bridges Industries issued $80,000 of bonds payable.The $80,000 was used to purchase $30,000 of equipment and $50,000 to purchase stock in another company.How will these transactions be reported in the statement of cash flows?

For the past two years, Monroe Corporation's statement of cash flows has shown net cash provided by investing activities.Which of the following choices could explain this result?

For the past two years, Monroe Corporation's statement of cash flows has shown net cash used by investing activities.Which of the following choices could explain this result?

When a company repurchases its own stock, which of the following is the correct reporting on the statement of cash flows?

On January 1 of the current year, Bratton Manufacturing borrowed $1,000,000 from the First National Bank.On June 30 and December 31, Bratton made principal payments of $10,000 each.How will these transactions be reported in the statement of cash flows?

When a company sells equipment for cash, which of the following amounts is reported in the investing section of the statement of cash flows?

During the current year, ABC Corporation purchased land for $40,000.ABC also sold equipment with a book value of $2,000 for $10,000.What amount is reported in ABC's investing section of its statement of cash flows?

When a company sells equipment for cash, which of the following is the correct reporting on the statement of cash flows?

The safest way to make sure that all investing activities have been identified is to

During the current year, XYZ Corporation purchased land for $5,000 and sold a piece of factory machinery with a book value of $15,000 for $12,000 cash.What is XYZ's net cash flows provided by investing activities for the year?

On July 31 of the current year, Bridges Industries borrowed $60,000 from the First National Bank.The $60,000 was used to pay dividends of $40,000 to stockholders and purchase a $20,000 piece of equipment.How will these transactions be reported in the statement of cash flows?

When a company issues new shares of common stock, which of the following is the correct reporting on the statement of cash flows?

During the current year, ABC Corporation purchased a warehouse for $1,200,000.In order to pay for the warehouse, ABC sold its investment in another company's common stock costing $900,000 for $1,400,000.What amount is reported in ABC's investing section of its statement of cash flows?

For the past two years, Monroe Corporation's statement of cash flows has shown net cash used by financing activities.Which of the following choices could explain this result?