Question 1

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-purchased truck for cash

Accepted Answer

Purchasing a truck for cash is considered an outflow from investing activities because it involves acquiring a long-term asset, which falls under investing activities in the statement of cash flows.

Question 2

A decrease in retained earnings represents dividends that were ____________________ during the period,not necessarily those that were paid.

Accepted Answer

The answer of A decrease in retained earnings represents dividends...

Question 3

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-issued long term mortgage to acquire land and a building

Accepted Answer

Issuing a long-term mortgage to acquire land and a building is considered a noncash investing and financing activity, and it is typically disclosed in a separate schedule or note to the financial statements rather than in the main body of the statement of cash flows.

Question 4

If the balance of prepaid insurance was the same on January 1,Year 1,and December 31,Year 2,then the insurance expense must have been ____________________ the cash payments made for insurance during the year.

Accepted Answer

The answer of If the balance of prepaid insurance was...

Question 5

When a company sells its own common shares,it is a(n)____________________ activity on the statement of cash flows.

Accepted Answer

The answer of When a company sells its own common...

Question 6

Under the indirect method,a gain from the sale of land is subtracted from ___________ in the operating activities section of the statement of cash flows.

Accepted Answer

The answer of Under the indirect method,a gain from the...

Question 7

A(n)____________________ occurs when the cash received from selling an item of property,plant,and equipment is greater than the book value of the asset sold.It is also shown in the operating activities section of the statement of cash flows prepared using the indirect method.

Accepted Answer

The answer of A(n)____________________ occurs when the cash received from...

Question 8

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-repaid a long-term bonds payable

Accepted Answer

Repaying a long-term bonds payable is considered an outflow from financing activities because it involves paying back money that was borrowed, which falls under financing activities in the statement of cash flows.

Question 9

If the balance of wages payable increases during the year,then the ____________________ for the period will be greater than the actual cash wages paid in the period.

Accepted Answer

The answer of If the balance of wages payable increases...

Question 10

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-received payments from accounts receivable

Accepted Answer

Receiving payments from accounts receivable is considered an inflow from operating activities, as it directly relates to the primary revenue-producing activities of the business.

Question 11

Under the ____________________ method of preparing a statement of cash flows,the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments,and all accruals of future operating cash receipts or payments.

Accepted Answer

The answer of Under the ____________________ method of preparing a...

Question 12

If an analysis of the balance sheet shows that Accounts Payable increased during the period,then the increase would have to be _______________ to net income to convert net income to cash.

Accepted Answer

The answer of If an analysis of the balance sheet...

Question 13

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-declared share dividends

Accepted Answer

Declared share dividends do not involve cash flow and are not reported on the statement of cash flows.

Question 14

If accounts receivable decreased during the year,then cash collections must have been ____________________ than sales on account for the period.

Accepted Answer

The answer of If accounts receivable decreased during the year,then...

Question 15

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-sold common shares for cash

Accepted Answer

Selling common shares for cash is considered an inflow from financing activities, as it involves obtaining funds from owners.

Question 16

____________________ represents the cash flow that a company is able to generate after considering the maintenance or expansion of its assets (capital expenditures)and payment of dividends.

Accepted Answer

The answer of ____________________ represents the cash flow that a...

Question 17

Beginning equipment minus equipment sold and minus ending equipment equals ____________________.

Accepted Answer

The answer of Beginning equipment minus equipment sold and minus...

Question 18

The use of a(n)______________ provides a means of systematically analyzing changes in the balance sheet amounts,along with the information from the income statement and any additional information,to produce the statement of cash flows.

Accepted Answer

The answer of The use of a(n)______________ provides a means...

Question 19

The indirect method of preparing a statement of cash flows begins with net income and then adjusts it for noncash items to produce net cash flow from ____________________.

Accepted Answer

The answer of The indirect method of preparing a statement...

Question 20

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.)
-paid employee insurance expense

Accepted Answer

Paying employee insurance expense is considered an outflow from operating activities because it is a regular expense related to the core operations of the business.

Quiz 11: The Statement of Cash Flows

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) -purchased truck for cash