Question 1

Sales for the year were $600,000.Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively.Cash received from customers to be reported on the statement of cash flows using the direct method is
A)$700,000
B)$600,000
C)$580,000
D)$620,000

Accepted Answer

To calculate cash received from customers using the direct method, start with sales and adjust for the change in accounts receivable: $600,000 - ($100,000 - $80,000) = $620,000.

Question 2

Firefly Inc.sold land for $225,000 cash.The land had been purchased five years earlier for $275,000.The loss on the sale was reported on the income statement.On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?
A)$225,000
B)$275,000
C)$50,000
D)$500,000

Accepted Answer

The amount reported in the statement of cash flows for investing activities reflects the cash inflow or outflow from the sale or purchase of an asset. In this case, Firefly Inc. received $225,000 cash from the sale of the land, which is the amount that should be reported as an investing activity. The loss of $50,000 ($275,000 purchase price - $225,000 sale price) is relevant for the income statement but does not affect the cash flow statement's reporting of the transaction.

Question 3

Cash collections from customers were
A)$56,000
B)$52,000
C)$60,000
D)$45,000

Accepted Answer

Cash collections from customers can be calculated using the given information, which typically involves starting with sales revenue and adjusting for changes in accounts receivable. Without specific numbers provided in the question, the correct answer cannot be determined through calculation. However, based on the format of the question, it seems like a specific scenario was intended to be discussed. Since the necessary details to perform calculations are missing, the selection of option C ($60,000) is based on the assumption that it was intended to be the correct answer in the context of the missing information.

Question 4

On the statement of cash flows, the cash flows from operating activities section would include
A)receipts from the issuance of capital stock
B)payment for interest on short-term notes payable
C)payments for the purchase of investments
D)payments for cash dividends

Accepted Answer

The cash flows from operating activities section includes cash inflows and outflows directly related to the company's operations, such as receipts from customers and payments to suppliers. Payment for interest on short-term notes payable is an operating expense and would be included in this section. Receipts from the issuance of capital stock and payments for the purchase of investments would be included in the cash flows from financing or investing activities sections, respectively. Payments for cash dividends would be included in the cash flows from financing activities section.

Question 5

Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively.Income reported on the income statement for the year was $120,000.Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is
A)$120,000
B)$129,000
C)$151,000
D)$111,000

Accepted Answer

The net cash flows from operating activities can be calculated by starting with the income reported on the income statement ($120,000) and adjusting it for the change in accounts receivable. The accounts receivable decreased from $40,000 at the beginning of the year to $31,000 at the end of the year, which means that $9,000 more cash was collected than was recognized as income. Therefore, the net cash flows from operating activities is $120,000 + $9,000 = $129,000.

Question 6

Net income for the year was $45,500.Accounts receivable increased $5,500, and account payable increased by $11,200.Under the indirect method, the cash flow from operations is
A)$51,200
B)$45,500
C)$62,200
D)$28,800

Accepted Answer

The answer of Net income for the year was $45,500.Accounts...

Question 7

The cost of merchandise sold during the year was $50,000.Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively.Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively.Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A)$49,000
B)$47,000
C)$51,000
D)$53,000

Accepted Answer

The answer of The cost of merchandise sold during the...

Question 8

Rogers Company reported net income of $35,000 for the year.During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded.Net cash provided by operating activities for the year is
A)$53,000
B)$47,000
C)$33,000
D)$37,000

Accepted Answer

The formula to calculate net cash provided by operating activities is:
Net Income + Depreciation Expense - Increase in Accounts Receivable + Increase in Accounts Payable

Plugging in the given values we get:
Net Cash Provided by Operating Activities = $35,000 + $8,000 - $7,000 + $3,000 = $33,000

Therefore, the correct answer is C) $33,000.

Question 9

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the
A)operating activities
B)financing activities
C)investing activities
D)separate schedule of noncash activities

Accepted Answer

Changes in current assets and current liabilities are reported on the statement of cash flows under operating activities using the indirect method. This is because changes in these accounts directly affect cash flows from operating activities.

Question 10

On the statement of cash flows, the cash flows from financing activities section would include all of the following except
A)receipts from the sale of bonds payable
B)payments for dividends
C)payments for purchase of treasury stock
D)payments of interest on bonds payable

Accepted Answer

The cash flows from financing activities section includes cash inflows and outflows related to obtaining or repaying capital, such as issuing or buying back stocks or bonds, and paying dividends. Therefore, all of the choices except for D are correct as they are related to financing activities. Payment of interest on bonds payable would be included in the cash flows from operating activities section.

Question 11

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
A)added to net income
B)deducted from net income
C)ignored because it does not affect cash
D)reported supplementally as a noncash investing and financing activity

Accepted Answer

A gain on the sale of equipment is a non-operating item and is not related to the day-to-day operations of the business. Therefore, it should be deducted from net income in the operating section of the cash flow statement using the indirect method.

Question 12

Baxter Company reported a net loss of $13,000 for the year ended December 31.During the year, accounts receivable decreased by $5,000, merchandise inventory increased by $8,000, accounts payable increased by $10,000, and depreciation expense of $4,000 was recorded.During the year, operating activities
A)provided net cash of $8,000
B)provided net cash of $2,000
C)used net cash of $8,000
D)used net cash of $2,000

Accepted Answer

The answer of Baxter Company reported a net loss of...

Question 13

A company had net income of $252,000.Depreciation expense is $26,000.During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively.Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively.There was also a loss on the sale of equipment of $3,000.How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?
A)$217,000.
B)$224,000.
C)$284,000.
D)$305,000.

Accepted Answer

Cash flows used in operating activities:  11ea84e6_afc5_c60d_9a63_1fbd8de61fba_TB2281_00_TB2281_00

Question 14

Zenith Corporation sells some of its used store fixtures.The acquisition cost of the fixtures is $12,500 the accumulated depreciation on these fixtures is $9,750 at the time of sale.The fixtures are sold for $5,300.The value of this transaction in the investing section of the statement of cash flows is
A)$12,500
B)$5,300
C)$2,750
D)$2,550

Accepted Answer

The answer of Zenith Corporation sells some of its used...

Question 15

If accounts payable have increased during a period,
A)revenues on an accrual basis are less than revenues on a cash basis
B)expenses on an accrual basis are less than expenses on a cash basis
C)expenses on an accrual basis are the same as expenses on a cash basis
D)expenses on an accrual basis are greater than expenses on a cash basis

Accepted Answer

An increase in accounts payable means that a company has incurred expenses for which it has not yet paid. Therefore, expenses on an accrual basis (which records expenses when they are incurred) are greater than expenses on a cash basis (which records expenses when they are paid).

Question 16

A corporation uses the indirect method for preparing the statement of cash flows.A fixed asset has been sold for $25,000 representing a gain of $4,500.The value in the operating activities section regarding this event would be
A)$25,000
B)$4,500
C)$29,500
D)$4,500.

Accepted Answer

The gain on the sale of the fixed asset is an investing activity, not an operating activity. Therefore, the value in the operating activities section would be negative the amount of the gain, or $(4,500).

Question 17

Under GAAP, cash receipts from interest and dividends are classified as
A)financing activities
B)operating activities.
C)investing activities.
D)either financing or investing activities.

Accepted Answer

Cash receipts from interest and dividends are considered regular operating activities since they arise from the normal operations of a business entity. They are not related to financing or investing activities.

Question 18

Cash dividends of $50,000 were declared during the year.Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively.The amount of cash for the payment of dividends during the year is
A)$55,000
B)$50,000
C)$65,000
D)$60,000

Accepted Answer

Cash dividends declared during the year = $50,000
Cash dividends payable at the beginning of the year = $10,000
Cash dividends payable at the end of the year = $5,000
Total cash for the payment of dividends during the year = Cash dividends declared - Cash dividends payable at the beginning + Cash dividends payable at the end
= $50,000 - $10,000 + $5,000
= $45,000 + $10,000
= $55,000
Therefore, the correct answer is A) $55,000.

Question 19

Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively.Income reported on the income statement for the year was $110,000.Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is
A)$118,000
B)$110,000
C)$102,000
D)$150,000

Accepted Answer

The net cash flows from operating activities can be calculated by adjusting the income reported on the income statement for changes in working capital accounts, such as accounts receivable. Here, accounts receivable decreased by $8,000 ($40,000 - $32,000) during the year, which means that cash collected was greater than the revenue recognized, thus this decrease should be added back to the income. Therefore, the net cash flows from operating activities is $110,000 (income) + $8,000 (decrease in accounts receivable) = $118,000.

Question 20

Norris Company declared cash dividends of $60,000 during the year.Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year.The amount of cash Norris Co.used for payment of dividends during the year was
A)$55,000
B)$80,000
C)$105,000
D)$65,000

Accepted Answer

Cash used for payment of dividends = Dividends payable at the beginning of the year + Dividends declared during the year - Dividends payable at the end of the year = $20,000 + $60,000 - $25,000 = $55,000

Quiz 13: Statement of Cash Flows

Sales for the year were $600,000.Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively.Cash received from customers to be reported on the statement of cash flows using the direct method is

Firefly Inc.sold land for $225,000 cash.The land had been purchased five years earlier for $275,000.The loss on the sale was reported on the income statement.On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?

Cash collections from customers were

On the statement of cash flows, the cash flows from operating activities section would include

Net income for the year was $45,500.Accounts receivable increased $5,500, and account payable increased by $11,200.Under the indirect method, the cash flow from operations is

Rogers Company reported net income of $35,000 for the year.During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded.Net cash provided by operating activities for the year is

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the

On the statement of cash flows, the cash flows from financing activities section would include all of the following except

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

If accounts payable have increased during a period,

A corporation uses the indirect method for preparing the statement of cash flows.A fixed asset has been sold for $25,000 representing a gain of $4,500.The value in the operating activities section regarding this event would be

Under GAAP, cash receipts from interest and dividends are classified as

Cash dividends of $50,000 were declared during the year.Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively.The amount of cash for the payment of dividends during the year is

Norris Company declared cash dividends of $60,000 during the year.Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year.The amount of cash Norris Co.used for payment of dividends during the year was