Question 1

Which of the following is NOT classified as an operating activity?

Accepted Answer

A)   Interest received
B)   Interest paid
C)   Dividends received
D)   Dividends paidE) B) and C)
F) C) and D)

Question 2

Choose the combination that best reflects the appropriate classification of cash paid for investing and financing activities. Cash Paid for Cash Paid for
Investing Activities Financing Activities

Accepted Answer

A)   Treasury stock Operational assets
B)   Treasury stock Dividends
C)   Operational assets Investment securities
D)   Investment securities DividendsE) None of the above
F) All of the above

Question 3

The conversion of nonparticipating preferred stock into common stock should be presented in a statement of cash flows as a(n)

Accepted Answer

A)   operating activity.
B)   investing activity.
C)   financing activity.
D)   noncash exchange.E) None of the above
F) All of the above

Question 4

Amortization of the premium on bonds payable is subtracted from net income in the reconciliation of net income to cash flows from operations because

Accepted Answer

A)   interest expense understates the cash paid for interest by the amount of the premium amortization.
B)   it reduces income without causing a cash outflow.
C)   it increases income without causing a cash flow.
D)   it is a financing cash outflow.E) All of the above
F) None of the above

Question 5

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $50,000 in both its lease liability and leased assets accounts.The contract calls for payments each December 31 of $10,000.The lessee's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.Which of the following should be reflected on the statement of cash flows under the indirect method for the first year of the contract (ignoring noncash disclosures) ?

Accepted Answer

A)   $10,000 financing cash outflow
B)   $10,000 operating cash outflow
C)   $5,000 operating cash outflow;$5,000 financing cash outflow
D)   $5,000 addition in the reconciliation of earnings and net operating cash flowE) A) and B)
F) All of the above

Question 6

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $60,000 in its lease receivable account.The contract calls for December 31 payments of $15,000.The lessor's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.The direct method statement of cash flows for the lessor should reflect which of the following in the first year of the lease contract (ignore noncash disclosures) ?

Accepted Answer

A)   $15,000 operating cash flow
B)   $6,000 operating cash flow;$9,000 investing cash flow
C)   $6,000 operating cash flow;$9,000 addition reconciling adjustment
D)   $9,000 investing cash flowE) A) and D)
F) B) and C)

Question 7

In preparing a statement of cash flows,the reconciliation of net income to cash from operating activities does NOT include

Accepted Answer

A)   loss on sale of operational assets.
B)   bond discount or premium amortization for the period.
C)   gain on sale of debt and equity securities classified as Trading Securities.
D)   adjustment to record debt or equity securities classified as Securities Available for Sale at fair value.E) All of the above
F) B) and D)

Question 8

Choose the combination that best reflects the appropriate classification of cash received from operating,investing and financing activities. Operating Investing Financing

Accepted Answer

A)   Cash paid by customers Sale of operational assets Issuance of bonds payable
B)   Dividends received Cash paid by customers Issuance of bonds payable
C)   Sale of operational assets Dividends received Cash paid by customers
D)   Issuance of bonds payable Sale of operational assets Dividends receivedE) All of the above
F) None of the above

Question 9

Choose the combination below that best reflects the appropriate classification of cash received from investing and financing activities. Cash Received from Cash Received from
Investing Activities Financing Activities

Accepted Answer

A)   Sale of treasury stock Proceeds from issuing common stock
B)   Sale of treasury stock Sale of investment securities
C)   Sale of investment securities Proceeds of issuing common stock
D)   Proceeds from issuing common stock Sale of investment securitiesE) A) and B)
F) A) and C)

Question 10

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows prepared under the indirect method as a(n)

Accepted Answer

A)   inflow from operating activities.
B)   inflow from investing activities.
C)   adjustment to reconcile net income to cash from operating activities.
D)   outflow from investing activities.E) B) and C)
F) A) and B)

Question 11

A firm's accumulated depreciation account increased $30,000 for the year and total plant assets at cost increased $200,000.During the year,the firm purchased $350,000 of new equipment for cash,and sold equipment for $50,000 cash.This equipment had been depreciated $30,000 at the time of the sale.What is the complete disclosure of these events in the statement of cash flows prepared under the direct method?

