Question 1

Tatum Company had an increase in inventory of $40,000. The cost of goods sold was $90,000. There was a $5,000 decrease in accounts payable from the prior period. What were Tatum's cash payments to suppliers?

Accepted Answer

The increase in inventory and the decrease in accounts payable represent an increase in cash payments to suppliers. The cost of goods sold is not relevant to this calculation. Therefore, the cash payments to suppliers are $40,000 + $5,000 = $45,000.

Question 2

Haden Inc. had cash sales of $300,000 and credit sales of $1,050,000. The accounts receivable balance increased $15,000 during the year. How much cash did Haden receive from its customers during the year?

Accepted Answer

Cash received from customers = Cash sales + Increase in accounts receivable= $300,000 + $15,000= $315,000

Question 3

During 2010, Klugman Industries reported cash provided by operations of $690,000, cash used in investing of $1,029,000, and cash used in financing of $135,000. In addition, cash spent for fixed assets during the period was $414,000. No dividends were paid. Based on this information, what was Klugman's free cash flow?

Accepted Answer

Free cash flow is calculated as cash provided by operations minus cash spent on fixed assets. Therefore, $690,000 (cash provided by operations) - $414,000 (cash spent on fixed assets) = $276,000.

Question 4

Rader Company had credit sales of $550,000. The beginning accounts receivable balance was $40,000 and the ending accounts receivable balance was $140,000. What were the cash collections from customers during the period?

Accepted Answer

The cash collections from customers can be calculated by adding the beginning accounts receivable balance to the credit sales and then subtracting the ending accounts receivable balance. Therefore, cash collections = beginning accounts receivable balance + credit sales - ending accounts receivable balance = $40,000 + $550,000 - $140,000 = $450,000.

Question 5

Each of the following would be reported under operating activities except cash receipts

Accepted Answer

Cash receipts from sales of investments would be reported under investing activities, not operating activities. The other options (sales of goods, interest on loans, and dividends from investments) are all operating activities.

Question 6

Which of the following statements concerning the statement of cash flows is true?

Accepted Answer

If the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided. While the indirect method starts with net income and adjusts for non-cash items, the direct method reports cash receipts and payments. However, the direct method still requires a reconciliation to show how cash flows from operating activities were derived. Statements of cash flows are required for external reporting purposes, and both the direct and indirect methods are acceptable. Earnings per share and cash per share are not reflected in the statement of cash flows.

Question 7

Which of the following items does not appear in the statement of cash flows under the direct method?

Accepted Answer

The depreciation expense is a non-cash item that appears in the operating section of the statement of cash flows under the indirect method, but not under the direct method. The direct method reports actual cash receipts and cash payments during the period.

Question 8

In the Roswell Corporation, cash receipts from customers were $138,000, cash payments for operating expenses were $102,000, and one-third of the company's $6.300 income taxes were paid during the year. Net cash provided by operating activities is:

Accepted Answer

The answer of In the Roswell Corporation, cash receipts from...

Question 9

Dobson Corporation shows income tax expense of $80,000. There has been a $5,000 decrease in federal income taxes payable and a $7,000 increase in state income taxes payable during the year. What was Dobson's cash payment for income taxes?

Accepted Answer

Dobson's cash payment for income taxes can be calculated using the formula:
Income tax expense - decrease in federal income taxes payable + increase in state income taxes payable = cash payment for income taxes
Substituting the given values, we get:
$80,000 - $5,000 + $7,000 = $82,000 - cash payment for income taxes
Rearranging and solving for cash payment, we get:
Cash payment for income taxes = $82,000 - ($80,000 - $5,000 + $7,000) = $78,000
Therefore, the best choice is B) $78,000.

Question 10

All of the following statements about free cash flow are false except:

Accepted Answer

Free cash flow is reported on the statement of cash flows as a reconciliation of cash flow from operations and cash flow from investing activities. The other statements are false. Significant free cash flow actually indicates more potential to finance new investments and pay additional dividends.

Question 11

On the statement of cash flows worksheet,

Accepted Answer

The answer of On the statement of cash flows worksheet,
...

Question 12

Largo Company has other operating expenses of $75,000. There has been a decrease in prepaid expenses of $4,000 during the year, and accrued liabilities are $6,000 larger than in the prior period. What were Largo's cash payments for operating expenses?

Accepted Answer

The answer of Largo Company has other operating expenses of...

Question 13

During the year, Salaries Payable decreased by $6,000. If Salary Expense amounted to $170,000 for the year, the cash paid to employees (including deductions from gross pay) is

Accepted Answer

The decrease in Salaries Payable indicates that more cash was paid than the expense recorded. Therefore, cash paid is Salary Expense plus the decrease in Salaries Payable: $170,000 + $6,000 = $176,000.

Question 14

When listing accounts in the statement of cash flows worksheet, the accumulated depreciation account is shown

Accepted Answer

Accumulated depreciation is a contra asset account, which means it has a credit balance. Therefore, it should be listed with accounts that have credit balances in the statement of cash flows worksheet.

Question 15

Carter Company reports the following:  If cost of goods sold for the year is $210,000, the amount of cash paid to suppliers is

Accepted Answer

The answer of Carter Company reports the following:  If...

Question 16

Gary Company reports a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $160,000. The cash payments made to suppliers were

Accepted Answer

The cash payments to suppliers are calculated as: Cost of Goods Sold ($160,000) + Increase in Inventory ($15,000) - Increase in Accounts Payable ($5,000) = $170,000.

Question 17

Utley Company had a cost of purchases of $250,000. The comparative balance sheet analysis revealed a $10,000 decrease in inventory and a $20,000 increase in accounts payable. What were Utley's cash payments to suppliers?

Accepted Answer

The formula for calculating cash payments to suppliers is:Cost of purchases + Decrease in inventory - Increase in accounts payable = Cash payments to suppliers$250,000 + (-$10,000) - $20,000 = $230,000

Question 18

In the bottom portion of the statement of cash flows worksheet,

Accepted Answer

The answer of In the bottom portion of the statement...

Question 19

In the Green Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $45,000 was sold for $45,000 cash, and land costing $87,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:

Accepted Answer

The answer of In the Green Company, the beginning and...

Question 20

LF's Pest Control Products has the following information available:  What is LF's free cash flow?

Accepted Answer

Without additional information, it is impossible to accurately calculate LF's free cash flow from the given information.

Quiz 17: Statement of Cash Flows