Deck 14: The Statement of Cash Flows

Question 1

Which of the following is NOT a financing cash flow?

A) Dividends received
B) Issue of shares
C) Borrowing $10 000 from the bank
D) Share buybacks

Answer 1

A

Question 2

Which of the following is classified under cash flow from operations?

A) Dividend paid
B) Purchase of office equipment for cash
C) Sale of office equipment
D) Income taxes paid

Answer 2

D

Question 3

Which of the following is a financing activity?

A) Repayment of loan by other entity
B) Share buyback
C) Discount received
D) Discount allowed

Answer 3

B

Question 4

Which of the following is NOT classified as an investing activity?

A) Purchase of plant and equipment
B) Sale of plant and equipment
C) Issue of shares
D) Purchase of shares in another company

Question 5

During the year, Penso Ltd received $50 000 from its customers, $5000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3000 for income tax and $50 000 for new machinery. In addition, it paid out $12 000 to redeem bonds. Its cash balance at the commencement of the year was $22 000. What were the cash flows from investing activities?

A) $8000
B) $45 000
C) ($45 000)
D) ($48 000)

Question 6

During the year, Penso Ltd received $50 000 from its customers, $5000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3000 for income tax and $50 000 for new machinery. In addition, it paid out $12 000 to redeem bonds. Its cash balance at the commencement of the year was $22 000. What were the cash flows from operating activities?

A) $25 000
B) $23 000
C) ($17 000)
D) $20 000

Question 7

Which of the following cannot be classified under cash flow from operations?

A) Interest received
B) Dividends received
C) Interest paid
D) Dividends paid

Question 8

Which of the following does NOT involve a cash flow in 2016?

A) Payment in 2016 of insurance for 2017
B) Purchase of inventory in 2016, to be paid in 2017
C) Borrowing from the bank in 2016, to be repaid in 2018
D) Cash sales in 2016

Question 9

Which of the following is NOT an operating cash flow?

A) Cash sales
B) Payment of wages
C) Dividends paid
D) Interest paid

Question 10

Which of the following is NOT classified as an investing activity?

A) Purchase of shares in BHP
B) Purchase of motor vehicle
C) Making a loan to another entity
D) Obtaining a loan from another entity

Question 11

Which of the following is NOT a financing cash flow?

A) Dividends received
B) Issue of shares
C) The borrowing of $10 000 from the bank
D) Share buybacks

Question 12

Which of the following is NOT classified as a financing activity?

A) Issue of shares
B) Dividend payments
C) Sale of equipment
D) Borrowing from a finance company

Question 13

Which of the following is an operating cash flow?

A) Issue of shares
B) Purchase of equipment
C) Repayment of a loan
D) Receipt of cash from accounts receivable

Question 14

Which of the following is NOT an example of financing cash flows?

A) Repayment of borrowings
B) Purchase of another entity
C) Proceeds from borrowings
D) Issue of shares

Question 15

What effect does increasing depreciation expense have on cash flows?

A) It increases operating cash flows.
B) It decreases operating cash flows.
C) It decreases investing cash flows.
D) It has no effect.

Question 16

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows:

What were the receipts from customers of Staple Ltd?

A) $25 000
B) $40 000
C) $65 000
D) $135 000

Question 17

During the year, Penso Ltd received $50 000 from its customers, $5000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3000 for income tax and $50 000 for new machinery. In addition, it paid out $12 000 to redeem bonds. Its cash balance at the commencement of the year was $22 000. What were the cash flows from financing activities?

A) $20 000
B) $8000
C) ($12 000)
D) ($28 000)

Question 18

Which of the following transactions does NOT involve a cash flow?

A) Prepayment of insurance
B) Issue of shares
C) Accrual of waged expense
D) Revenue received in advance

Question 19

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows:

What were the payments to suppliers and employees of Staple Ltd?

A) $45 000
B) $55 000
C) $80 000
D) $30 000

Question 20

Which of the following is NOT an investing cash flow?

A) Proceeds from the sale of equipment
B) Purchase of shares on the stock market
C) Purchase of another company
D) Repayment of debentures

Question 21

Given the following information for the year ended 30 June 2016:

What was the amount of cash received from customers?

A) $110 000
B) $180 000
C) $290 000
D) $310 000

Question 22

The following information is taken from the accounts of Birmingham Ltd for year ended 30 June 2016.

What was the amount of cash received from customers?

A) $305 000
B) $465 000
C) $485 000
D) None of the answers provided

Question 23

Use the information below to answer the following question.

The amount of cash paid to suppliers during the year was:

A) $10 000.
B) $501 000.
C) $510 000.
D) $519 000.

Question 24

If a gain of $70 000 is incurred in selling equipment that has a book value of $250 000, the total amount reported in the cash flows from the investing activities section of the statement of cash flows is:

A) $70 000.
B) $220 000.
C) $320 000.
D) $270 000.

Question 25

Marion Company had these transactions during the first month of the new accounting period:
$\bullet$ Sold merchandise for $9000 on credit; its cost was $5000 and it was purchased and paid for last year
$\bullet$ Collected $3000 from an account receivable
$\bullet$ Borrowed $10 000 from the bank
$\bullet$ Paid dividends of $500
Using the above information, Marion would report net cash flow from operating activities for the new period as:

A) $2500.
B) $3000.
C) $8000.
D) none of the answers provided.

Question 26

Use the information below to answer the following question.

The amount of inventory purchased during the year was:

A) $490 000.
B) $500 000.
C) $510 000.
D) $520 000.

Question 27

The cost of goods sold during the year was $50 000. Inventories were $11 500 and $9500 at the beginning and end of the year, respectively. Accounts payable were $5000 and $4000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments to accounts payable would total:

A) $49 000.
B) $47 000.
C) $51 000.
D) $53 000.

Question 28

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows:

What was the cash flow from financing activities of Staple Ltd?

A) $60 000
B) $40 000
C) ($20 000)
D) $20 000

Question 29

Income tax expense was $200 000 for the year. Income tax payable was $20 000 at the beginning and $30 000 at the end of the year. Cash payment for income tax reported on the cash flow statement using the direct method is:

A) $200 000.
B) $190 000.
C) $220 000.
D) $230 000.

Question 30

Use the information below to answer the following question.

What was the cash flow from financing activities?

A) $320
B) $430
C) ($40)
D) $700

Question 31

Use the information below to answer the following question.

What was the cash flow from investing activities?

A) $570
B) $210
C) ($290)
D) ($330)

Question 32

The net profit reported on the income statement for the current year was $50 000. Depreciation on property, plant and equipment was $31 000. What is the amount of cash flows from operating activities that would appear on the statement of cash flows prepared using the indirect method?

A) $19 000
B) $49 000
C) $81 000
D) $80 000

Question 33

A summary of the entries in the Cash ledger account of Staple Ltd for the month of January was as follows:

What was the cash flow from investing activities of Staple Ltd?

A) ($5000)
B) ($45 000)
C) ($65 000)
D) ($55 000)

Question 34

The following information is taken from the accounts of Birmingham Ltd for year ended 30 June 2016.

What was the value of debts written off as irrecoverable during the year?

A) $5000
B) $8000
C) $12 000
D) $20 000

Question 35

Assume zero opening balances for all balance sheet accounts.
$\bullet$ Credit sales of $100 000, of which $80 000 was received at year end
$\bullet$ Paid wages of $40 000
$\bullet$ Depreciation expenses was $8000
Net profit and cash flow from operations are respectively?

A) $32 000; $40 000
B) $52 000; $32 000
C) $52 000; $40 000
D) None of the answers provided

Question 36

Determine the cash received from customers on account during July, based on the following data.

A) $37 900
B) $40 000
C) $42 100
D) $26 000

Question 37

Use the information below to answer the following question.

What was the cash flow from operating activities?

A) ($90)
B) ($350)
C) ($610)
D) ($500)

Question 38

Given the following information, what was the amount paid to suppliers during the year?

A) $700 000
B) $580 000
C) $540 000
D) $240 000

Question 39

The opening and closing balances of accounts receivable were $200 000 and $270 000 respectively. Sales on credit were $200 000. What was the amount of cash received from customers?

A) $130 000
B) $200 000
C) $270 000
D) $300 000

Question 40

The prepaid insurance account showed an opening balance of $22 000 and a closing balance of $25 000. Insurance expense was $67 000. What was the cash payment for insurance?

A) $64 000
B) $67 000
C) $70 000
D) $45 000

Question 41

The income tax payable account showed an opening balance of $62 000 and a closing balance of $75 000. Income tax expense was $68 000. What was the income tax paid?

A) $55 000
B) $68 000
C) $81 000
D) $62 000

Question 42

The following information is taken from the accounts of Ray Ltd.

What was the value of motor vehicles purchased for cash?

A) $140 000
B) $190 000
C) $250 000
D) $80 000

Question 43

The following information is taken from the accounts of Ray Ltd.

What were the proceeds from sale of motor vehicles?

A) $30 000
B) $40 000
C) $50 000
D) $140 000

Question 44

The following information is taken from the accounts of Spratt Ltd.

What were the proceeds from the sale of plant?

A) $9000
B) $19 000
C) $29 000
D) $47 000

Question 45

The following information is taken from the financial statements of Cyrus Ltd for the year ended 30 June 2016.

Dividends of $100 000 were declared during the year, and the balances in the dividends payable account at the beginning and end of the year were $15 000 and $25 000 respectively. What amount would be reported as payment of dividends in the cash flows from the financing activities section of the statement of cash flows?

A) $90 000
B) $25 000
C) $100 000
D) $110 000

Question 46

The following information is taken from the accounts of Spratt Ltd.

What was the accumulated depreciation on plant sold during the year?

A) $32 000
B) $42 000
C) $52 000
D) $40 000

Question 47

Using the following information, calculate net operating profit after tax.

A) $270 000
B) $430 000
C) $530 000
D) None of the answers provided

Question 48

The following information is taken from the accounts of Ray Ltd.

What was the accumulated depreciation on motor vehicles sold during the year?

A) $90 000
B) $150 000
C) $210 000
D) $80 000

Question 49

The following information is taken from the accounts of Spratt Ltd.

What was the value of plant purchased?

A) $20 000
B) $70 000
C) $88 000
D) $120 000

Question 50

The net profit reported on the income statement for the current year was $100 000. Depreciation recorded on property, plant and equipment was $60 000. Balances of current asset and current liability accounts at the end and at the beginning of the year are listed below.

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

A) $94 000
B) $109 500
C) $154 500
D) $155 500

Question 51

Which of the following is NOT added back to net income to obtain cash flow from operations?

A) Depreciation
B) Gain on sale of investment
C) Decrease in accounts receivable
D) Increase in accounts payable

Question 52

Income tax expense was $200 000 for the year. Income tax payable was $20 000 at the beginning and $30 000 at the end of the year. Cash payment for income tax reported on the cash flow statement using the direct method is:

A) $200 000.
B) $190 000.
C) $220 000.
D) $230 000.

Question 53

The wages payable account showed an opening balance of $27 000 and a closing balance of $42 000. Wages expense was $590 000. What was the cash payment for wages?

A) $575 000
B) $590 000
C) $605 000
D) $632 000

Question 54

Which of the following statements about the indirect method of presenting cash flow from operations is NOT true?

A) The direct and indirect methods give the same cash flow from operations.
B) Australian companies do not need to report information about the indirect method.
C) Depreciation expense is added back to operating profit in the indirect method.
D) Decreases in accounts payable are deducted from operating profit in the indirect method.

Question 55

The following information is taken from the financial statements of Cyrus Ltd for the year ended 30 June 2016.

What was the amount of interim dividend paid during the year?

A) $620 000
B) $460 000
C) $230 000
D) $210 000

Question 56

The following information is taken from the financial statements of Cyrus Ltd for the year ended 30 June 2016.

What were the total dividends paid during the year?

A) $250 000
B) $460 000
C) $480 000
D) $230 000

Question 57

The retained profits of Franko Ltd at the beginning of the year were $270 000 and at the end of the year $320 000. Net profit after tax for the year was $510 000. During the year, $100 000 was transferred to general reserve. The proposed final dividend at the beginning of the year was $200 000 and at the end of the year $250 000. What was the amount of interim dividend paid during the year?

A) $110 000
B) $160 000
C) $260 000
D) $360 000

Question 58

The net operating profit of Patrick Ltd was $31 000. Depreciation expense was $10 000 and gain on sale of equipment was $2000. Accounts receivable increased by $15 000 and inventory decreased by $7000. Accounts payable decreased by $8000. What was the cash flow from operations?

A) $47 000
B) $39 000
C) $25 000
D) $23 000

Question 59

Consecutive balance sheets of Crow Ltd showed the following balances:

During the year ended 30 June 2016, land was revalued upwards by $120 000, and $80 000 was borrowed to acquire land. What was the value of land purchased for cash?

A) $50 000
B) $130 000
C) $170 000
D) $250 000

Question 60

Shippers Ltd made a net operating loss of $42 000. Depreciation expense was $80 000 and loss on sale of vessels was $170 000. Accounts receivable increased by $65 000 and inventory decreased by $18 000. Accounts payable increased by $160 000 and expenses payable decreased by $1000. What was the cash flow from operations?

A) $404 000
B) $320 000
C) ($20 000)
D) None of the answers provided