Question 1

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?
A) $8,000
B) $11,000
C) $16,000
D) $24,000

Accepted Answer

The answer of During the current year,ABC Corporation did not...

Question 2

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?
A) $0
B) $1,200,000 use of cash
C) $900,000 source of cash
D) $200,000 net cash provided by investing activities

Accepted Answer

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

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?
A)Collection of accounts receivable balances
B)Purchase of stock in another company
C)Issuance of bonds payable
D)Payment of cash dividends to stockholders

Accepted Answer

When a company pays cash dividends to stockholders, it is recorded as a financing activity and results in a decrease in cash. Therefore, payment of cash dividends to stockholders is the most likely explanation for Monroe Corporation's net cash used by financing activities. The other choices (A, B, and C) would generally be recorded as operating or investing activities on the statement of cash flows.

Question 4

Which of the following is classified as a financing activity?
A)Receipt of dividend income
B)Receipt of interest on loan receivable
C)Payment of dividends
D)Investment in another company's stock

Accepted Answer

Payment of dividends is classified as a financing activity because it involves distributing profits to shareholders, which reduces the company's available cash and can affect its ability to meet long-term financial obligations. The other options are classified as operating or investing activities, as they relate to the company's day-to-day operations or investments in other entities.

Question 5

On July 31^st 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^st of the current year...

Question 6

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?
A)Repayment of debt
B)Purchase of land
C)Receipt of cash dividends from investments in other company's stock
D)Issuance of long-term debt

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.

Question 7

When a company issues new shares of common stock,which of the following is the correct reporting on the statement of cash flows?
A)A source of cash in the financing section
B)A use of cash in the financing section
C)A source of cash in the investing section
D)A use of cash in the investing section

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 8

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?
A) $0
B) $30,000 net cash used by investing activities
C) $38,000 net cash provided by investing activities
D) $38,000 net cash used by investing activities

Accepted Answer

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

Question 9

When a company sells equipment for cash,which of the following amounts is reported in the investing section of the statement of cash flows?
A)Book value
B)Gain on sale of equipment
C)Depreciation expense
D)Amount of cash received

Accepted Answer

The amount of cash received is reported in the investing section of the statement of cash flows, as it represents a cash inflow from the sale of the equipment. The book value, gain on sale of equipment, and depreciation expense are all relevant to the sale of the equipment, but they are not reported in the investing section of the statement of cash flows.

Question 10

When a company repurchases its own stock,which of the following is the correct reporting on the statement of cash flows?
A)A source of cash in the financing section
B)A use of cash in the financing section
C)A source of cash in the investing section
D)A use of cash in the investing section

Accepted Answer

Repurchasing its own stock is considered a use of cash in the financing section of the statement of cash flows. This is because it is a payment made from the company's own funds to buy back its own equity. It is not considered an investing activity because it does not involve the acquisition or disposal of long-term assets for the purpose of generating income.

Question 11

When a company declares a cash dividend,which of the following is the correct reporting on the statement of cash flows?
A)A use of cash in the operating section
B)A use of cash in the investing section
C)A use of cash in the financing section
D)Declaring a dividend is not reported on the statement of cash flows

Accepted Answer

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

Question 12

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?
A) $8,000
B) $11,000
C) $7,000
D) $10,000

Accepted Answer

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

Question 13

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?
A)Selling of inventory on credit in excess of collections from customers
B)Sales of factory equipment
C)Purchasing investments in other company's stock
D)Issuance of long-term debt

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 14

The safest way to make sure that all investing activities have been identified is to
A)Go through a company's balance sheet line by line
B)Go through a company's income statement line by line
C)Go through all purchase orders processed during the period
D)Identify any invoices received for property and equipment

Accepted Answer

The answer of The safest way to make sure that...

Question 15

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?
A)Collection of accounts receivable balances
B)Sales of factory equipment
C)Receipt of cash dividends from investments in other company's stock
D)Issuance of long-term debt

Accepted Answer

The sale of factory equipment would generate cash inflows classified as investing activities on the statement of cash flows. None of the other choices listed are classified as investing activities.

Question 16

On July 31^st 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^st of the current year...

Question 17

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?
A)Collection of accounts receivable balances
B)Sales of factory equipment
C)Receipt of cash dividends from investments in other company's stock
D)Issuance of long-term debt

Accepted Answer

Issuance of long-term debt would result in net cash provided by financing activities.

Question 18

On January 1st of the current year Bratton Manufacturing borrowed $1,000,000 from the First National Bank.On June 30^st and December 31^st Bratton made payments of $10,000 each.How will these transactions be reported in the statement of cash flows? A)$1,000,000 source of cash and $20,000 use of cash,both shown in the financing section B)$1,000,000 source of cash in the financing section and $20,000 use of cash in the operating section as a use of cash C)$1,000,000 source of cash in the investing section and $20,000 use of cash in the operating section D)$1,000,000 source of cash and $20,000 use of cash,both shown in the investing section

Accepted Answer

The answer of On January 1st of the current year...

Question 19

When a company purchases and retires its bonds,which of the following is the correct reporting on the statement of cash flows?
A)Gain or loss in operating section,amount of cash paid in investing section
B)Gain or loss in financing section,amount of cash received in operating section
C)Gain or loss in operating section,amount of cash paid in financing section
D)Gain or loss in investing section,amount of cash received in operating section

Accepted Answer

When a company purchases and retires its bonds, any gain or loss should be reported in the operating section of the statement of cash flows, as it pertains to the company's core operations. The amount of cash paid should be reported in the financing section, as it relates to the company's financing activities. Therefore, choice C is the correct option.

Question 20

When a company sells equipment for cash,which of the following is the correct reporting on the statement of cash flows?
A)Gain or loss in operating section,amount of cash received in operating section.
B)Gain or loss in operating section,amount of cash received in investing section
C)Gain or loss in investing section,amount of cash received in investing section .
D)Gain or loss in investing section,amount of cash received in investing section

Accepted Answer

When a company sells equipment for cash, it is considered an investing activity, so the gain or loss 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, option B is the correct choice.

Quiz 13: 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?

Which of the following is classified as a financing activity?

On July 31st 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 used by financing activities.Which of the following choices could explain this result?

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 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 amounts is reported in the investing section of the statement of cash flows?

When a company repurchases its own stock,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?

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?

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?

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

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?

On July 31st 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?

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

When a company purchases and retires its bonds,which of the following is the correct reporting on the 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?

On July 31^st 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?

On July 31^st 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?

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