Question 1

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col } 3 \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col } 4 \
\text { Financing }
\end{array} \
\hline \text { Increase in prepaid expenses } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 2

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Cash received from customers } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 3

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Increase in inventory } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 4

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Decrease in prepaid expenses } & & & & \
\hline
\end{array}$

Accepted Answer

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

Question 5

The cash flows from operating activities are reported by the direct method on the statement of cash flow.Determine the following:
a.If sales for the current year were $600,000 and accounts receivable decreased $25,500 during the year,what was the amount of cash received from customers?
b.If sales salaries expense for the current years was $80,000 and sales salaries payable increased $25,000 during the year,what was the amount of cash payments for sales salaries?

Accepted Answer

The answer of The cash flows from operating activities are...

Question 6

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col } 4 \
\text { Financing }
\end{array} \
\hline \begin{array} { l } 
\text { Cash paid for merchandise } \
\text { inventory }
\end{array} & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 7

Which would not go into the operating activities section of a statement of cash flows using the direct method?

Accepted Answer

The operating activities section of a statement of cash flows using the direct method includes cash transactions related to revenue and expense activities. Depreciation expense (A) is a non-cash charge and thus not included. Payment for dividends (B) is a financing activity, and selling of plant, property, and equipment (C) is an investing activity, neither of which belong in the operating activities section.

Question 8

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Cash paid for rent } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 9

The direct method must be used to report cash flows from operating activities in the statement of cash flows.

Accepted Answer

Both the direct and indirect methods are acceptable for reporting cash flows from operating activities according to accounting standards. The direct method shows actual cash inflows and outflows from operating activities, while the indirect method adjusts net income for non-cash transactions and changes in working capital.

Question 10

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Cash paid for salaries or wages } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 11

Which of the following is not a cash flow from investing activities?

Accepted Answer

Payment of cash dividends is considered a cash flow from financing activities, not investing activities. The other choices (A, C, and D) are all cash flows from investing activities.

Question 12

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Net loss } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 13

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Sale of land } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 14

To determine cash received from customers for the cash flow statement using the direct method,a decrease in accounts receivable is added to sales.

Accepted Answer

A decrease in accounts receivable means that less money is owed from customers, which indicates that cash has been received. Therefore, it is added to sales to determine the cash received from customers.

Question 15

Depreciation is shown only when using the direct method of preparing a statement of cash flow.

Accepted Answer

Depreciation can be shown under both the direct and indirect method of preparing a statement of cash flow. Under the direct method, it is included in operating activities as a separate line item while under the indirect method, it is added back to net income in the operating activities section.

Question 16

Under the direct method,each line of the income statement is converted to cash paid or received.

Accepted Answer

The direct method of cash flow statement preparation involves converting each line item of the income statement to reflect cash transactions, showing cash received and paid.

Question 17

Operating expenses other than depreciation for the year were $400,000.Accrued expenses payable increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

The cash payments for operating expenses would be the operating expenses minus the increase in accrued expenses payable: $400,000 - $35,000 = $365,000.

Question 18

The cash flows from operating activities are reported by the direct method on the statement of cash flows.Determine the following:
a.If accrued expenses showed $50,000 on the income statement and payables increased from $15,000 to $18,500 on the balance sheet,what was the amount of cash paid?
b.If insurance expense showed $10,000 on the income statement and Prepaid Insurance increased from $10,000 to $12,000 on the balance sheet,what was the amount of cash paid for insurance?

Accepted Answer

The answer of The cash flows from operating activities are...

Question 19

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col } 4 \
\text { Financing }
\end{array} \
\hline \text { Increase in accounts payable } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 20

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Net income } & & & & \
\hline
\end{array}$$

Accepted Answer

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

Quiz 21: Statement of Cash Flows

Which would not go into the operating activities section of a statement of cash flows using the direct method?

The direct method must be used to report cash flows from operating activities in the statement of cash flows.

Which of the following is not a cash flow from investing activities?

To determine cash received from customers for the cash flow statement using the direct method,a decrease in accounts receivable is added to sales.

Depreciation is shown only when using the direct method of preparing a statement of cash flow.

Under the direct method,each line of the income statement is converted to cash paid or received.

Operating expenses other than depreciation for the year were $400,000.Accrued expenses payable increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be: