Question 1

A statement of cash flows and its related disclosure note typically do not report:

Accepted Answer

Stock dividends don't change assets, liabilities, or shareholders' equity and are not included in the statement of cash flows or related disclosure note. The other options (A, B, and D) involve transactions that affect cash flows and are typically included in the statement of cash flows and related disclosure note.

Question 2

Acquiring land with a long-term note is:

Accepted Answer

Acquiring land with a long-term note is a noncash investing and financing activity because it does not involve the exchange of cash but instead the exchange of a note payable, which represents a financing activity. It is also an investing activity because it involves the acquisition of an asset that will be used in the business. Therefore, it is reported as a noncash investing and financing activity in the statement of cash flows.

Question 3

Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

Accepted Answer

The increase in dividends payable is $750 - $450 = $300, which means that $13,200 ($13,500 - $300) of dividends were actually paid in cash during the year. Therefore, the answer is (D) $13,200.

Question 4

Which of the following is reported as a financing activity in the statement of cash flows?

Accepted Answer

The acquisition of stock for the purpose of retiring it is considered a financing activity because it involves the use of funds obtained from investors or creditors to repurchase stock. The sale of securities classified as available for sale is reported as an investing activity, the payment of interest on bonds payable is reported as an operating activity, and the receipt of dividend revenue is reported as an investing or operating activity depending on the nature of the investment.

Question 5

In a statement of cash flows using the indirect method, an increase in available-for-sale securities due to an increase in their fair value should be reported as:

Accepted Answer

The increase in available-for-sale securities due to an increase in their fair value should not be reported as a cash flow since it is an unrealized gain that increases other comprehensive income, not net income. Therefore, the correct choice is D, which indicates that it should not be reported.

Question 6

Rampart Inc. recorded the following transaction: In the statement of cash flows, this would be reported as a:

Accepted Answer

The $3 million outflow is the cash portion of the transaction, while the $12 million is a noncash activity, both related to investing activities.

Question 7

In a statement of cash flows using the indirect method, an increase in available-for-sale securities not due to an increase in their fair value should be reported as:

Accepted Answer

An increase in available-for-sale securities would indicate an investment in the securities and would be classified as a net cash outflow from investing activity in the statement of cash flows using the indirect method. It would not be deducted or added to net income in determining cash flows from operating activities.

Question 8

Property dividends distributed are reported in connection with a statement of cash flows as:

Accepted Answer

Property dividends distributed are considered a noncash activity as no actual cash is being transferred. Thus, this activity is reported as a noncash activity in the statement of cash flows.

Question 9

In preparing its cash flow statement for the year ended December 31, 2009, Green Co. gathered the following data: In its December 31, 2009, statement of cash flows, what amount should Green report as net cash from financing activities?

Accepted Answer

The net increase in long-term debt is computed as:
$360,000 + $20,000 − $150,000 = $230,000.
The payment of dividends is a financing activity and is reported as a cash outflow. Thus, net cash from financing activities is $230,000 – $156,000 = $74,000. Therefore, option D is correct.

Question 10

When treasury stock is sold at an amount less than its cost, the sale is classified as:

Accepted Answer

Treasury stock transactions are considered financing activities because they relate to the company's equity and how it finances its operations and growth, not its core operational activities or investments in long-term assets.

Question 11

Which of the following is not classified as an operating activity?

Accepted Answer

Dividends paid on common stock are classified as financing activities, not operating activities. Operating activities involve the primary revenue-generating activities of the business, whereas financing activities involve ways in which a business finances its operations, including payments of dividends.

Question 12

Proceeds from the sale of a plant site are:

Accepted Answer

Proceeds from the sale of a plant site are considered a cash inflow related to investing activities, as it represents a disposal of a long-term asset.

Question 13

Which of the following would not be a cash inflow from financing activities?

Accepted Answer

Cash from the sale of stock of a supplier would be a cash inflow from investing activities, not financing activities. Financing activities involve obtaining funds from lenders or investors, while investing activities involve buying or selling long-term assets such as property or equipment, or investments such as stocks or bonds. The other options, cash from issuing common stock, issuing bonds, and issuing preferred stock, would all be cash inflows from financing activities.

Question 14

Of the following, which is not an investing activity?

Accepted Answer

The answer of Of the following, which is not an...

Question 15

The purchase of treasury stock is:

Accepted Answer

The purchase of treasury stock is reported as a financing activity in the statement of cash flows because it involves transactions related to the company's own equity.

Question 16

Freeman Company's accounting records include the following information: What is the amount of net cash provided by operating activities indicated by these transactions?

Accepted Answer

Net cash provided by operating activities can be calculated using the indirect method of cash flow statement. Based on the information given, the net increase in accounts payable is $5,000, net decrease in accounts receivable is $10,000, and depreciation expense is $20,000. These items are added back to net income of $50,000 to calculate net cash provided by operating activities as follows:
Net income + Depreciation expense + Decrease in accounts receivable - Increase in accounts payable
= $50,000 + $20,000 - $10,000 - $5,000
= $55,000

Question 17

During 2009, T Company engaged in the following activities: In T's statement of cash flows, what were net cash outflows from financing activities for 2009?

Accepted Answer

Net cash outflows from financing activities can be calculated by adding the amounts from the "Payments to acquire treasury stock" ($240) and the "Repayments of long-term debt" ($200) and subtracting the amount from "Proceeds from issuance of common stock" ($176).

$240 + $200 - $176 = $264 - $176 = $88

However, the question specifically asks for net cash outflows from financing activities, so we need to look for the option that represents a negative value. Option B is the only one with a negative value of -$440, which represents net cash outflows from financing activities for 2009.

Question 18

Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

Accepted Answer

To find the amount of cash paid for insurance, we need to calculate the change in the prepaid insurance account.

Beginning balance in prepaid insurance = $50 
Ending balance in prepaid insurance = $30

Change in prepaid insurance = Ending balance - Beginning balance 
= $30 - $50 
= -$20

The negative value indicates a decrease in the prepaid insurance account, which means insurance was expensed during the current year.

Insurance expense reported = $477

Cash paid for insurance = Insurance expense + Change in prepaid insurance 
= $477 - $20 
= $457

Therefore, the answer is B) $457.

Question 19

Which of the following causes a change in cash?

Accepted Answer

Payment of a cash dividend declared in the previous fiscal year causes a change in cash as cash is being paid out to shareholders. The other options (accrual of interest payable, recording of depreciation expense, and write-off of an uncollectible account) are accounting entries that do not involve a change in cash.

Question 20

Which of the following is reported as a financing activity in the statement of cash flows?

Accepted Answer

The repayment of bonds issued at par is a financing activity because it involves cash flows related to borrowing and repaying debt.

Quiz 21: The Statement of Cash Flows

A statement of cash flows and its related disclosure note typically do not report:

Acquiring land with a long-term note is:

Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

Which of the following is reported as a financing activity in the statement of cash flows?

In a statement of cash flows using the indirect method, an increase in available-for-sale securities due to an increase in their fair value should be reported as:

Rampart Inc. recorded the following transaction: In the statement of cash flows, this would be reported as a:

In a statement of cash flows using the indirect method, an increase in available-for-sale securities not due to an increase in their fair value should be reported as:

Property dividends distributed are reported in connection with a statement of cash flows as:

In preparing its cash flow statement for the year ended December 31, 2009, Green Co. gathered the following data: In its December 31, 2009, statement of cash flows, what amount should Green report as net cash from financing activities?

When treasury stock is sold at an amount less than its cost, the sale is classified as:

Which of the following is not classified as an operating activity?

Proceeds from the sale of a plant site are:

Which of the following would not be a cash inflow from financing activities?

Of the following, which is not an investing activity?

The purchase of treasury stock is:

Freeman Company's accounting records include the following information: What is the amount of net cash provided by operating activities indicated by these transactions?

During 2009, T Company engaged in the following activities: In T's statement of cash flows, what were net cash outflows from financing activities for 2009?

Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

Which of the following causes a change in cash?

Which of the following is reported as a financing activity in the statement of cash flows?