Question 1

Match between columns
                        Premises: Increase in notes receivable due in 60 days
Decrease in accounts receivable
Amortization of patents
Increase in salaries payable
Gain on sale of fixed assets
Decrease in merchandise inventory
Increase in prepaid expenses
Increase in income taxes payable
Increase in notes payable due in 30 days
Decrease in accounts payable
Amortization of discount on bonds payable
Loss on retirement of long-term debt
Depreciation of fixed assets

Accepted Answer

The Answer of added and deducted is...

Question 2

Free cash flow is cash from operations, less cash for
A) dividends and cash for fixed assets needed to maintain productivity
B) dividends and cash to redeem bonds payable
C) fixed assets needed to maintain productivity
D) fixed assets needed to maintain productivity, and cash to redeem bonds payable

Accepted Answer

Free cash flow is the cash generated by a company's operations after deducting capital expenditures needed to maintain productivity and dividends that are paid to shareholders. Therefore, the correct option is A, which includes only the deductions for dividends and cash for fixed assets needed to maintain productivity.

Question 3

Selected data taken from the accounting records of Laser Inc. for the current year ended December 31, are as follows:
 During the current year, the cost of merchandise sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows.
Required:
Determine the amount reported on the statement of cash flows for:
(1) Cash payments for merchandise; and
(2) Cash payments for operating expenses.

Accepted Answer

The answer of Selected data taken from the accounting records...

Question 4

Match between columns
                        Premises: Sale of fixed assets
Net income
Sale of capital stock
Gain on sale of fixed assets
Payment of cash dividends
Distribution of stock dividends
Retirement of long-term debt
Receipt of interest revenue
Payment of interest expense
Purchase of fixed assets

Accepted Answer

The Answer of investing activities and none and financing activities is...

Question 5

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method.

Accepted Answer

The answer of For each of the following, identify whether...

Question 6

The board of directors declared cash dividends total $168,000 during 2014. The comparative balance sheet indicated dividends payable of $46,000 at the beginning of the year and $42,000 at the end of the year. What was the amount of cash payment to stockholders during the year?

Accepted Answer

The answer of The board of directors declared cash dividends...

Question 7

State the section(s) of the statement of cash flows prepared by the indirect method (operating activities, investing activities, financing activities, or not reported) and the amount that would be reported for each of the following transactions:

Accepted Answer

The answer of State the section(s) of the statement of...

Question 8

Free cash flow is
A) all cash in the bank
B) cash from operations
C) cash from financing, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends
D) cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends

Accepted Answer

Free cash flow is the cash generated by a company from its operations after subtracting capital expenditures to maintain production capacity, and cash dividends paid to shareholders. Therefore, the best choice is D, which is cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends. A is incorrect because free cash flow does not include all cash in the bank, but only the cash generated by the company's operations. B is incorrect because it only includes cash from operations, but does not subtract capital expenditures or dividends paid. C is incorrect because it includes cash from financing, which is not part of free cash flow.

Question 9

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A) $46,000
B) $44,000
C) $50,000
D) $40,000

Accepted Answer

The direct method of reporting cash flows involves reporting actual cash inflows and outflows during the period.

To calculate cash payments for merchandise, we need to start with the cost of merchandise sold during the year, which is $45,000.

We then need to adjust for the changes in merchandise inventories and accounts payable.

Starting merchandise inventory = $13,500
Ending merchandise inventory = $10,500
Change in merchandise inventory = $13,500 - $10,500 = $3,000 decrease

Starting accounts payable = $7,000
Ending accounts payable = $5,000
Change in accounts payable = $7,000 - $5,000 = $2,000 decrease

To calculate cash payments for merchandise, we can use the following formula:

Cash payments = Cost of merchandise sold + Increase in accounts payable - Decrease in merchandise inventory

Cash payments = $45,000 + $0 - $3,000

Cash payments = $42,000

Therefore, the answer is B) $44,000, which is the closest choice to our calculated answer of $42,000.

Question 10

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:

Accepted Answer

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

Question 11

Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity.
What is the free cash flow for Master Designs?

Accepted Answer

The answer of Master Designs Company has cash flows for...

Question 12

Durrand Corporation's accumulated depreciation increased by $12,000, while patents decreased by $2,200 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $4,300 from sale of land. Reconcile a net income of $65,000 to net cash flow from operating activities.

Accepted Answer

The answer of Durrand Corporation's accumulated depreciation increased by $12,000,...

Question 13

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows:
  Adjust 2012 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Fortune Corporation's comparative balance sheet for current...

Question 14

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

Accepted Answer

The answer of Sales reported on the income statement were...

Question 15

Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

Accepted Answer

The answer of Lamar Corporation purchased land for $150,000. Later...

Question 16

Match between columns
                        Premises: Issued common stock
Issued preferred stock
Net income
Purchased treasury stock
Issued bonds
Paid cash dividends
Sold long-term investment.
Redeemed bonds
Purchased patents
Sold equipment.
Purchased buildings

Accepted Answer

The Answer of operating and investing and financing is...

Question 17

Match between columns
                        Premises: Received interest on a long-term bond investment
Paid cash for stock in another company
Purchased treasury stock for cash
Received cash for sales
Paid an account payable
Declared and paid a cash dividend
Issued bonds payable for cash
Paid the weekly payroll
Paid cash for a new piece of equipment
Sold a long-term stock investment for cash at book value

Accepted Answer

The Answer of NC, Noncash investing and financing activity and is...

Question 18

Match between columns
                        Premises: Purchased buildings
Depreciation expense
Issued Common Stock
Net income
Paid cash dividends
Sold Patents

Accepted Answer

The Answer of operating (O) and financing (F) and investing is...

Question 19

Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the year. Determine the amount of cash paid for merchandise.

Accepted Answer

The answer of Cost of merchandise sold reported on the...

Question 20

Kennedy, Inc. reported the following data:
  Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.

Accepted Answer

The answer of Kennedy, Inc. reported the following data:
 ...

Quiz 16: Statement of Cash Flows

Select whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method:

Free cash flow is cash from operations, less cash for

Select the section (operating activities, investing activities, financing activities, or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method:

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method.

The board of directors declared cash dividends total $168,000 during 2014. The comparative balance sheet indicated dividends payable of $46,000 at the beginning of the year and $42,000 at the end of the year. What was the amount of cash payment to stockholders during the year?

State the section(s) of the statement of cash flows prepared by the indirect method (operating activities, investing activities, financing activities, or not reported) and the amount that would be reported for each of the following transactions:

Free cash flow is

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:

Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity. What is the free cash flow for Master Designs?

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows: Adjust 2012 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

Select which section the statement of cash flows (using the indirect method) would present information regarding the following activities: (Use A for operating, B for investing, or C for financing):

Each of the events below may have an effect on the statement of cash flows. Designate how the event should be reported within the statement of cash flows using the codes provided below. Codes may be used more than once, or not at all.

For each of the following, select whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method.

Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the year. Determine the amount of cash paid for merchandise.

Kennedy, Inc. reported the following data: Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.