Question 1

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)$7,000
B)$10,000
C)$7,000.
D)$10,000.

Accepted Answer

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

Question 2

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

Net cash provided by investing activities typically includes proceeds from sales of long-term assets, such as factory equipment. Choices A, C, and D refer to financing activities or operating activities, which would not be included in the investing activities section of the statement of cash flows.

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)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 4

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 5

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 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?
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 can provide a source of cash for a company, which would be reflected as net cash provided by financing activities on the statement of cash flows.

Question 7

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 8

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 9

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 10

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 is reported in the operating section of the statement of cash flows, since it is related to the company's normal operations. The amount of cash paid to retire the bonds is reported in the financing section, since it represents a use of cash for financing activities. Therefore, choice C is the correct answer.

Question 11

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 12

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 borrowing of $1,000,000 is a financing activity, as it involves raising capital. The payments of $10,000 each are also financing activities, as they are repayments of the principal amount borrowed.

Question 13

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 net cash provided by investing activities is $200,000, calculated as the $1,400,000 received from selling the stock minus the $1,200,000 spent on purchasing the warehouse.

Question 14

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 under the cash inflows from investing activities. Book value and depreciation expense are not reported in the investing section, while the gain on sale of equipment is reported in the operating section as it relates to the company's core business operations.

Question 15

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, the gain or loss from the sale is reported in the operating section of the statement of cash flows. However, the cash received from the sale is reported in the investing section since it represents a cash inflow from the sale of a long-term asset, which is an investing activity. Therefore, option B "Gain or loss in operating section, amount of cash received in investing section" is the correct reporting on the statement of cash flows.

Question 16

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 17

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 financing activity and not an investing activity. Therefore, it represents a use of cash and should be reported in the financing section of the statement of cash flows.

Question 18

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 affects the company's investors and capital structure. The other options are either classified as operating activities (A and B) or investing activities (D).

Question 19

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

Payment of cash dividends to stockholders is a financing activity, which reduces the company's cash balance and is reflected as net cash used by financing activities in the statement of cash flows. The other choices (A, B, and C) represent operating or investing activities that would not result in net cash used by financing activities.

Question 20

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

Going through a company's balance sheet line by line is the safest way to identify all investing activities, as it includes assets and liabilities that reflect investments.

Quiz 13: 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 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 financing activities.Which of the following choices could explain this result?

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?

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?

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?

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?

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 issues new shares of common stock,which of the following is the correct reporting on 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 30st and December 31st Bratton made payments of $10,000 each.How will these transactions be reported in 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?

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 sells equipment for cash,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?

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

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 used by financing 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

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 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 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?