Question 1

From the Income Statement and Balance Sheet information listed below,what amount of cash was paid for salaries and wages during 2012?

Accepted Answer

The answer of From the Income Statement and Balance Sheet...

Question 2

When a corporation receives dividends,they are shown as a(n):

Accepted Answer

Dividends received by a corporation are considered an operating activity because they are part of the company's regular business operations and are included in the cash flows from operating activities in the cash flow statement.

Question 3

Operating expenses-other than depreciation-for the year were $335,000.Prepaid expenses decreased by $7,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

The cash payments for operating expenses will be calculated by adjusting the operating expenses for changes in prepaid expenses.

Cash payments for operating expenses = Operating expenses - decrease in prepaid expenses

= $335,000 - $7,000

= $328,000

Therefore, the correct option is (C) $328,000.

Question 4

Operating expenses other than depreciation for the year were $400,000.Accrued expenses increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

The cash payments for operating expenses using the direct method are calculated by adding the increase or subtracting the decrease in accrued expenses to the operating expenses other than depreciation. Therefore, the cash payments for operating expenses are $400,000 + $35,000 = $435,000. Thus, the best choice is C.

Question 5

Cost of goods sold for the year was $850,000.Inventory was $60,000 at the beginning of the year and $90,000 at the end of the year.There were no changes in the amount in account payable for the year.Cash payment for merchandise to be reported under the direct method is:

Accepted Answer

The direct method reports cash payments for merchandise (cost of goods sold) as the sum of purchases less the change in inventory.

Purchases = Cost of goods sold + Decrease in inventory
Purchases = $850,000 + ($60,000 - $90,000)
Purchases = $820,000

Cash payment for merchandise = Purchases + Increase in accounts payable
Cash payment for merchandise = $820,000 + $0 (no change in accounts payable)
Cash payment for merchandise = $820,000

Therefore, the correct answer is D) $880,000.

Question 6

Depreciation of factory equipment under the direct method would be reported as a(n):

Accepted Answer

Under the direct method, depreciation is not reported on the cash flow statement because it is a non-cash expense.

Question 7

Investing activities do NOT include:

Accepted Answer

Investing activities involve the purchase and sale of long-term assets and other investments, not the sale of a company's own stock, which is a financing activity.

Question 8

The following information is available for Bestway Company.What amount is paid for merchandise for the current year (2012)?

Accepted Answer

To find the amount paid for merchandise for the current year (2012), we need to look at the "Purchases" line in the Income Statement. 
Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory 
Using the information given in the question: 
Cost of Goods Sold = $840,000
Ending Inventory = $54,000
Beginning Inventory = $20,000
This gives us: 
Purchases = $840,000 + $54,000 - $20,000 = $874,000 
Therefore, the correct answer is B) $870,000.

Question 9

From the Income Statement and Balance Sheet information listed below,what amount of cash was paid for salaries and wages during 2012?

Accepted Answer

The answer of From the Income Statement and Balance Sheet...

Question 10

Cost of goods sold for the year was $700,000.Inventory was $80,000 at the beginning of the year and $35,000 at the end of the year.There were no changes in the amount in account payable for the year.Cash payment for merchandise to be reported under the direct method is:

Accepted Answer

The direct method of reporting cash payments for merchandise involves subtracting any increase in accounts payable from the cost of goods sold and adding any decrease in inventory. Therefore:
Cash payments for merchandise = cost of goods sold - decrease in inventory + increase in accounts payable
Decrease in inventory = $80,000 - $35,000 = $45,000
Increase in accounts payable = $0 (there were no changes)
Cost of goods sold = $700,000
Cash payments for merchandise = $700,000 - $45,000 + $0 = $655,000. Therefore, the correct answer is choice B.

Question 11

Payments to suppliers include items such as employee compensation,interest and income taxes.

Accepted Answer

Payments to suppliers typically refer to the amounts paid for goods and services used in the production process or for direct resale, and do not include employee compensation, interest, or income taxes, which are categorized separately in financial accounting.

Question 12

Operating expenses other than depreciation for the year were $563,000.Accrued expenses decreased by $47,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

The cash payments for operating expenses are calculated by adjusting the operating expenses for changes in accrued expenses. Since accrued expenses decreased by $47,000, it means that cash payments were higher than the operating expenses reported. Therefore, $563,000 + $47,000 = $610,000.

