Question 1

The balance sheet of The Computer Doctor reports total assets of $160,000 and $220,000 at the beginning and end of the year,respectively.The cash return on assets for the year is 10%.Calculate The Computer Doctor's net cash flows from operating activities for the year.

Accepted Answer

The answer of The balance sheet of The Computer Doctor...

Question 2

The balance sheet of Integrated Systems reports total assets of $890,000 and $950,000 at the beginning and end of the year,respectively.Sales revenues are $1.6 million,net income is $185,000,and net cash flows from operating activities are $155,000.Calculate the cash return on assets,cash flow to sales,and asset turnover for Integrated Systems.

Accepted Answer

The answer of The balance sheet of Integrated Systems reports...

Question 3

Identify and briefly describe the three categories of cash flows reported in the statement of cash flows.

Accepted Answer

The answer of Identify and briefly describe the three categories...

Question 4

Freedom Wireless reports operating expenses of $255,000.Operating expenses include both rent expense and salaries expense.Prepaid rent decreases during the year by $10,000 and salaries payable increases by $25,000.What is the cash paid for operating expenses during the year?

Accepted Answer

The answer of Freedom Wireless reports operating expenses of $255,000.Operating...

Question 5

Mobile Video Systems sold land,investments,and issued their own common stock for $10 million,$15 million,and $20 million,respectively.Mobile Video also purchased treasury stock,equipment,and a patent for $2 million,$4 million,and $6 million,respectively.What amount should the company report as net cash flows from investing activities? What amount should the company report as net cash flows from financing activities?

Accepted Answer

The answer of Mobile Video Systems sold land,investments,and issued their...

Question 6

Fidelity Systems reports net income of $80 million.Included in that number is depreciation expense of $8 million,and a gain on the sale of equipment of $1 million.Records reveal increases in Accounts Receivable,Inventory,and Accounts Payable of $4 million,$3 million,and $2 million,respectively.Calculate Fidelity's net cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Fidelity Systems reports net income of $80...

Question 7

Wilson Electric reports income tax expense of $150,000.Income tax payable at the beginning and end of the year are $20,000 and $25,000,respectively.What is the cash paid for income taxes during the year?

Accepted Answer

The answer of Wilson Electric reports income tax expense of...

Question 8

Schneider Inc.purchases its inventory from suppliers on account.During the year,its Inventory account increased by $10 million and its accounts payable to suppliers decreased by $3 million.Cost of goods sold was $440 million,its cash outflows to inventory suppliers totaled:

Accepted Answer

The cash outflows to inventory suppliers can be calculated by adding the increase in inventory to the cost of goods sold and then subtracting the decrease in accounts payable: $440 million (COGS) + $10 million (increase in inventory) - $3 million (decrease in accounts payable) = $453 million.

Question 9

Two competitors in the construction supply industry report the following selected financial data:
  Calculate the cash return on assets,cash flow to sales ratio,and asset turnover ratio for each company.Which company has the better cash flow to sales ratio and which company has the better asset turnover ratio?

Accepted Answer

The answer of Two competitors in the construction supply industry...

Question 10

Laser Solutions' inventory decreases during the year by $8 million and its accounts payable to suppliers increases by $6 million during the same period.What is the amount of cash paid to suppliers of merchandise during the reporting period if its cost of goods sold is $81 million?

Accepted Answer

The answer of Laser Solutions' inventory decreases during the year...

Question 11

A company's Income Tax Payable account decreased from $14 million to $12 million during the year.If its income tax expense was $80 million,what would be shown as cash paid for income taxes under the direct method?

Accepted Answer

The decrease in Income Tax Payable account means that the company paid $2 million in income taxes during the year ($14 million - $12 million = $2 million). Therefore, cash paid for income taxes must be the income tax expense ($80 million) plus the decrease in Income Tax Payable ($2 million), which equals $82 million. Therefore, the correct answer is option D.

Question 12

Portions of the financial statements for Horizon Telecom are provided below.
   Prepare the operating activities section of the statement of cash flows for Horizon Telecom using the indirect method.

Accepted Answer

The answer of Portions of the financial statements for Horizon...

Question 13

Portions of the financial statements for Horizon Telecom are provided below.
   Prepare the operating activities section of the statement of cash flows for Horizon Telecom using the direct method.

Accepted Answer

The answer of Portions of the financial statements for Horizon...

Question 14

Nathan Herrmann has completed the basic format to be used in preparing the statement of cash flows (indirect method)for CEO Consultants.
  Listed below in random order are line items to be included in the statement of cash flows.  Prepare the statement of cash flows for CEO Consultants using the indirect method.

Accepted Answer

The answer of Nathan Herrmann has completed the basic format...

Question 15

Which of the following items is reported in the operating section of the statement of cash flows using the direct method?

Accepted Answer

Cash received from customers is a key item in the operating section of the statement of cash flows as it represents the cash generated from the company's core business operations. Depreciation expense and loss/gain on sale of assets are reported in the investing section, while gains/losses on debt or equity securities are reported in the financing section.

Question 16

Micro Manufacturing reports net income of $850,000.Depreciation Expense is $60,000,Accounts Receivable increases $30,000 and Accounts Payable decreases $10,000.Calculate net cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Micro Manufacturing reports net income of $850,000.Depreciation...

Question 17

Electronic Wonders reports net income of $95,000.The accounting records reveal Depreciation Expense of $50,000 as well as increases in Prepaid Rent,Accounts Payable,and Income Tax Payable of $40,000,$23,000,and $20,000,respectively.Prepare the operating activities section of Electronic Wonders' statement of cash flows using the indirect method.

Accepted Answer

The answer of Electronic Wonders reports net income of $95,000.The...

Question 18

Which of the following items is not reported in the operating section of the statement of cash flows using the direct method?

Accepted Answer

Depreciation expense is a non-cash expense and is not reported in the operating section of the statement of cash flows using the direct method.

Question 19

Discount Computers' accounts receivable increases during the year by $3 million.What is the amount of cash received from customers during the reporting period if its sales are $47 million?

Accepted Answer

The answer of Discount Computers' accounts receivable increases during the...

Question 20

Alpha Computers reports net income of $44 million.Included in that number are depreciation expense of $7 million and a loss on the sale of land of $2 million.Records reveal decreases in Accounts Receivable,Inventory,and Accounts Payable of $4 million,$3 million,and $2 million,respectively.Calculate Alpha Computers' net cash flows from operating activities using the indirect method.

Accepted Answer

The answer of Alpha Computers reports net income of $44...

Quiz 11: Statement of Cash Flows