Question 1

Royer Corporation engaged in this transaction: Purchased treasury stock with cash.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

Purchasing treasury stock with cash is considered a financing activity, as it involves using cash to reduce the number of outstanding shares of the company's stock. Therefore, this transaction would appear in the financing activities section of the statement of cash flows.

Question 2

Royer Corporation engaged in this transaction: Sold buildings and equipment for cash.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

The transaction represents a sale of long-term assets (buildings and equipment), which would fall under the investing activities section of the statement of cash flows.

Question 3

Royer Corporation engaged in this transaction: Depreciation on equipment.Assume use of the indirect approach.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

Depreciation on equipment is a non-cash expense that affects the company's net income, but it doesn't involve any cash transaction. Therefore, it would appear in the operating activities section of the statement of cash flows, as an adjustment to net income to arrive at the company's net cash provided by operating activities.

Question 4

Royer Corporation engaged in this transaction: Purchased 60-day commercial paper.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

The answer of Royer Corporation engaged in this transaction: Purchased...

Question 5

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Income (assume that cash received is equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

Interest income is considered a non-operating item and does not affect the calculation of net cash flows from operating activities when using the indirect method. It is typically dealt with in the investing section of the cash flow statement.

Question 6

If the indirect method is used to prepare a statement of cash flows,which of the following would be added to net income to arrive at net cash flows from operating activities?

Accepted Answer

The answer of If the indirect method is used to...

Question 7

If the indirect method is used to prepare a statement of cash flows,which of the following would be deducted from net income to arrive at net cash flows from operating activities?

Accepted Answer

The answer of If the indirect method is used to...

Question 8

Royer Corporation engaged in this transaction: Amortization of a patent.Assume use of the indirect approach.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

The amortization of a patent would be reported in the operating activities section of the statement of cash flows under the indirect approach because it is a noncash expense that affects net income.

Question 9

During 2010,Heckart Corporation had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $26,000,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Cash flows to assets equals (Round amounts to one decimal place)

Accepted Answer

The answer of During 2010,Heckart Corporation had sales of $250,000,net...

Question 10

During 2010,Heckart Corporation had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $35,000,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Free cash flow equals

Accepted Answer

The answer of During 2010,Heckart Corporation had sales of $250,000,net...

Question 11

Cash flows to assets is measured in terms of

Accepted Answer

The answer of Cash flows to assets is measured in...

Question 12

During 2010,Heckart Corporation had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $43,000,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Cash flows to sales equals (Round amounts to one decimal place)

Accepted Answer

The answer of During 2010,Heckart Corporation had sales of $250,000,net...

Question 13

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Accounts Receivable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

An increase in accounts receivable represents a decrease in cash received from customers, which is not reflected in net income. Therefore, it needs to be subtracted from net income to arrive at net cash flows from operating activities.

Question 14

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Inventory-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

An increase in inventory indicates that more cash has been used to purchase or produce inventory, which is subtracted from net income to arrive at net cash flows from operating activities. This is because the increase in inventory represents a use of cash, which must be subtracted to determine the cash generated from operating activities.

Question 15

During 2010,Heckart Corporation had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $37,500,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Cash flow yield equals (Round amounts to one decimal place)

Accepted Answer

Cash flow yield is calculated as net cash flows from operating activities divided by net income. Here, it is $37,500 / $25,000 = 1.5 times.

Question 16

If net cash flows from operating activities were $187,000,net income were $50,000,and net sales were $600,000,the cash flow yield would equal (Round amounts to one decimal place)

Accepted Answer

Cash flow yield is calculated as net cash flows from operating activities divided by net sales. 
Cash flow yield = $187,000 / $600,000 = 0.31 or 3.7 times (rounded to one decimal place). Therefore, the answer is option C.

Question 17

The direct method of preparing a statement of cash flows

Accepted Answer

The answer of The direct method of preparing a statement...

Question 18

The calculation of free cash flow could include all of the following except

Accepted Answer

Free cash flow is calculated by subtracting capital expenditures (such as cash purchases of plant assets) and dividends paid from net cash flows from operating activities. Net income is a component of operating activities and is already factored into the calculation of net cash flows from operating activities, so it would not be included separately in the calculation of free cash flow.

Question 19

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Dividend Income (assume that cash received is equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

The answer of Assume the indirect method is used to...

Question 20

If net cash flows from operating activities were $316,000,net income were $200,000,and sales were $2,000,000,cash flows to sales would equal (Round amounts to one decimal place)

Accepted Answer

Cash flows to sales = (Net Cash Flows from Operating Activities / Sales) x 100%
Cash flows to sales = ($316,000 / $2,000,000) x 100%
Cash flows to sales = 0.158, which is 15.8% (rounded to one decimal place)

Quiz 14: The Statement of Cash Flows

Royer Corporation engaged in this transaction: Purchased treasury stock with cash. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Royer Corporation engaged in this transaction: Sold buildings and equipment for cash. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Royer Corporation engaged in this transaction: Depreciation on equipment.Assume use of the indirect approach. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Royer Corporation engaged in this transaction: Purchased 60-day commercial paper. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

If the indirect method is used to prepare a statement of cash flows,which of the following would be added to net income to arrive at net cash flows from operating activities?

If the indirect method is used to prepare a statement of cash flows,which of the following would be deducted from net income to arrive at net cash flows from operating activities?

Royer Corporation engaged in this transaction: Amortization of a patent.Assume use of the indirect approach. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

During 2010,Heckart Corporation had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $35,000,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Free cash flow equals

Cash flows to assets is measured in terms of

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Accounts Receivable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Inventory-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

If net cash flows from operating activities were $187,000,net income were $50,000,and net sales were $600,000,the cash flow yield would equal (Round amounts to one decimal place)

The direct method of preparing a statement of cash flows

The calculation of free cash flow could include all of the following except

If net cash flows from operating activities were $316,000,net income were $200,000,and sales were $2,000,000,cash flows to sales would equal (Round amounts to one decimal place)