Question 1

Cash borrowed on a mortgage note is a(n)________ activity on the statement of cash flows.

Accepted Answer

Cash borrowed on a mortgage note is a financing activity, as it involves obtaining funds from external sources to finance the operations of the company. Financing activities on the statement of cash flows include activities that involve raising or returning capital to investors, creditors, or other external sources.

Question 2

Allen Moving Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:
  
If the net income for the year was $61,000,the company must have declared $26,000 as dividends during the year.

Accepted Answer

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Question 3

Martin Ceramics Company sold equipment for cash.The income statement shows a gain on the sale of $920.The net book value of the asset was $3,610.Which of the following statements describes the cash effect of the transaction?

Accepted Answer

C)
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Question 4

Hector Production Company uses the indirect method to prepare its statement of cash flows.The Treasury Stock account had a debit balance of $7,000 at the beginning of the year and a debit balance of $18,000 at the end of the year.No Treasury Stock was sold during the year.The financing section of the statement of cash flows will show a positive cash flow of $11,000 for the buy back of Treasury Stock.

Accepted Answer

The information provided suggests that there was an increase in the Treasury Stock account balance, which usually indicates a buyback of shares by the company. However, the increase in the Treasury Stock account balance isnot a source of cash, but rather a use of cash. Therefore, the financing section of the statement of cash flows would show a negative cash flow of $11,000 for the buyback of Treasury Stock, rather than a positive cash flow.

Question 5

Financing activities on the statement of cash flows affect the long-term liability and equity accounts.

Accepted Answer

Financing activities, such as issuing stock or obtaining loans, have an impact on the long-term liability and equity accounts. These transactions can increase or decrease these accounts depending on the type of financing activity. As cash flows in and out of these accounts, it is important to include them on the statement of cash flows to provide a complete picture of the company's financial health.

Question 6

To Go Company is preparing its statement of cash flows using the indirect method.During the year,they purchased equipment for $15,000 cash.Which of the following statements is true?

Accepted Answer

When a company purchases equipment for cash, it is considered a cash outflow for investing activities. Therefore, the $15,000 would be shown as a negative cash flow in the investing activities section of the statement of cash flows.

Question 7

Caleb Auto Parts Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:

Additional information provided by the company includes the following:
Equipment costing $104,000 was purchased for cash.
Equipment with a net book value of $20,000 was sold for $28,000.
Depreciation expense of $24,000 was recorded during the year.
Prepare the investing activities section of the statement of cash flows.

Accepted Answer

The answer of Caleb Auto Parts Company uses the indirect...

Question 8

Issuing preferred stock to stockholders in exchange for cash is shown under the financing activities section of the statement of cash flows.

Accepted Answer

Issuing preferred stock is a financing activity, as it involves raising funds from external sources. Therefore, it is included in the financing activities section of the statement of cash flows.

Question 9

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

Accepted Answer

Payment of dividends is a cash outflow for a financing activity because it represents a distribution of profits to shareholders, which reduces the company's liabilities to its owners. Payment of interest on a loan would be a cash outflow for an operating activity, payment for purchasing Merchandise Inventory would be a cash outflow for an investing activity, and payments to the government for taxes would be a cash outflow for an operating activity.

Question 10

The financing section of the statement of cash flows involves transactions relating to the equity accounts and the long-term liability accounts.

Accepted Answer

The financing section of the statement of cash flows includes transactions related to equity accounts (such as issuing or repurchasing stock) and long-term liability accounts (such as taking out or repaying loans).

Question 11

Which of the following sections from the statement of cash flows includes the cash paid for the purchase of Treasury Stock?

Accepted Answer

The purchase of Treasury Stock is typically classified as a financing activity because it involves using cash to buy back the company's own stock. This is recorded in the financing activities section of the statement of cash flows along with other transactions related to the company's financing activities such as issuing debt, paying dividends, and repurchasing other types of stock.

Question 12

Which of the following sections of the statement of cash flows includes the issuance of stock and the payment of cash dividends?

Accepted Answer

The issuance of stock and payment of cash dividends are both related to the financing of the company's operations and would be included in the financing activities section of the statement of cash flows.

Question 13

Christopher Corp.is preparing its statement of cash flows using the indirect method.It provides the following information about transactions for the year:
Plant assets,net-beginning balance: $108,000
Plant assets,net-ending balance: $149,000
Equipment was purchased for $67,000.
Equipment with a net asset value of $12,000 was sold for $19,000.
Depreciation Expense of $19,000 was recorded during the year.
What was the amount of net cash provided by (used for)investing activities?

Accepted Answer

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Question 14

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

Accepted Answer

Purchase of treasury stock is a cash outflow for a financing activity as it involves using funds from financing sources, such as issuing bonds or stocks, to buy back the company's own stock.

Question 15

Sonesta Farm Equipment Company sold equipment for cash.The income statement shows a loss on the sale of $9,000.The net book value of the asset was $30,900.Which of the following statements describes the cash effect of the transaction?

Accepted Answer

D)
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Question 16

Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term liabilities and stockholders' equity?

Accepted Answer

The financing activities section of the statement of cash flows includes activities related to the issuance and repayment of long-term debt, the issuance and repurchase of stock, and the payment of dividends. All of these activities affect long-term liabilities and stockholders' equity.

Question 17

Buying property,plant,and equipment for cash is considered a cash outflow for the financing activities section of the statement of cash flows.

Accepted Answer

Buying property, plant, and equipment for cash is considered a cash outflow for the investing activities section of the statement of cash flows. Financing activities involve activities that involve changes in the company's capital structure, such as issuing or repurchasing stock or paying dividends.

Question 18

Kevin Woodworking Company is preparing its statement of cash flows using the indirect method.During the year,Kevin sold equipment for $7,490 cash.The net book value of the asset was $4,670.Which of the following statements is true?

Accepted Answer

When an asset is sold, the cash receipt is shown as a positive cash flow in the investing activities section. Therefore, choice C is correct. Choice A is incorrect because the gain on sale is added back to net income in the investing activities section, not the operating activities section. Choice B is incorrect because the book value of the asset sold is not shown in the cash flow statement. Choice D is incorrect because the gain on sale is not shown in the financing activities section.

Question 19

Lewis,Inc.uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:

Additional information provided by the company includes the following:
Equipment costing $104,000 was purchased for cash.
Equipment with a net book value of $20,000 was sold for $28,000.
Depreciation Expense of $24,000 was recorded during the year.
Use the T-account format and evaluate the transactions affecting Property,Plant,and Equipment,net.

Accepted Answer

The answer of Lewis,Inc.uses the indirect method to prepare its...

Question 20

Which of the following sections from the statement of cash flows includes borrowing cash and paying off loans?

Accepted Answer

The financing activities section of the statement of cash flows includes activities related to borrowing and repaying loans, issuing and buying back stock, and paying dividends.

Quiz 16: The Statement of Cash Flows

Cash borrowed on a mortgage note is a(n) ________ activity on the statement of cash flows.

Allen Moving Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: If the net income for the year was $61,000,the company must have declared $26,000 as dividends during the year.

Martin Ceramics Company sold equipment for cash.The income statement shows a gain on the sale of $920.The net book value of the asset was $3,610.Which of the following statements describes the cash effect of the transaction?

Financing activities on the statement of cash flows affect the long-term liability and equity accounts.

To Go Company is preparing its statement of cash flows using the indirect method.During the year,they purchased equipment for $15,000 cash.Which of the following statements is true?

Issuing preferred stock to stockholders in exchange for cash is shown under the financing activities section of the statement of cash flows.

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

The financing section of the statement of cash flows involves transactions relating to the equity accounts and the long-term liability accounts.

Which of the following sections from the statement of cash flows includes the cash paid for the purchase of Treasury Stock?

Which of the following sections of the statement of cash flows includes the issuance of stock and the payment of cash dividends?

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

Sonesta Farm Equipment Company sold equipment for cash.The income statement shows a loss on the sale of $9,000.The net book value of the asset was $30,900.Which of the following statements describes the cash effect of the transaction?

Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term liabilities and stockholders' equity?

Buying property,plant,and equipment for cash is considered a cash outflow for the financing activities section of the statement of cash flows.

Kevin Woodworking Company is preparing its statement of cash flows using the indirect method.During the year,Kevin sold equipment for $7,490 cash.The net book value of the asset was $4,670.Which of the following statements is true?

Which of the following sections from the statement of cash flows includes borrowing cash and paying off loans?