Accepted Answer

A)   $300,000 investing cash outflow;$130,000 addition reconciling adjustment
B)   $350,000 investing cash outflow;$50,000 investing cash inflow;$60,000 addition reconciling adjustment
C)   $350,000 investing cash outflow;$50,000 investing cash inflow;$60,000 addition reconciling adjustment;$70,000 addition reconciling adjustment
D)   $350,000 investing cash outflow;$50,000 investing cash inflow;$70,000 addition reconciling adjustmentE) B) and C)
F) A) and D)

Question 12

Use the following information to compute the cash flow from operating activities under (1)the U.S.approach,and (2)the U.K.approach.

Accepted Answer

The answer of Use the following information to compute the...

Question 13

Which of the following is NOT required by generally accepted accounting principles?

Accepted Answer

A)   Statement of cash flows
B)   Earnings per share
C)   Cash per share
D)   Disclosure in notes to financial statements of the projected benefit obligation of a defined-benefit pension planE) A) and B)
F) A) and C)

Question 14

Which of the following would be reported in the operating,investing,or financing sections of the statement of cash flows prepared under the indirect method?

Accepted Answer

A)   Declaration of an unpaid cash dividend
B)   Acquisition of a factory warehouse by issuing long-term debt
C)   Gain on the sale of cash equivalents
D)   Write-off of an uncollectible account receivableE) A) and B)
F) A) and C)

Question 15

Which of the following transactions would not be reported on the statement of cash flows?

Accepted Answer

A)   Purchase of treasury stock
B)   Declaration of a cash dividend which has not yet been paid
C)   Patent amortization
D)   Purchase of an operational asset by issuing common stockE) C) and D)
F) B) and D)

Question 16

Which of the following investments should be classified as cash equivalents for Lastima Company in preparing the statement of cash flows?

Accepted Answer

A)   2,3
B)   2,4
C)   2,3,4
D)   1,2,3,4E) None of the above
F) A) and B)

Question 17

Which of the following causes a change in the amount of cash held by a company?

Accepted Answer

A)   Write-off of a bad debt
B)   Declaration of a cash dividend
C)   Payment of a cash dividend declared in a previous period
D)   Declaration and issuance of a stock dividendE) A) and D)
F) A) and C)

Question 18

When preparing a reconciliation of net income to cash from operations,an increase in the ending inventory over the beginning inventory will result in an adjustment to reported net income because

Accepted Answer

A)   cash is increased because inventory is a current asset.
B)   inventory is an expense deducted in computing net earnings,but is not a use of cash.
C)   the net increase in inventory is part of the difference between cost of goods sold and cash paid to suppliers.
D)   all changes in noncash accounts must be disclosed.E) None of the above
F) B) and C)

Question 19

Jacquin Corporation reports its income from investments under the equity method and recognized income of $15,000 from its investment in Trapper Company during the current year.Trapper declared no dividends during the current year.On Jacquin's statement of cash flows the $15,000 would

Accepted Answer

A)   be shown as cash from investing activities.
B)   be shown as an addition to net income in the reconciliation of net income to cash from operations.
C)   be shown as a deduction from net income in the reconciliation of net income to cash from operations.
D)   not be shown.E) None of the above
F) All of the above

Question 20

Under the direct method,cash paid to suppliers can be computed as cost of goods sold for the period

Accepted Answer

A)   minus a decrease in inventory and plus an increase in accounts payable.
B)   plus a decrease in inventory and minus an increase in accounts payable.
C)   minus an increase in inventory and plus an increase in accounts payable.
D)   plus an increase in inventory and minus an increase in accountsE) A) and B)
F) C) and D)

Exam 21: Statement of Cash Flows Revisited

Which of the following causes a change in the amount of cash held by a company?

Correct Answer
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Which of the following transactions would not be reported on the statement of cash flows?

Correct Answer
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In preparing a statement of cash flows,the reconciliation of net income to cash from operating activities does NOT include

Correct Answer
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Jacquin Corporation reports its income from investments under the equity method and recognized income of $15,000 from its investment in Trapper Company during the current year.Trapper declared no dividends during the current year.On Jacquin's statement of cash flows the $15,000 would

Correct Answer
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Use the following information to compute the cash flow from operating activities under (1)the U.S.approach,and (2)the U.K.approach.

Correct Answer
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Which of the following is NOT required by generally accepted accounting principles?

Correct Answer
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Which of the following would be reported in the operating,investing,or financing sections of the statement of cash flows prepared under the indirect method?

Correct Answer
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Correct Answer
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Correct Answer
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Under the direct method,cash paid to suppliers can be computed as cost of goods sold for the period

Correct Answer
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Which of the following is NOT classified as an operating activity?

Correct Answer
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Amortization of the premium on bonds payable is subtracted from net income in the reconciliation of net income to cash flows from operations because

Correct Answer
verified

The conversion of nonparticipating preferred stock into common stock should be presented in a statement of cash flows as a(n)

Correct Answer
verified

Which of the following investments should be classified as cash equivalents for Lastima Company in preparing the statement of cash flows?

Correct Answer
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Choose the combination that best reflects the appropriate classification of cash received from operating,investing and financing activities. Operating Investing Financing

Correct Answer
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Choose the combination below that best reflects the appropriate classification of cash received from investing and financing activities. Cash Received from Cash Received from Investing Activities Financing Activities

Correct Answer
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Correct Answer
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A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows prepared under the indirect method as a(n)

Correct Answer
verified

When preparing a reconciliation of net income to cash from operations,an increase in the ending inventory over the beginning inventory will result in an adjustment to reported net income because

Correct Answer
verified

Choose the combination that best reflects the appropriate classification of cash paid for investing and financing activities. Cash Paid for Cash Paid for Investing Activities Financing Activities

Correct Answer
verified

Exam 21: Statement of Cash Flows Revisited

Which of the following causes a change in the amount of cash held by a company?

Correct AnswerverifiedShow Answer

Which of the following transactions would not be reported on the statement of cash flows?

Correct AnswerverifiedShow Answer

In preparing a statement of cash flows,the reconciliation of net income to cash from operating activities does NOT include

Correct AnswerverifiedShow Answer

Jacquin Corporation reports its income from investments under the equity method and recognized income of $15,000 from its investment in Trapper Company during the current year.Trapper declared no dividends during the current year.On Jacquin's statement of cash flows the $15,000 would

Correct AnswerverifiedShow Answer

Use the following information to compute the cash flow from operating activities under (1)the U.S.approach,and (2)the U.K.approach.

Correct AnswerverifiedShow Answer

Which of the following is NOT required by generally accepted accounting principles?

Correct AnswerverifiedShow Answer

Which of the following would be reported in the operating,investing,or financing sections of the statement of cash flows prepared under the indirect method?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the direct method,cash paid to suppliers can be computed as cost of goods sold for the period

Correct AnswerverifiedShow Answer

Which of the following is NOT classified as an operating activity?

Correct AnswerverifiedShow Answer

Amortization of the premium on bonds payable is subtracted from net income in the reconciliation of net income to cash flows from operations because

Correct AnswerverifiedShow Answer

The conversion of nonparticipating preferred stock into common stock should be presented in a statement of cash flows as a(n)

Correct AnswerverifiedShow Answer

Which of the following investments should be classified as cash equivalents for Lastima Company in preparing the statement of cash flows?

Correct AnswerverifiedShow Answer

Choose the combination that best reflects the appropriate classification of cash received from operating,investing and financing activities. Operating Investing Financing

Correct AnswerverifiedShow Answer

Choose the combination below that best reflects the appropriate classification of cash received from investing and financing activities. Cash Received from Cash Received from Investing Activities Financing Activities

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows prepared under the indirect method as a(n)

Correct AnswerverifiedShow Answer

When preparing a reconciliation of net income to cash from operations,an increase in the ending inventory over the beginning inventory will result in an adjustment to reported net income because

Correct AnswerverifiedShow Answer

Choose the combination that best reflects the appropriate classification of cash paid for investing and financing activities. Cash Paid for Cash Paid for Investing Activities Financing Activities

Correct AnswerverifiedShow Answer

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