Question 1

During the year, Holistic Corp.reported Income Tax Expense of $36,000.There was a $3,000 decrease in federal income tax payable and a $2,000 increase in provincial income tax payable during the year.What were Holistic's cash payments for income tax for the year?
A)$41,000
B)$37,000
C)$35,000
D)$31,000

Accepted Answer

The answer of During the year, Holistic Corp.reported Income Tax...

Question 2

Under the direct method, one of the adjustments to revenue to determine cash receipts from customers is made by
A)deducting a decrease in accounts receivables.
B)adding an increase in accounts receivables.
C)adding a decrease in deferred revenue
D)deducting a decrease in deferred revenue.

Accepted Answer

The answer of Under the direct method, one of the...

Question 3

The following information relates to Fenelon Corporation:  What was the amount of cash paid for insurance during 2022?
A)$942,000
B)$658,000
C)$582,000
D)$298,000

Accepted Answer

The answer of The following information relates to Fenelon Corporation:...

Question 4

During the year, Rinks Corp.reported $510,000 in cash sales and $2,350,000 in credit sales.Beginning Accounts Receivable was $360,000 and ending Accounts Receivable was $475,000.What was the total cash collected from all customers during the year?
A)$3,695,000
B)$2,975,000
C)$2,675,000
D)$2,745,000

Accepted Answer

The total cash collected from customers is calculated by adding cash sales to the change in accounts receivable. Cash collected = Cash sales + (Beginning Accounts Receivable + Credit Sales - Ending Accounts Receivable) = $510,000 + ($360,000 + $2,350,000 - $475,000) = $2,745,000.

Question 5

During the year, Kawartha Corp.reported an increase in Inventory of $40,000.Cost of Goods Sold for the year was $125,000, and there was an $6,000 decrease in Accounts Payable.What were the cash payments to suppliers during the year?
A)$79,000
B)$91,000
C)$159,000
D)$171,000

Accepted Answer

The cash payments to suppliers can be calculated using the formula: Cash Payments = COGS + Increase in Inventory - Decrease in Accounts Payable. Therefore, Cash Payments = $125,000 + $40,000 + $6,000 = $171,000.

Question 6

Which of the following would not appear in the operating activities section of a statement of cash flows prepared using the direct method?
A)cash receipts from customers
B)cash paid for income taxes
C)gain on sale of equipment
D)cash paid to employees

Accepted Answer

The gain on sale of equipment would not appear in the operating activities section of a statement of cash flows prepared using the direct method because it is related to investing activities, not operating activities. The direct method focuses on specific cash flows from operating activities, such as cash received from customers and cash paid to suppliers and employees. Gains or losses from the sale of equipment are considered investing activities and are handled separately.

Question 7

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is
A)cash flows provided (used)by financing activities.
B)cash flows provided (used)by investing activities.
C)cash flows provided (used)by operating activities.
D)usually different from year to year.

Accepted Answer

Cash flows provided by operating activities are generally considered the best measure of a company's ability to continue as a going concern because they reflect the cash generated from the company's core business operations, which is crucial for sustaining operations and meeting ongoing financial obligations.

Question 8

Kate's Fashions Ltd.produces and sells high fashion merchandise.For the year ended June 30, 2022, the company reported $85,000 cash provided by operating activities, $18,000 by investing activities, and $49,000 by financing activities.Kate's Fashions paid $22,000 in dividends and spent $35,000 for new equipment.Its free cash flow for 2022 was
A)$95,000.
B)$63,000.
C)$50,000.
D)$28,000.

Accepted Answer

Free cash flow is calculated as cash provided by operating activities minus capital expenditures and dividends. Thus, $85,000 (operating activities) - $35,000 (equipment) - $22,000 (dividends) = $28,000.

Question 9

Cash receipts from customers are greater than sales revenues when there is a(n)
A)increase in accounts receivable.
B)decrease in accounts receivable.
C)increase in cost of goods sold.
D)decrease in cost of goods sold.

Accepted Answer

Cash receipts from customers are greater than sales revenues when there is a decrease in accounts receivable. This indicates that customers are paying off their previous balances, leading to more cash being received than the current period's sales revenue.

Question 10

During the year, Tristan Inc.reported a $6,000 increase in Inventory and a $4,000 increase in Accounts Payable.Cost of goods sold for the year was $125,000.What were the cash payments made to suppliers during the year?
A)$135,000
B)$127,000
C)$115,000
D)$123,000

Accepted Answer

The answer of During the year, Tristan Inc.reported a $6,000...

Question 11

Which of the following is not one of the phases of the corporate life cycle?
A)growth
B)lapse
C)introductory
D)maturity

Accepted Answer

The corporate life cycle typically includes phases such as introductory, growth, maturity, and decline. "Lapse" is not recognized as a phase in the corporate life cycle.

Question 12

During the year, Cost of Goods Sold was $65,000, Inventory decreased by $4,000, and Accounts Payable decreased by $2,000.What were the cash payments for merchandise during the year?
A)$63,000
B)$65,000
C)$67,000
D)$71,000

Accepted Answer

Cash payments for merchandise = Cost of Goods Sold + Decrease in Inventory - Decrease in Accounts Payable= $65,000 + $4,000 - $2,000= $63,000

Question 13

The statement of income showed bond interest expense of $11,520 while the statement of financial position showed that the carrying amount of the bonds payable had increased by $1,520.Assuming no other transactions affected bonds during the period, the cash paid for bond interest was
A)$13,040.
B)$11,520.
C)$10,000.
D)$1,520.

Accepted Answer

The increase in the carrying amount of bonds payable by $1,520 indicates that this amount was not paid in cash but rather added to the bond liability. Therefore, the cash paid for bond interest is the bond interest expense minus the increase in the carrying amount: $11,520 - $1,520 = $10,000.

Question 14

Free cash flow:
A)is not a solvency-based measure that helps creditors and investors understand how much discretionary cash flow a company has left from operating activities.
B)is calculated as cash provided (used)by operating activities plus net capital expenditures and dividends paid.
C)helps creditors and investors understand how much discretionary cash flow a company has left from its operating activities.
D)helps to understand how much discretionary cash flow a company has left from its operating activities that can be used to expand operations, increase debt, or pay additional dividends.

Accepted Answer

The answer of Free cash flow:
A)is not a solvency-based measure...

Question 15

Free cash flow is a measure of
A)solvency.
B)profitability.
C)liquidity.
D)creativity.

Accepted Answer

Free cash flow is a measure of solvency because it indicates a company's ability to generate cash after accounting for capital expenditures, which can be used to pay debts, dividends, or reinvest in the business.

Question 16

The statement of cash flows will not provide insight into
A)why dividends were not increased.
B)whether cash flow is greater than net income.
C)the number of shares issued in a stock split.
D)how the retirement of debt was accomplished.

Accepted Answer

The statement of cash flows provides information about cash inflows and outflows from operating, investing, and financing activities, but it does not provide details on non-cash transactions such as the number of shares issued in a stock split.

Question 17

During the year, Oak Inc.reported other operating expenses of $102,000.The Prepaid Expenses decreased $8,500 during the year, and liabilities related to other operating expenses increased by $11,000.What were Oak's cash payments for operating expenses for the year?
A)$121,500
B)$ 99,500
C)$ 104,500
D)$ 82,500

Accepted Answer

The answer of During the year, Oak Inc.reported other operating...

Question 18

During the year, Omega Limited reported credit sales of $600,000.Beginning Accounts Receivable was $70,000 and ending Accounts Receivable was $160,000.What were the cash collections from customers during the year?
A)$830,000
B)$690,000
C)$510,000
D)$370,000

Accepted Answer

To calculate cash collections from customers, we start with credit sales and adjust for the change in accounts receivable. The formula is: Cash Collections = Credit Sales - Increase in Accounts Receivable. Here, the increase in Accounts Receivable is $160,000 (ending) - $70,000 (beginning) = $90,000. So, Cash Collections = $600,000 - $90,000 = $510,000.

Question 19

Which of the following items does not appear in the operating activities section of the statement of cash flows prepared under the direct method?
A)cash payments to suppliers
B)cash collections from customers
C)depreciation expense
D)cash payments for interest

Accepted Answer

Depreciation expense is a non-cash expense and therefore does not appear in the operating activities section of the cash flow statement under the direct method. The direct method focuses on the actual cash flows from operating activities, such as cash received from customers and cash paid to suppliers and employees.

Question 20

The statement of cash flows
A)is prepared instead of an statement of income under ASPE.
B)is used to assess a company's ability to generate cash and the needs of the company in using the cash flows.
C)is prepared from a comparative statement of income.
D)reports basic earnings per share figures on a cash basis in the body of the statement.

Accepted Answer

The statement of cash flows is used to assess a company's ability to generate future cash flows, to assess its ability to pay dividends and meet obligations, and for other needs such as to evaluate the reasons for differences between net income and net cash provided (used) by operating activities. It does not replace the income statement, is not prepared from a comparative statement of income alone (it also uses balance sheet data), and does not report earnings per share figures.

Quiz 13: Statement of Cash Flows

During the year, Holistic Corp.reported Income Tax Expense of $36,000.There was a $3,000 decrease in federal income tax payable and a $2,000 increase in provincial income tax payable during the year.What were Holistic's cash payments for income tax for the year?

Under the direct method, one of the adjustments to revenue to determine cash receipts from customers is made by

The following information relates to Fenelon Corporation: What was the amount of cash paid for insurance during 2022?

During the year, Rinks Corp.reported $510,000 in cash sales and $2,350,000 in credit sales.Beginning Accounts Receivable was $360,000 and ending Accounts Receivable was $475,000.What was the total cash collected from all customers during the year?

During the year, Kawartha Corp.reported an increase in Inventory of $40,000.Cost of Goods Sold for the year was $125,000, and there was an $6,000 decrease in Accounts Payable.What were the cash payments to suppliers during the year?

Which of the following would not appear in the operating activities section of a statement of cash flows prepared using the direct method?

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

Cash receipts from customers are greater than sales revenues when there is a(n)

During the year, Tristan Inc.reported a $6,000 increase in Inventory and a $4,000 increase in Accounts Payable.Cost of goods sold for the year was $125,000.What were the cash payments made to suppliers during the year?

Which of the following is not one of the phases of the corporate life cycle?

During the year, Cost of Goods Sold was $65,000, Inventory decreased by $4,000, and Accounts Payable decreased by $2,000.What were the cash payments for merchandise during the year?

The statement of income showed bond interest expense of $11,520 while the statement of financial position showed that the carrying amount of the bonds payable had increased by $1,520.Assuming no other transactions affected bonds during the period, the cash paid for bond interest was

Free cash flow:

Free cash flow is a measure of

The statement of cash flows will not provide insight into

During the year, Oak Inc.reported other operating expenses of $102,000.The Prepaid Expenses decreased $8,500 during the year, and liabilities related to other operating expenses increased by $11,000.What were Oak's cash payments for operating expenses for the year?

During the year, Omega Limited reported credit sales of $600,000.Beginning Accounts Receivable was $70,000 and ending Accounts Receivable was $160,000.What were the cash collections from customers during the year?

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

The statement of cash flows