Question 1

During the growth phase, a company will start to generate small amounts of cash _______________.

Accepted Answer

The answer of During the growth phase, a company will...

Question 2

The current cash debt coverage is computed by dividing net cash provided by operating activities by _________________ liabilities.

Accepted Answer

The answer of The current cash debt coverage is computed...

Question 3

Net cash provided/used by operating activities can be determined using the ____________ method or the ______________ method.

Accepted Answer

The answer of Net cash provided/used by operating activities can...

Question 4

In computing cash payments for income taxes, a decrease in income taxes payable is ______________ to (from) income tax expense.

Accepted Answer

The answer of In computing cash payments for income taxes,...

Question 5

The financial statements of Appalachian Mountain Company appear below:  The following additional data were provided:
1. Dividends declared and paid were $16,000.
2. During the year equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a book value of $12,000 at the time of sale.
3. All depreciation expense is in the selling expense category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions
Prepare a statement of cash flows for Appalachian Mountain Company using the direct method.

Accepted Answer

The answer of The financial statements of Appalachian Mountain Company...

Question 6

Information for two companies in the same industry, Tucker Corporation and Wiggins Corporation, is presented here.  Instructions
Using the cash-based measures presented in this chapter, compare the (a) liquidity and (b) solvency of the two companies.

Accepted Answer

The answer of Information for two companies in the same...

Question 7

Using the indirect approach, noncash charges in the income statement are ___________ to net income and noncash credits are ______________ to compute cash provided by operations.

Accepted Answer

The answer of Using the indirect approach, noncash charges in...

Question 8

The income statement for McDonald's Corporation shows cost of goods sold $6,175.6 million and operating expenses (including depreciation expense of $1,214.1 million) $18,907.6 million. The comparative balance sheet for the year shows that inventory increased $12.9 million, prepaid expenses increased $102.9 million, accounts payable (merchandise suppliers) decreased $44.6 million, and accrued expenses payable increased $162.4 million.
Instructions
Using the direct method, compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

Accepted Answer

The answer of The income statement for McDonald's Corporation shows...

Question 9

During the _______________, cash from operations and net income are approximately the same.

Accepted Answer

The answer of During the _______________, cash from operations and...

Question 10

Cost of goods sold for the year amounted to $100,000, and during the year, inventory ______________ by $7,000 and accounts payable ______________ by $3,000 resulting in cash paid to suppliers of $90,000.

Accepted Answer

The answer of Cost of goods sold for the year...

Question 11

In computing cash payments for operating expenses, a decrease in prepaid expenses is ______________ and an increase in accrued expenses payable is ______________ to (from) operating expenses, exclusive of depreciation.

Accepted Answer

The answer of In computing cash payments for operating expenses,...

Question 12

Wave Rider Company completed its first year of operations on December 31, 2014. Its initial income statement showed that Wave Rider had revenues of $207,000 and operating expenses of $108,000. Accounts receivable and accounts payable at year-end were $80,000 and $28,000, respectively. Assume that accounts payable related to operating expenses. Ignore income taxes.
Instructions
Compute net cash provided by operating activities using the direct method.

Accepted Answer

The answer of Wave Rider Company completed its first year...

Question 13

If accounts receivable increase during a period, revenues on an accrual basis are ______________ than revenues on a cash basis.

Accepted Answer

The answer of If accounts receivable increase during a period,...

Question 14

The cash ______________ is a measure of solvency that uses cash figures.

Accepted Answer

The answer of The cash ______________ is a measure of...

Question 15

The income statement of Gise Company is shown below:  Additional information:
1. Accounts receivable increased $600,000 during the year.
2. Inventory increased $250,000 during the year.
3. Prepaid expenses increased $150,000 during the year.
4. Accounts payable to merchandise suppliers increased $125,000 during the year.
5. Accrued expenses payable increased $180,000 during the year.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2014, for Gise Company, using the direct method.

Accepted Answer

The answer of The income statement of Gise Company is...

Question 16

Condensed financial data of Gorni Company appear below:  Additional information:
1. New plant assets costing $85,000 were purchased for cash in 2014.
2. Old plant assets costing $25,000 were sold for $5,000 cash when book value was $13,000.
3. Bonds with a face value of $20,000 were converted into $20,000 of common stock.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Instructions
1. Prepare a statement of cash flows for the year using the direct method.
2. Compute the following cash basis ratios:
a. Current cash debt coverage
b. Cash debt coverage

Accepted Answer

The answer of Condensed financial data of Gorni Company appear...

Question 17

The cash effects of selling goods and services appears in the ______________ activities section of a statement of cash flows.

Accepted Answer

The answer of The cash effects of selling goods and...

Question 18

The sale of equipment at less than its book value is a(an) ______________ of cash that is reported in the ______________ activities section.

Accepted Answer

The answer of The sale of equipment at less than...

Question 19

A statement of cash flows summarizes the operating, ____________, and ___________ activities of an entity.

Accepted Answer

The answer of A statement of cash flows summarizes the...

Question 20

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash ________________________ and cash _________________________.

Accepted Answer

The answer of Under the direct method, the two largest...

Quiz 12: Statement of Cash Flows

During the growth phase, a company will start to generate small amounts of cash _______________.

The current cash debt coverage is computed by dividing net cash provided by operating activities by _________________ liabilities.

Net cash provided/used by operating activities can be determined using the method or the __ method.

In computing cash payments for income taxes, a decrease in income taxes payable is ______________ to (from) income tax expense.

Information for two companies in the same industry, Tucker Corporation and Wiggins Corporation, is presented here. Instructions Using the cash-based measures presented in this chapter, compare the (a) liquidity and (b) solvency of the two companies.

Using the indirect approach, noncash charges in the income statement are _ to net income and noncash credits are ____ to compute cash provided by operations.

During the _______________, cash from operations and net income are approximately the same.

Cost of goods sold for the year amounted to $100,000, and during the year, inventory by $7,000 and accounts payable by $3,000 resulting in cash paid to suppliers of $90,000.

In computing cash payments for operating expenses, a decrease in prepaid expenses is and an increase in accrued expenses payable is to (from) operating expenses, exclusive of depreciation.

If accounts receivable increase during a period, revenues on an accrual basis are ______________ than revenues on a cash basis.

The cash ______________ is a measure of solvency that uses cash figures.

The cash effects of selling goods and services appears in the ______________ activities section of a statement of cash flows.

The sale of equipment at less than its book value is a(an) of cash that is reported in the activities section.

A statement of cash flows summarizes the operating, __, and _ activities of an entity.

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash and cash _.