Question 13

A purchase of new equipment on a note payable under the direct method would be reported:

Accepted Answer

Purchases of new equipment on a note payable are considered non-cash investing and financing activities. Therefore, they are not reported in the cash flow statement's main sections (operating, investing, or financing) but are disclosed separately.

Question 14

Cash payments for inventory are computed as- Total inventory purchased plus a decrease in Accounts Payable OR minus an increase in Accounts Payable.

Accepted Answer

Cash payments for inventory are computed as the total inventory purchased plus a decrease in Accounts Payable. If there is an increase in Accounts Payable, it means that the payment for some of the inventory was not paid in cash but was deferred to a later date. Therefore, it should not be subtracted from the total inventory purchased to determine the cash payment for inventory.

Question 15

Some investing and financing activities involve no Cash Flows,so they:

Accepted Answer

Investing and financing activities that involve no cash flows should be reported in a separate section of the cash flow statement called "non-cash financing and investing activities." This section shows the significant financial changes that did not involve actual cash inflows or outflows but have an impact on the financial position of the company. Examples include issuing stock options, converting bonds to stock, and acquiring assets through lease agreements. Including them in the three main sections of the statement of cash flows would distort the true cash flow position of the company.

Question 16

The gains and losses on the sale of equipment under the direct method would be reported:

Accepted Answer

The direct method only reports cash inflows and outflows from operating activities. Gains and losses on the sale of equipment are considered investing activities and would be reported in the investing section if using the indirect method. However, they are not reported at all when using the direct method.

Question 17

Operating expenses-other than depreciation-for the year were $280,000.Prepaid expenses increased by $16,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

The cash payments for operating expenses would be the operating expenses plus the increase in prepaid expenses. Therefore, $280,000 + $16,000 = $296,000.

Question 18

The following information is available for Allsport Company.What amount was paid for merchandise during the current year (2012)?

Accepted Answer

The answer of The following information is available for Allsport...

Question 19

Exchanging stock for a building under the direct method would be reported:

Accepted Answer

Exchanging stock for a building is a non-cash transaction and would not appear in the cash flow statement itself. Instead, it should be reported in a separate disclosure to provide information about investing and financing activities that do not involve cash flows.

Question 20

Under the direct method,paying and collecting interest on loans are:

Accepted Answer

Under the direct method of preparing the cash flow statement, paying and collecting interest on loans are considered operating activities. This is because they relate to the core operations of the business, such as receiving interest on loans given (which is part of operating income) and paying interest on loans taken (which is part of operating expenses).

Quiz 11: The Statement of Cash Flows

From the Income Statement and Balance Sheet information listed below,what amount of cash was paid for salaries and wages during 2012?

When a corporation receives dividends,they are shown as a(n) :

Operating expenses-other than depreciation-for the year were $335,000.Prepaid expenses decreased by $7,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Operating expenses other than depreciation for the year were $400,000.Accrued expenses increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Cost of goods sold for the year was $850,000.Inventory was $60,000 at the beginning of the year and $90,000 at the end of the year.There were no changes in the amount in account payable for the year.Cash payment for merchandise to be reported under the direct method is:

Depreciation of factory equipment under the direct method would be reported as a(n) :

Investing activities do NOT include:

The following information is available for Bestway Company.What amount is paid for merchandise for the current year (2012) ?

From the Income Statement and Balance Sheet information listed below,what amount of cash was paid for salaries and wages during 2012?

Cost of goods sold for the year was $700,000.Inventory was $80,000 at the beginning of the year and $35,000 at the end of the year.There were no changes in the amount in account payable for the year.Cash payment for merchandise to be reported under the direct method is:

Payments to suppliers include items such as employee compensation,interest and income taxes.

Operating expenses other than depreciation for the year were $563,000.Accrued expenses decreased by $47,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

A purchase of new equipment on a note payable under the direct method would be reported:

Cash payments for inventory are computed as- Total inventory purchased plus a decrease in Accounts Payable OR minus an increase in Accounts Payable.

Some investing and financing activities involve no Cash Flows,so they:

The gains and losses on the sale of equipment under the direct method would be reported:

Operating expenses-other than depreciation-for the year were $280,000.Prepaid expenses increased by $16,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

The following information is available for Allsport Company.What amount was paid for merchandise during the current year (2012) ?

Exchanging stock for a building under the direct method would be reported:

Under the direct method,paying and collecting interest on loans are: