Question 1

A firm reported salary expense of $239,000 for the current year. The beginning and ending balances in salaries payable were $40,000 and $15,000, respectively. What was the amount of cash paid for salaries?

Accepted Answer

$\begin{array}{lrr}
\text { Beginning balance, Salaries payable } & \$ & 40,000 \
\text { Plus Salaries expense } & & 239,000 \
\text { Minus Ending balance, Salaries payable } && \underline{(15,000)} \
 \text {= Cash paid for salaries } && \underline{\$ 264,000} \
& & \
\text { Salary expense } & 239,000 & \
\text { Salaries payable } & 25,000 & \
\text { Cash } & & 264,000
\end{array}$

Question 2

When a company purchases a security it considers a cash equivalent, the cash outflow is:

Accepted Answer

Cash equivalents are considered part of cash and are not reported separately on the statement of cash flows.

Question 3

When preparing a statement of cash flows using the direct method, accrual of payroll expense is:

Accepted Answer

The accrual of payroll expense is not directly reported in the statement of cash flows using the direct method. Instead, cash payments for payroll are reported as operating activities.

Question 4

Pickering Company's prepaid insurance was $8,000 at December 31, 2017, and $10,000 at December 31, 2018. Pickering reported insurance expense of $15,000 on the 2018 income statement. What amount would be reported in the statement of cash flows as insurance paid using the direct method?

Accepted Answer

$\begin{array}{ll}
\text { Ending balance, Prepaid insurance } & \$ \quad 10,000 \
\text { Plus Insurance expense } & 15,000 \
\text { Minus Beginning balance, Prepaid insurance } & \underline{(8,000)} \
\text { = Cash paid for insurance } & \underline{\$ 17,000}
\end{array}$ Irsurarace expense$~~~~~~~~~~~15,000$
Prepaid insurarnce$~~~~~~~~~~~2,000$
Cash$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\colorbox{white}{17,000}$

Question 5

During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

Accepted Answer

$300 - $500 = ($200)

Question 6

Lite Travel Company's accounting records include the following information: Payments to suppliers$~~~~~~~~~~~~~~~\$ 50,000$
Collections on accounts receivable$~~~~~~~~~~~~~~~79,000$
Cash sales$~~~~~~~~~~~~~~~ 44,000$ What is the amount of net cash provided by operating activities indicated by the amounts provided?

Accepted Answer

Cash received, cash sales$~~~~~~~~~~~~~~~\$ 44,000$
Cash received, accourits receivable$~~~~~~~~~~~~~~~79,000$
Minus cash paid to suppliers$~~~~~~~~~~~~~~~\underline{50,000}$
$=$ Cash provided operating activities$~~~~~~~~~~~~~~~\underline{5,000}$ Cash$~~~~~~~~~~~~~~~~~~73,000$
Accounts payable$~~~~~~~~~~~~~~~~~~50,000$
Accounts receivable$~~~~~~~~~~~~~~~~~~79,000$
Sales revenue$~~~~~~~~~~~~~~~~~~44,000$

Question 7

Cash paid to suppliers under the direct method is computed as:

Accepted Answer

The answer of Cash paid to suppliers under the direct...

Question 8

Cash equivalents have each of the following characteristics except:

Accepted Answer

Cash equivalents are financial instruments that can be easily converted into cash within a short period, typically within three months or less. However, there is no requirement for cash equivalents to have a specific maturity period of at least three months. The other characteristics of cash equivalents are that they have little risk of loss and are highly liquid, meaning they can be quickly and easily converted into cash without significant loss of value.

Question 9

Dooling Corporation reported balances in the following accounts for the current year: $\begin{array}{llr}
&\text { Beginning } & {\text { Ending }} \
Inventories&\$  600 & \$  300 \
Accounts ~payable&300  & 500
\end{array}$ Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

Accepted Answer

$\begin{array}{lr}
\text { Cost of goods sold } & 7,500 \
 \text { Inventory } & 300 \
\text { Accounts payable } & 200 \
\text { Cash } & 7,000
\end{array}$

Question 10

Cash equivalents generally would not include short-term investments in:

Accepted Answer

Held-to-maturity debt securities are not considered cash equivalents because they are classified as investments held for a longer period of time and may be subject to fluctuations in value.

The other options (A, B, and D) are typically considered cash equivalents because they are highly liquid and easily convertible to cash, with a low risk of a change in value.

Question 11

A firm reported ($ in millions) net cash inflows (outflows) as follows: operating $75, investing ($200), and financing $350. The beginning cash balance was $250. What was the ending cash balance?

Accepted Answer

$75 - $200 + $350 + $250 = $475

Question 12

Ludwig Company's prepaid rent was $9,000 at December 31, 2017, and $13,000 at December 31, 2018. Ludwig reported rent expense of $19,000 on the 2018 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Accepted Answer

Ending balance, Prepaid rent$~~~~~~~~~~~~~~~~~~~~~~~\$ 13,000$
Plus Rent expense$~~~~~~~~~~~~~~~~~~~~~~~19,000$
Minus Beginning balance, Prepaid rent$~~~~~~~~~~~~~~~~~~~~~~~\underline{(9,000)}$
$ = $ Cash paid for rent$~~~~~~~~~~~~~~~~~~~~~~~\underline{\$ 23,000}$ Rent experse$~~~~~~~~~~~~~19,000$ 
Prepaid rent$~~~~~~~~~~~~~4,000$
Cash$~~~~~~~~~~~~~\colorbox{white}{23,000}$

Question 13

Which of the following is reported as an operating activity in the statement of cash flows?

Accepted Answer

The payment of prepaid insurance is reported as an operating activity in the statement of cash flows, as it is a transaction that affects the company's day-to-day operations and expenses. The purchase of long-lived assets, the acquisition of treasury stock, and the retirement of bonds are reported as investing or financing activities.

Question 14

Which of the following is reported as an operating activity in the statement of cash flows?

Accepted Answer

The payment of interest on long-term notes is reported as an operating activity in the statement of cash flows, as it reflects the company's ongoing operational costs. The payment of dividends is reported as a financing activity, the sale of office equipment is reported as an investing activity, and the issuance of a stock dividend is not reported in the statement of cash flows at all.

Question 15

Bowers Corporation reported the following ($ in 000s) for the year: $$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\text { Balance }\
\begin{array} { l l l r } 
& \text { Begirning } & \text { Ending } \
\text { Accounts receivable } & \$ 600 & \$ 873
\end{array}$$ Sales on account were $1,900,000 for the year. How much cash was collected from customers on account?

Accepted Answer

Cash$~~~~~~~~~~~~~~~~~~~~~~~~~~1,627$
Accounts receivable$~~~~~~~~~~~~~~~~~~~~~~~~~~250$
Sales revenue$~~~~~~~~~~~~~~~~~~~~~~~~~~\colorbox{white}{1,900}$

Question 16

Using the direct method, cash received from customers is calculated as sales:

Accepted Answer

The answer of Using the direct method, cash received from...

Question 17

In a statement of cash flows in which operating activities are reported by the direct method, which of the following would increase reported cash flows from operating activities?

Accepted Answer

The two gains are not cash flows. Proceeds from the sale of land are reported as a component of investing activities.

Question 18

Cost of goods sold as reported in the income statement will be less than cash paid to suppliers if:

Accepted Answer

The answer of Cost of goods sold as reported in...

Question 19

On December 31, 2018, Wellstone Company reported net income of $70,000 and sales of $210,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Wellstone will report cash collected from customers in its 2018 statement of cash flows (direct method) in the amount of:

Accepted Answer

$\begin{array}{lr}
\text { Beginning balance, Accounts receivable } & \$ 20,000 \
\text { Plus Sales } & 210,000 \
\text { Minus Ending balance, Account receivable } & \underline{(25,000)} \
=\text { Cash collected from customers } & \underline{\$ 205,000}
\end{array}$ Cash$~~~~~~~~~~~205,000$
Accourts receivable$~~~~~~~~~~~ 5,000$
Bales reverue$~~~~~~~~~~~210,000$

Question 20

If bond interest expense is $800,000, bond interest payable increased by $8,000 and bond discount decreased by $2,000, cash paid for bond interest is:

Accepted Answer

$$\begin{array} { | l | r | r | } 
\hline \text { Interest expense } & 800 & \
\hline \text { Interest payable } & & 8 \
\hline \colorbox{white}{\text { Discount }} & & 2 \
\hline \text { Cash } & & 790 \
\hline
\end{array}$$

Quiz 21: The Statement of Cash Flows Revisited

A firm reported salary expense of $239,000 for the current year. The beginning and ending balances in salaries payable were $40,000 and $15,000, respectively. What was the amount of cash paid for salaries?

When a company purchases a security it considers a cash equivalent, the cash outflow is:

When preparing a statement of cash flows using the direct method, accrual of payroll expense is:

Pickering Company's prepaid insurance was $8,000 at December 31, 2017, and $10,000 at December 31, 2018. Pickering reported insurance expense of $15,000 on the 2018 income statement. What amount would be reported in the statement of cash flows as insurance paid using the direct method?

During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

Lite Travel Company's accounting records include the following information: Payments to suppliers $~~~~~~~\$ 50,000$ Collections on accounts receivable $~79,000$ Cash sales $~~~~~~~~~ 44,000$ What is the amount of net cash provided by operating activities indicated by the amounts provided?

Cash paid to suppliers under the direct method is computed as:

Cash equivalents have each of the following characteristics except:

Dooling Corporation reported balances in the following accounts for the current year: $\begin{array}{llr}&\text { Beginning } & {\text { Ending }} \\Inventories&\$ 600 & \$ 300 \\Accounts ~payable&300 & 500\end{array}$ Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

Cash equivalents generally would not include short-term investments in:

A firm reported ($ in millions) net cash inflows (outflows) as follows: operating $75, investing ($200) , and financing $350. The beginning cash balance was $250. What was the ending cash balance?

Ludwig Company's prepaid rent was $9,000 at December 31, 2017, and $13,000 at December 31, 2018. Ludwig reported rent expense of $19,000 on the 2018 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Which of the following is reported as an operating activity in the statement of cash flows?

Which of the following is reported as an operating activity in the statement of cash flows?

Using the direct method, cash received from customers is calculated as sales:

In a statement of cash flows in which operating activities are reported by the direct method, which of the following would increase reported cash flows from operating activities?

Cost of goods sold as reported in the income statement will be less than cash paid to suppliers if:

If bond interest expense is $800,000, bond interest payable increased by $8,000 and bond discount decreased by $2,000, cash paid for bond interest is: