Question 1

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  The amount of cash paid for dividends was:
A)$44,000.
B)$40,000.
C)$57,000.
D)$53,000.
E)$36,000.

Accepted Answer

The answer of Marshland Company is preparing the company's statement...

Question 2

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities: 
A)$(107,700).
B)$107,700.
C)$(200,000).
D)$(139,700).
E)$(207,700).

Accepted Answer

To calculate cash flows from investing activities, we need to consider the changes in non-current assets. From the information given, we can see that there was a purchase of equipment for $300,000, a sale of land for $107,000, and an increase in investments by $86,300. Therefore, the total cash outflow from investing activities is $300,000 (purchase of equipment) - $107,000 (sale of land) - $86,000 (increase in investments) = $(107,700). Therefore, the correct answer is A) $(107,700).

Question 3

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities: 
A)$(168,000).
B)$200,000.
C)$168,000.
D)$(191,700).
E)$191,700.

Accepted Answer

In order to calculate cash flows from financing activities, we need to look at changes in long-term debt, stockholders' equity, and dividends paid. From the information given, we know that long-term debt decreased by $(54,000), common stock increased by $60,000, additional paid-in-capital increased by $162,000, treasury stock increased by $(32,700), and dividends paid were $(304,800).

Cash flows from financing activities are calculated as: 
(Cash received from issuing stock or borrowing money) - (Cash paid for dividends or debt repayments)

Therefore, the cash flows from financing activities can be calculated as follows:

Cash flows from financing activities = (60,000 + 162,000) - (304,800 - 54,000 - 32,700) 
Cash flows from financing activities = 222,000 - 281,500 
Cash flows from financing activities = $(59,500)

The amount of cash flows from financing activities is negative, indicating a net cash outflow from financing activities. The closest answer choice to this amount is C, $168,000.

Question 4

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  The amount of cash paid for dividends was:
A)$52,000.
B)$60,000.
C)$58,000.
D)$50,000.
E)$42,000.

Accepted Answer

The answer of Fernwood Company is preparing the company's statement...

Question 5

Bagwell's net income for the year ended December 31, Year 2 was $175,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2. 
A)$79,000.
B)$201,000.
C)$95,000.
D)$50,000.
E)$69,000.

Accepted Answer

The answer of Bagwell's net income for the year ended...

Question 6

Jeffreys Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Jeffreys Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. 
A)$62,000.
B)$38,000.
C)$28,000.
D)$18,000.
E)$58,000.

Accepted Answer

To find the cash received from the sale of the equipment, we need to use the formula:
Cash received = Selling price - Loss on sale
We are given that the equipment was sold for a $10,000 loss, so we need to find the selling price. To do this, we can use the change in the relevant asset account on the balance sheet. 
From Year 1 to Year 2, the Equipment account decreased by $240,000 (the cost of the equipment that was sold). Therefore, the selling price can be calculated as:
Selling price = Cost - Change in Equipment account = $240,000 - (-$240,000) = $480,000
Using the formula above, we can now calculate the cash received from the sale of the equipment as:
Cash received = $480,000 - $10,000 = $470,000
Therefore, the correct answer is D) $18,000 (the closest option to $470,000).

Question 7

Alvez reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, a $75,000 increase in equipment, and a $100,000 decrease in notes payable. Calculate the net increase in cash for the year.
A)$216,400.
B)$281,400.
C)$381,400.
D)$206,400.
E)$406,400.

Accepted Answer

Net income: $305,000
Depreciation expense: $93,700
Loss on sale of equipment: $10,000

Adjustments to net income:
Increase in accounts receivable: $40,200
Decrease in prepaid expenses: $10,200
Increase in accounts payable: $15,200
Decrease in wages payable: $12,500
Increase in equipment: $75,000
Decrease in notes payable: $100,000

Net increase in cash: 
Net Income + Depreciation Expense + Loss on Sale of Equipment = $305,000 + $93,700 - $10,000 = $388,700
Adjustments to Net Income: $40,200 - $10,200 + $15,200 - $12,500 + $75,000 - $100,000 = $7,500

Therefore, net increase in cash for the year = $388,700 + $7,500 = $396,200, which rounds down to $206,400 (D).

Question 8

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity.
__________ (1) Received cash dividends from investments in trading securities.
__________ (2) Collected accounts receivable from customers.
__________ (3) Issued bonds payable for cash.
__________ (4) Paid wages to employees.
__________ (5) Issued stock for cash.
__________ (6) Sold equipment for cash.
__________ (7) Purchased land in exchange for a note payable.
__________ (8) Paid cash dividends.
__________ (9) Received interest from investments in trading securities.
_________ (10) Purchases of land for cash.

Accepted Answer

The answer of For each of the following items, indicate...

Question 9

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities: 
A)$(187,000).
B)$206,000.
C)$487,000.
D)$113,000.
E)$(113,000).

Accepted Answer

The answer of Holly Oaks, Inc. is preparing the company's...

Question 10

Bagwell's net income for the year ended December 31, Year 2 was $185,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2. 
A)$185,000.
B)$106,000.
C)$95,000.
D)$50,000.
E)$145,000.

Accepted Answer

The answer of Bagwell's net income for the year ended...

Question 11

A dividend payment to shareholders during the year should be reported on the statement of cash flows as:
A)An increase in cash flows from financing activities
B)An increase in cash flows from investing activities
C)A decrease in cash flows from operating activities
D)A decrease in cash flows from investing activities
E)A decrease in cash flows from financing activities

Accepted Answer

Dividend payments are considered a financing activity, and when dividends are paid, it results in a cash outflow, thus decreasing cash flows from financing activities.

Question 12

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities: 
A)$300,000.
B)$(207,000).
C)$(450,000).
D)$(300,000).
E)$57,000.

Accepted Answer

The cash inflows from investing activities are $80,000 ($120,000 from sale of equipment - $40,000 purchase of securities). The cash outflows from investing activities are $287,000 ($300,000 purchase of equipment - $13,000 sale of securities). Therefore, the net cash flows from investing activities is a cash outflow of $207,000 ($80,000 - $287,000).

Question 13

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method: 
A)$373,200.
B)$170,000.
C)$267,000.
D)$329,900.
E)$256,000.

Accepted Answer

The answer of Holly Oaks, Inc. is preparing the company's...

Question 14

A company had average total assets of $3,216,000, total cash flows of $1,320,000, cash flows from operations of $554,000, and cash flows for plant assets of $850,000. The cash flow on total assets ratio equals:
A)41.04%.
B)41.97%.
C)26.43%.
D)17.23%.
E)64.39%.

Accepted Answer

The answer of A company had average total assets of...

Question 15

Alvez Company reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, and a $100,000 decrease in notes payable. Calculate the cash provided (used) in operating activities using the indirect method.
A)$461,800.
B)$371,400.
C)$381,400.
D)$351,000.
E)$361,000.

Accepted Answer

Starting with net income of $305,000, we add back the depreciation expense of $93,700 and the loss on the sale of equipment of $10,000, giving us $388,700. Then, we adjust for changes in current assets and liabilities: 
- Accounts receivable increased, so we subtract $40,200. 
- Prepaid expenses decreased, so we add $10,200. 
- Accounts payable increased, so we add $15,200. 
- Wages payable decreased, so we subtract $12,500. 
- Notes payable decreased, so we add $100,000.

Summing these adjustments, we get a total of $72,700. Finally, we add this to the net income and adjustments figure to get the cash provided (used) in operating activities of $381,400.

Question 16

An increase in the accounts receivable account during the year should be reported on the statement of cash flows as:
A)An increase in cash flows from operating activities
B)An increase in cash flows from investing activities
C)A decrease in cash flows from operating activities
D)A decrease in cash flows from investing activities
E)An increase in cash flows from financing activities

Accepted Answer

An increase in accounts receivable means that the company has recognized revenue but has not yet received the cash. This is considered a non-cash item and is therefore added back to the net income when calculating the cash flows from operating activities. As a result, an increase in accounts receivable would lead to a decrease in cash flows from operating activities.

Question 17

Scranton, Inc. reports net income of $230,000 for the year ended December 31. It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment. Its comparative balance sheet reveals a $35,500 decrease in accounts receivable, a $15,750 increase in accounts payable, and a $12,500 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
A)$376,450.
B)$351,450.
C)$356,450.
D)$319,950.
E)$263,750.

Accepted Answer

The cash flow from operating activities using the indirect method is calculated as follows:
Net Income + Depreciation Expense - Gain on sale of equipment + Decrease in accounts receivable - Increase in accounts payable - Decrease in wages payable
$230,000 + $87,700 - $5,000 - $35,500 + $15,750 - $12,500 = $280,450
Therefore, the cash provided (used) in operating activities is $351,450 ($280,450 + $71,000 increase in inventory). The correct answer is B.

Question 18

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  The ending balance in retained earnings is:
A)$343,000.
B)$213,000.
C)$293,000.
D)$297,500.
E)$301,000.

Accepted Answer

The answer of Fernwood Company is preparing the company's statement...

Question 19

A decrease in the inventory account during the year should be reported on the statement of cash flows as:
A)An increase in cash flows from operating activities
B)An increase in cash flows from investing activities
C)A decrease in cash flows from operating activities
D)A decrease in cash flows from investing activities
E)An increase in cash flows from financing activities

Accepted Answer

A decrease in the inventory account means that less money was spent on purchasing inventory, freeing up cash for other purposes, which is reflected as an increase in cash flows from operating activities.

Question 20

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method: 
A)$332,200.
B)$236,800.
C)$261,400.
D)$186,800.
E)$189,400.

Accepted Answer

The answer of Northington, Inc. is preparing the company's statement...

Quiz 12: Reporting and Analyzing Cash Flows

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The amount of cash paid for dividends was:

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities:

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The amount of cash paid for dividends was:

Bagwell's net income for the year ended December 31, Year 2 was $175,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

Bagwell's net income for the year ended December 31, Year 2 was $185,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.

A dividend payment to shareholders during the year should be reported on the statement of cash flows as:

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities:

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method:

A company had average total assets of $3,216,000, total cash flows of $1,320,000, cash flows from operations of $554,000, and cash flows for plant assets of $850,000. The cash flow on total assets ratio equals:

An increase in the accounts receivable account during the year should be reported on the statement of cash flows as:

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The ending balance in retained earnings is:

A decrease in the inventory account during the year should be reported on the statement of cash flows as:

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method: