Question 1

Kilduff Corporation's balance sheet and income statement appear below:   The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) operating activities for the year was:
A)$187
B)$231
C)$257
D)$201

Accepted Answer

The answer of Kilduff Corporation's balance sheet and income statement...

Question 2

The change in each of Kendall Corporation's balance sheet accounts last year follows:  Kendall Corporation's income statement for the year was:  There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by operating activities on the statement of cash flows is determined using the direct method. Using the direct method, the cost of goods sold adjusted to a cash basis would be:
A)$180,000
B)$174,000
C)$177,000
D)$186,000

Accepted Answer

We can use the formula for calculating cost of goods sold using the direct method, which is: Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory. Plugging in the given values, we get: Cost of Goods Sold = $63,000 + $267,000 - $144,000 = $186,000. Therefore, the correct choice is D.

Question 3

The most recent balance sheet and income statement of Oldaker Corporation appear below:   The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:
A)($127)
B)($138)
C)$138
D)$127

Accepted Answer

The answer of The most recent balance sheet and income...

Question 4

Kilduff Corporation's balance sheet and income statement appear below:   The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) financing activities for the year was:
A)($44)
B)($71)
C)$2
D)($29)

Accepted Answer

The answer of Kilduff Corporation's balance sheet and income statement...

Question 5

Last year Marton Corporation reported a cost of goods sold of $720,000 on its income statement. The following additional data were taken from the company's comparative balance sheet for the year:  The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The cost of goods sold adjusted to a cash basis would be:
A)$740,000
B)$767,000
C)$747,000
D)$673,000

Accepted Answer

The answer of Last year Marton Corporation reported a cost...

Question 6

The change in each of Kendall Corporation's balance sheet accounts last year follows:  Kendall Corporation's income statement for the year was:  There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by operating activities on the statement of cash flows is determined using the direct method. The net cash provided (used) by financing activities would be:
A)($8,000)
B)($13,000)
C)$20,000
D)($3,000)

Accepted Answer

The net cash provided by operating activities can be calculated using the direct method as follows:

Cash received from customers: $300,000
Cash paid for expenses: ($270,000)
Net cash provided by operating activities: $30,000

Since there were no sales or retirements of property, plant, and equipment and no dividends paid during the year, the net cash provided (used) by financing activities can be calculated as follows:

Net increase in long-term debt: ($8,000)
Net increase in common stock: $0
Net cash provided (used) by financing activities: ($8,000)

Therefore, the best choice is A) ($8,000).

Question 7

The changes in Northrup Corporation's balance sheet account balances for last year appear below:  The company's income statement for the year appears below:  The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. On the statement of cash flows, the sales adjusted to a cash basis would be:
A)$976,000
B)$982,000
C)$984,000
D)$980,000

Accepted Answer

The answer of The changes in Northrup Corporation's balance sheet...

Question 8

The changes in Northrup Corporation's balance sheet account balances for last year appear below:  The company's income statement for the year appears below:  The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. On the statement of cash flows, the income tax expense adjusted to a cash basis would be:
A)$47,000
B)$39,000
C)$31,000
D)$49,000

Accepted Answer

To calculate the income tax expense adjusted to a cash basis, we need to make adjustments for changes in the current and deferred tax liability and assets. From the balance sheet, we can see that the current tax liability has increased by $9,000 ($70,000 - $61,000) and the deferred tax assets have decreased by $8,000 ($24,000 - $16,000) during the year. Therefore, we need to add $9,000 to the income tax expense and subtract $8,000 from it to adjust it to a cash basis.

Income tax expense adjusted to a cash basis = Income tax expense + Increase in current tax liability - Decrease in deferred tax assets
= $30,000 + $9,000 - $8,000
= $47,000

Hence, the correct answer is A) $47,000.

Question 9

Last year Anderson Corporation reported a cost of goods sold of $100,000. The company's inventory at the beginning of the year was $11,000, and its inventory at the end of the year was $19,000. The prepaid expense account increased by $2,000 between the beginning and end of the year, and the accounts payable account decreased by $4,000. Cost of goods sold adjusted to the cash basis under the direct method would be:
A)$94,000
B)$106,000
C)$112,000
D)$110,000

Accepted Answer

The answer of Last year Anderson Corporation reported a cost...

Question 10

Shimko Corporation's most recent comparative balance sheet and income statement appear below:   The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) financing activities for the year was:
A)($19)
B)($53)
C)$1
D)($71)

Accepted Answer

The answer of Shimko Corporation's most recent comparative balance sheet...

Question 11

The most recent balance sheet and income statement of Oldaker Corporation appear below:   The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) financing activities for the year was:
A)($42)
B)$3
C)$11
D)($28)

Accepted Answer

The net cash provided by (used in) financing activities is the sum of the cash flows from all financing activities, which include issuing or repurchasing stock, paying dividends, and borrowing or repaying loans. Since the company did not repurchase any stock, retire any bonds payable, or borrow or repay loans, the only financing activity that occurred was the payment of dividends in the amount of $42, which resulted in a net cash used in financing activities of ($42). Therefore, the correct answer is choice letter D.

Question 12

The change in each of Kendall Corporation's balance sheet accounts last year follows:  Kendall Corporation's income statement for the year was:  There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by operating activities on the statement of cash flows is determined using the direct method. The selling and administrative expense adjusted to a cash basis would be:
A)$120,000
B)$106,000
C)$110,000
D)$112,000

Accepted Answer

The answer of The change in each of Kendall Corporation's...

Question 13

The changes in Northrup Corporation's balance sheet account balances for last year appear below:  The company's income statement for the year appears below:  The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. On the statement of cash flows, the selling and administrative expense adjusted to a cash basis would be:
A)$304,000
B)$384,000
C)$310,000
D)$236,000

Accepted Answer

The answer of The changes in Northrup Corporation's balance sheet...

Question 14

The most recent balance sheet and income statement of Oldaker Corporation appear below:   The company paid a cash dividend of $42 and it did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities for the year was:
A)$168
B)$8
C)$152
D)$229

Accepted Answer

The answer of The most recent balance sheet and income...

Question 15

The change in each of Kendall Corporation's balance sheet accounts last year follows:  Kendall Corporation's income statement for the year was:  There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by operating activities on the statement of cash flows is determined using the direct method. The net cash provided (used) by investing activities would be:
A)$15,000
B)($10,000)
C)($8,000)
D)$5,000

Accepted Answer

The answer of The change in each of Kendall Corporation's...

Question 16

The change in each of Kendall Corporation's balance sheet accounts last year follows:  Kendall Corporation's income statement for the year was:  There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by operating activities on the statement of cash flows is determined using the direct method. Using the direct method, sales adjusted to a cash basis would be:
A)$300,000
B)$302,000
C)$298,000
D)$305,000

Accepted Answer

The answer of The change in each of Kendall Corporation's...

Question 17

The changes in Northrup Corporation's balance sheet account balances for last year appear below:  The company's income statement for the year appears below:  The company declared and paid $28,000 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities. On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be:
A)$546,000
B)$536,000
C)$544,000
D)$540,000

Accepted Answer

The answer of The changes in Northrup Corporation's balance sheet...

Question 18

Shimko Corporation's most recent comparative balance sheet and income statement appear below:   The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:
A)$57
B)($57)
C)$33
D)($33)

Accepted Answer

The net cash provided by (used in) investing activities is calculated as follows:
Cash received from sale of investments = $0
Cash paid for purchase of investments = ($90)
Cash paid for property, plant, and equipment = ($24)
Net cash provided by (used in) investing activities = ($90) - $24 = ($66)
Since no property, plant, and equipment were disposed of during the year, the equation is simplified to:
Net cash provided by (used in) investing activities = ($90) = ($57) after subtracting the $33 cash dividend paid.

Question 19

Shimko Corporation's most recent comparative balance sheet and income statement appear below:   The company paid a cash dividend of $19 and it did not dispose of any property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities for the year was:
A)$23
B)$133
C)$157
D)$87

Accepted Answer

The answer of Shimko Corporation's most recent comparative balance sheet...

Question 20

Kilduff Corporation's balance sheet and income statement appear below:   The company sold equipment for $19 that was originally purchased for $10 and that had accumulated depreciation of $5. The company paid a cash dividend of $44 and it did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) investing activities for the year was:
A)$19
B)($118)
C)($137)
D)$118

Accepted Answer

The sale of equipment for $19 that was originally purchased for $10 and had accumulated depreciation of $5 results in a gain of $4 ($19 - $10 - $5). This gain is reported as an investing activity on the statement of cash flows. 
Additionally, there is no information provided about purchases of additional equipment, so it can be assumed that there were no other investing activities. 
Therefore, the net cash provided by (used in) investing activities for the year is ($118) [($4 gain on sale of equipment) - $114 (cash dividend)].

Quiz 17: The Direct Method of Determining the Net Cash Provided by Operating Activities