Question 1

Which of the following is disclosed separately in a statement of cash flows using the indirect method?

Accepted Answer

Net income is the starting point for the cash flow from operating activities section in the indirect method of the statement of cash flows.

Question 2

Ashford Company has an accrual basis net income of $270,000 in 2019 and the following related items:
 How much is Ashford's net cash flow from operating activities in 2019?

Accepted Answer

$270,000 + $57,000 - $18,000 + $21,000 - $12,000 = $318,000

Question 3

Baxa Company has an accrual basis net income of $360,000 in 2019 and the following related items:
 How much is Baxa's net cash flow from operating activities in 2019?

Accepted Answer

$360,000 + $76,000 - $24,000 + $28,000 - $16,000 = $424,000

Question 4

Demi, Inc. has an accrual basis net loss of $60,000 in 2019 and the following related items:
 How much is Lovato's net cash flow from operating activities in 2019?

Accepted Answer

$(60,000) + $33,000 + $24,000 - $18,000 + $9,000 + $15,000 = $3,000

Question 5

Luna, Inc. has an accrual basis net loss of $80,000 in 2019 and the following related items:
 How much is Lunas' net cash flow from operating activities in 2019?

Accepted Answer

$(80,000) + $44,000 + $32,000 - $24,000 + $12,000 + $20,000 = $4,000

Question 6

Tina's Art Supplies has an accrual basis net income of $156,000 in 2019 and the following related items:
 What is Tina's Art Supplies' net cash flow from operating activities in 2019?

Accepted Answer

$156,000 + $39,000 + $21,000 + $15,000 + $18,000 = $249,000

Question 7

Bruder's Office Supplies, Inc. has an accrual basis net income of $208,000 in 2019 and the following related items:
 What is Bruder's Office Supplies, Inc.'s net cash flow from operating activities in 2019?

Accepted Answer

$208,000 + $52,000 + $28,000 + $20,000 + $24,000 = $332,000

Question 8

A company reported annual sales revenue of $1,650,000 in 2019. During the year, accounts receivable decreased from a $42,000 beginning balance to a $36,000 ending balance. Accounts payable decreased from a $33,000 beginning balance to a $24,000 ending balance.
How much is cash received from customers for the year?

Accepted Answer

$1,650,000 + ($42,000 - $36,000) = $1,656,000

Question 9

A company reported annual sales revenue of $2,200,000 in 2019. During the year, accounts receivable decreased from a $56,000 beginning balance to a $48,000 ending balance. Accounts payable decreased from a $44,000 beginning balance to a $32,000 ending balance.
How much is cash received from customers for the year?

Accepted Answer

$2,200,000 + ($56,000 - $48,000) = $2,208,000

Question 10

A company reported annual sales revenue of $2,535,000 in 2019. During the year accounts receivable increased from a $42,000 beginning balance to a $57,000 ending balance. Accounts payable decreased from a $39,000 beginning balance to a $18,000 ending balance.
How much is cash received from customers for the year?

Accepted Answer

$2,535,000 - ($57,000 - $42,000) = $2,520,000

Question 11

A company reported cost of goods sold of $800,000 for the 2019 year. During the year, inventory increased from a $46,000 beginning balance to a $70,000 ending balance, and accounts payable increased from a $24,000 beginning balance to a $28,000 ending balance.
How much is the cash paid for merchandise purchased during the year?

Accepted Answer

$800,000 + ($70,000 - $46,000) + ($24,000 - $28,000) = $820,000

Question 12

A company reported cost of goods sold of $2,400,000 for the 2019 year. During the year, inventory increased from a $138,000 beginning balance to a $210,000 ending balance, and accounts payable increased from a $72,000 beginning balance to a $84,000 ending balance.
How much is the cash paid for merchandise purchased during the year?

Accepted Answer

$2,400,000 + ($210,000 - $138,000) + ($72,000 - $84,000) = $2,460,000

Question 13

A company reported annual income tax expense of $170,000 in 2019. During the year, income tax payable increased from a $12,400 beginning balance to a $17,600 ending balance.
How much is cash paid for income taxes during the year?

Accepted Answer

$170,000 + ($12,400 - $17,600) = $164,800

Question 14

A company reported annual income tax expense of $510,000 in 2019. During the year, income tax payable increased from a $37,200 beginning balance to a $52,800 ending balance.
How much is cash paid for income taxes during the year?

Accepted Answer

$510,000 + ($37,200 - $52,800) = $494,400

Question 15

With reference to the reporting of net cash flow from operating activities, which method do most companies use and why?

Accepted Answer

The indirect method is easier and cheaper because it takes less time. The direct method requires an additional step in that companies must also present a supplemental indirect method section.

Question 16

The following amounts have been taken from the recent financial statements for Merema Industries:
 To the closest hundredth, which of the following amounts is Merema's operating-cash-flow-to-current-liabilities ratio?

Accepted Answer

$5,335,000 / [($1,860,000 + $2,925,000)/2] = $5,335,000 / $2,392,500 = 2.23

Question 17

The following amounts have been taken from the recent financial statements for Becky Industries:
 To the closest hundredth, which of the following amounts is Becky's operating-cash-flow-to-current-liabilities ratio?

Accepted Answer

$6,732,000 / [($2,480,000 + $3,900,000)/2] = $6,732,000 / $3,190,000 = 2.11

Question 18

Which of the following is a required separate disclosure for firms using the direct method in the statement of cash flows?

Accepted Answer

All of the choices listed are required disclosures for firms using the direct method in the statement of cash flows. A reconciliation of net income to net cash flows from operating activities helps users understand the adjustments made to convert accrual-based net income to cash-based figures. A list of all noncash investing and financing transactions provides insight into significant activities that do not impact cash but affect the financial position. The policy for determining cash equivalents clarifies what the company considers as cash for the purpose of the statement of cash flows.

Question 19

Which of the following is not disclosed in a statement of cash flows using the direct method?

Accepted Answer

Depreciation expense is a non-cash charge and is not disclosed in the statement of cash flows, regardless of whether the direct or indirect method is used. The statement of cash flows focuses on actual cash inflows and outflows.

Question 20

For the current year, Rex Company's net cash flow from operating activities is $210,000; its beginning total liabilities were $300,000, and its ending total liabilities were $750,000.
The company's operating-cash-flow-to-total-liabilities ratio for the year is:

Accepted Answer

$210,000 / [($300,000 + $750,000) / 2] = 0.40

Quiz 13: Statement of Cash Flows

Which of the following is disclosed separately in a statement of cash flows using the indirect method?

Ashford Company has an accrual basis net income of $270,000 in 2019 and the following related items: How much is Ashford's net cash flow from operating activities in 2019?

Baxa Company has an accrual basis net income of $360,000 in 2019 and the following related items: How much is Baxa's net cash flow from operating activities in 2019?

Demi, Inc. has an accrual basis net loss of $60,000 in 2019 and the following related items: How much is Lovato's net cash flow from operating activities in 2019?

Luna, Inc. has an accrual basis net loss of $80,000 in 2019 and the following related items: How much is Lunas' net cash flow from operating activities in 2019?

Tina's Art Supplies has an accrual basis net income of $156,000 in 2019 and the following related items: What is Tina's Art Supplies' net cash flow from operating activities in 2019?

Bruder's Office Supplies, Inc. has an accrual basis net income of $208,000 in 2019 and the following related items: What is Bruder's Office Supplies, Inc.'s net cash flow from operating activities in 2019?

A company reported annual income tax expense of $170,000 in 2019. During the year, income tax payable increased from a $12,400 beginning balance to a $17,600 ending balance. How much is cash paid for income taxes during the year?

A company reported annual income tax expense of $510,000 in 2019. During the year, income tax payable increased from a $37,200 beginning balance to a $52,800 ending balance. How much is cash paid for income taxes during the year?

With reference to the reporting of net cash flow from operating activities, which method do most companies use and why?

The following amounts have been taken from the recent financial statements for Merema Industries: To the closest hundredth, which of the following amounts is Merema's operating-cash-flow-to-current-liabilities ratio?

The following amounts have been taken from the recent financial statements for Becky Industries: To the closest hundredth, which of the following amounts is Becky's operating-cash-flow-to-current-liabilities ratio?

Which of the following is a required separate disclosure for firms using the direct method in the statement of cash flows?

Which of the following is not disclosed in a statement of cash flows using the direct method?

For the current year, Rex Company's net cash flow from operating activities is $210,000; its beginning total liabilities were $300,000, and its ending total liabilities were $750,000. The company's operating-cash-flow-to-total-liabilities ratio for the year is: