Question 1

Table 17-7
The accounting records of McKal Chocolates Ltd. reveal the following:
 
-Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the Total net cash flow from operating,investing and financing activities?

Accepted Answer

A) $113,050 - 195,000 - 10,000

Question 2

Table 17-7
The accounting records of McKal Chocolates Ltd. reveal the following:
 
-Refer to Table 17-7.Which of the following statements is TRUE?

Accepted Answer

A large investment likely caused the overall cash flow to be negative, indicating that the company is investing in its future rather than not generating enough cash from operations.

Question 3

Magraw Corporation's 2017 income statement reports amortization expense of $25,000.On the cash flow statement for 2017 prepared using the direct method,amortization:

Accepted Answer

Amortization is a non-cash expense and is not reported on the cash flow statement when using the direct method.

Question 4

Poole Industries prepares its cash flow statement using the direct method.Poole sold equipment with a book value of $7,000 at a gain of $2,500.The amount to be reported on the cash flow statement under operating activities is:

Accepted Answer

The sale of equipment is considered an investing activity, not an operating activity, on the cash flow statement. Therefore, it would not be reported under operating activities.

Question 5

Freedom Enterprises uses the direct method in preparing its cash flow statement.Freedom sold machinery with a book value of $36,700 at a loss of $7,200.The amount to be reported on the cash flow statement under "Cash received from sale of property,plant,and equipment" is:

Accepted Answer

The direct method only reports the actual cash received from the sale of property, plant, and equipment. Therefore, the cash received is the selling price minus the loss on sale, which is $36,700 - $7,200 = $29,500. Therefore, the correct answer is B.

Question 6

All of the following might appear on the direct-method cash flow statement except:

Accepted Answer

The direct method of preparing a cash flow statement focuses on the actual cash flows from operating activities, which include cash transactions like interest received on a loan (A), payment of dividends (B), and collections from customers (D). A gain on the sale of equipment (C) is not a cash flow from operating activities but rather an investing activity, and it would be reflected in the cash flow statement as a cash inflow in the investing section, not in the operating section where the direct method is applied.

Question 7

Table 17-7
The accounting records of McKal Chocolates Ltd. reveal the following:
 
-Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from operating activities?

Accepted Answer

B) $253,000 - 85,000 - 46,950 - 8,000

Question 8

Carlton Industries prepares its cash flow statement using the direct method.Carlton sold a piece of equipment used in their operations with a book value of $6,400 at a loss of $800.The amount to be reported on the cash flow statement under investing activities is:

Accepted Answer

The cash received from the sale of equipment is calculated by subtracting the loss from the book value, which is $6,400 - $800 = $5,600. This is the amount reported under investing activities.

Question 9

Floyd & Sons Inc.gathered the following data from its accounting records for the year ended December 31,2017:
 $\begin{array}{ll}
\text { Amortization expense } & \$ 20,900 \
\text { Payment of income taxes } & 19,500 \
\text { Collections of accounts receivable } & 367,200 \
\text { Declaration of stock dividend } & 65,000 \
\text { Cash Received on sale of land } & 105,400 \
\text { Collection of dividend revenue } & 14,000 \
\text { Payments of salaries and wages } & 183,600 \
\text { Cash sales } & 23,700 \
\text { Payment of interest } & 19,400 \
\text { Interest received on investments } & 3,100 \
\text { Payments to suppliers } & 73,600
\end{array}$ Prepare the operating activities section of the cash flow statement using the direct method.

Accepted Answer

The answer of Floyd & Sons Inc.gathered the following data...

Question 10

As the accountant at O'Donnell Industries,you are responsible for preparing the cash flow statement.You have decided to prepare the statement using the direct method and have gathered the following data from the accounting records:
  Acquisition of equipment by issuing
  Cash received from sale of property,plant,and equipment,
  Prepare the operating activities section of the cash flow statement using the direct method for the year ended December 31,2017.

Accepted Answer

The answer of As the accountant at O'Donnell Industries,you are...

Question 11

Alcan Corporation reports the following information for 2017. $\begin{array}{ll}
\text { Credit sales } & \$ 599,000 \
\text { Collections from customers } & 480,000 \
\text { Interest received on investments } & 20,000 \
\text { Dividends paid to common shareholders } & 11,000 \
\text { Cost of goods sold } & 335,000 \
\text { Payments to inventory suppliers } & 339,500 \
\text { Amortization expense } & 25,000 \
\text { Operating expenses } & 70,000 \
\text { Payments for operating expenses } & 72,500 \
\text { Interest and taxes paid } & 12,300
\end{array}$ What is the net cash inflow from operating activities?

Accepted Answer

Net cash inflow from operating activities is calculated as: Collections from customers ($480,000) - Payments to inventory suppliers ($339,500) - Payments for operating expenses ($72,500) - Interest and taxes paid ($12,300) = $75,700.

Question 12

Sureteck Industries prepares its cash flow statement using the direct method.Sureteck sold a piece of equipment used in their operations with a book value of $7,000 at a gain of $2,500.The amount to be reported on the cash flow statement under investing activities is:

Accepted Answer

The gain on sale of equipment is reported under investing activities as a cash inflow of $9,500 ($7,000 book value + $2,500 gain).

Question 13

Table 17-7
The accounting records of McKal Chocolates Ltd. reveal the following:
 
-Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from financing activities?

Accepted Answer

D) Only the payment of dividends has an effect on cash. The share issuance was for a noncash asset - warehouse.

Question 14

Kline Industries prepares its cash flow statement using the direct method.Kline sold equipment with a book value of $7,500 at a gain of $1,300.The amount to be reported on the cash flow statement under "Cash received from sale of property,plant,and equipment" is:

Accepted Answer

The amount received from the sale is the book value of the equipment ($7,500) plus the gain on sale ($1,300), totaling $8,800.

Question 15

Rona Inc.gathered the following data from its accounting records for the year ended December 31,2017:
  Acquisition of equipment by issuing
 long-term note payable$\quad$$\quad$50,000 Prepare the operating activities section of the cash flow statement using the direct method.

Accepted Answer

The answer of Rona Inc.gathered the following data from its...

Question 16

Santana Industries prepares its cash flow statement using the direct method.Santana sold equipment with a book value of $6,400 at a loss of $800.The amount to be reported on the cash flow statement under operating activities is:

Accepted Answer

The sale of equipment is considered an investing activity, not an operating activity, on the cash flow statement. Therefore, it would not be reported under operating activities.

Question 17

All of the following might appear on the direct-method cash flow statement except:

Accepted Answer

The direct-method cash flow statement only reports cash inflows and outflows related to operating activities, investing activities, and financing activities. A loss on sale of land is a non-operating item and would not be included in the direct-method cash flow statement. Interest received on a loan would be included as an operating cash inflow, payment of dividends would be included as a financing cash outflow, and collections from customers would be included as an operating cash inflow.

Question 18

Table 17-7
The accounting records of McKal Chocolates Ltd. reveal the following:
 
-Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from investing activities?

Accepted Answer

C) Only the purchase of the equipment has an effect on cash.

Question 19

As the accountant at O'Donnell Industries,you are responsible for preparing the cash flow statement.You have decided to prepare the statement using the direct method and have gathered the following data from the accounting records:
 payment of long-term debt$\quad$$\quad$$\quad$$\quad$$200,000
Collections on accounts receivable$\quad$$\quad$210,600 Acquisition of equipment by issuing
  Cash received from sale of property,plant,and equipment,
  Prepare the financing activities section of the cash flow statement using the direct method for the year ended December 31,2017.

Accepted Answer

The answer of As the accountant at O'Donnell Industries,you are...

Question 20

As the accountant at O'Donnell Industries,you are responsible for preparing the cash flow statement.You have decided to prepare the statement using the direct method and have gathered the following data from the accounting records:
  Acquisition of equipment by issuing
  Cash received from sale of property,plant,and equipment,
  Prepare the investing activities section of the cash flow statement using the direct method for the year ended December 31,2017.

Accepted Answer

The answer of As the accountant at O'Donnell Industries,you are...

Quiz 6: The Cash Flow Statement

Table 17-7 The accounting records of McKal Chocolates Ltd. reveal the following: -Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the Total net cash flow from operating,investing and financing activities?

Table 17-7 The accounting records of McKal Chocolates Ltd. reveal the following: -Refer to Table 17-7.Which of the following statements is TRUE?

Magraw Corporation's 2017 income statement reports amortization expense of $25,000.On the cash flow statement for 2017 prepared using the direct method,amortization:

Poole Industries prepares its cash flow statement using the direct method.Poole sold equipment with a book value of $7,000 at a gain of $2,500.The amount to be reported on the cash flow statement under operating activities is:

Freedom Enterprises uses the direct method in preparing its cash flow statement.Freedom sold machinery with a book value of $36,700 at a loss of $7,200.The amount to be reported on the cash flow statement under "Cash received from sale of property,plant,and equipment" is:

All of the following might appear on the direct-method cash flow statement except:

Table 17-7 The accounting records of McKal Chocolates Ltd. reveal the following: -Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from operating activities?

Carlton Industries prepares its cash flow statement using the direct method.Carlton sold a piece of equipment used in their operations with a book value of $6,400 at a loss of $800.The amount to be reported on the cash flow statement under investing activities is:

Sureteck Industries prepares its cash flow statement using the direct method.Sureteck sold a piece of equipment used in their operations with a book value of $7,000 at a gain of $2,500.The amount to be reported on the cash flow statement under investing activities is:

Table 17-7 The accounting records of McKal Chocolates Ltd. reveal the following: -Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from financing activities?

Kline Industries prepares its cash flow statement using the direct method.Kline sold equipment with a book value of $7,500 at a gain of $1,300.The amount to be reported on the cash flow statement under "Cash received from sale of property,plant,and equipment" is:

Rona Inc.gathered the following data from its accounting records for the year ended December 31,2017: Acquisition of equipment by issuing long-term note payable \quad\quad 50,000 Prepare the operating activities section of the cash flow statement using the direct method.

Santana Industries prepares its cash flow statement using the direct method.Santana sold equipment with a book value of $6,400 at a loss of $800.The amount to be reported on the cash flow statement under operating activities is:

All of the following might appear on the direct-method cash flow statement except:

Table 17-7 The accounting records of McKal Chocolates Ltd. reveal the following: -Refer to Table 17-7.Assume that McKal Chocolates Ltd.used the direct-method to prepare their cash flow statement.What would be the net cash flow from investing activities?