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Given this information, what is the amount of cash paid for insurance?


A) $13,000
B) $12,000
C) $14,000
D) $16,000

E) B) and C)
F) B) and D)

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Cinno Company reported net income of $20,000 for the year ended December 31, 2011. During the year, inventories decreased by $7,000, accounts payable decreased by $8,000, depreciation expense was $10,000, and accounts receivable increased by $6,500. Net cash provided by operations in 2011, computed using the indirect method, was:


A) $10,500.
B) $22,500.
C) $38,500.
D) $51,500.

E) C) and D)
F) B) and D)

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Use the information provided above to calculate the net cash flow from operat ing activities in 2011 using the direct method.

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Which of the following statements is NOT true?


A) The statement of cash flows does not replace the income statement.
B) The statement of cash flows provides details as to how cash changed during a period.
C) The statement of cash flows provides information about cash receipts and cash payments over a period of time.
D) The statement of cash flows measures profitability.

E) B) and C)
F) A) and D)

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Which of the following statements regarding financing activities is NOT true?


A) Cash dividends paid to a company's stockholders are reported as cash outflows from financing activities.
B) When a company issues stock for cash, it reports a cash inflow from financing activities.
C) When a company repurchases stock with cash, it reports a cash outflow for financing activities.
D) When a company repays a loan, it reports a cash outflow from investing activities.

E) B) and C)
F) C) and D)

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If Interest Revenue for the period is $14,000 and the beginning and ending Interest Receivable balances are $1,320 and $5,900, respectively, cash received for interest is:


A) $14,000
B) $9,420
C) $18,500
D) $8,100

E) None of the above
F) A) and D)

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If an analyst wishes to analyze the ability of a company's operating activities to fund its level of investment in property, plant, and equipment, a good measure would be the:


A) quality of income ratio.
B) working capital.
C) times interest earned ratio.
D) capital acquisitions ratio.

E) None of the above
F) A) and C)

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What is the net cash flows from investing activities?


A) ($200,000)
B) $420,000
C) $410,000
D) ($190,000)

E) None of the above
F) B) and D)

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Significant noncash financing and investing activities are not reported on the statement of cash flows since they do not represent a cash flow.

A) True
B) False

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Cash flows from financing activities:


A) are always negative because the company pays dividends as well as interest and principal on debt.
B) includes all cash inflows and outflows between a company and its stockholders.
C) includes all cash inflows and outflows associated with a company's lending activities.
D) are always positive unless the company is experiencing serious financial trouble.

E) B) and C)
F) None of the above

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When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added to net income.

A) True
B) False

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Given this information, what is the amount of cash paid for rent?


A) $9,000
B) $11,000
C) $10,000
D) $12,000

E) B) and D)
F) A) and C)

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Under the indirect method, changes in current assets are used in determining net cash flows from operating activities and changes in current liabilities are used in determining cash flows from financing activities.

A) True
B) False

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What was the amount of cash paid for purchases of equipment during the year?


A) $40,000
B) $43,000
C) $50,000
D) $31,000

E) B) and D)
F) B) and C)

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If Sales are $850,000 and the beginning and ending balances of Accounts Receivable are $43,000 and $48,000, respectively, the cash collected from customers is:


A) $850,000
B) $802,000
C) $845,000
D) $855,000

E) None of the above
F) B) and C)

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When the indirect method is used, if accounts receivable increases during the accounting period, the change in accounts receivable is:


A) added to the change in the cash account.
B) subtracted from net income.
C) added to net income.
D) subtracted from the change in the cash account.

E) A) and D)
F) None of the above

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Company X paid Company Y $1.35 million for a new plant. During the same accounting period, Company X experienced the following changes in its balance sheet: Cash decreased by $350,000, Accounts Receivable increased by $321,300, Inventory increased by $275,800, Property, Plant, and Equipment increased by $752,900, and Bonds Payable increased by $1 million. The net cash flow from financing activities is:


A) An inflow of $1.35 million.
B) An outflow of $350,000.
C) An inflow of $1 million.
D) An inflow of $752,900.

E) A) and B)
F) All of the above

Correct Answer

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Assume a company uses the indirect method to prepare its statement of cash flows. If inventory decreases and unearned revenue increases during an accounting period, what does the company do with the changes in these accounts to calculate net cash flows from operating activities?


A) Both are added to net income.
B) The change in inventory is added to net income; the change in unearned revenue is subtracted.
C) Both are subtracted from net income.
D) The change in unearned revenue is added to net income; the change in inventory is subtracted.

E) A) and D)
F) A) and B)

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A company purchases a $300,000 building, paying $200,000 in cash and signing a $100,000 promissory note. What will be reported on the statement of cash flows as a result of this transaction?


A) A $300,000 cash outflow from investing activities.
B) A $200,000 cash outflow from investing activities and a $100,000 cash inflow from financing activities.
C) A $200,000 cash outflow from investing activities and a $100,000 noncash transaction.
D) A $300,000 cash outflow from investing activities and a $100,000 cash inflow from financing activities.

E) None of the above
F) A) and B)

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Which of the following statements regarding cash flows from investing activities is true?


A) The proceeds from sales of investments are reported as cash inflows from investing activities.
B) Cash flows from investing activities are calculated by making adjustments to net income.
C) Cash paid to acquire long-lived assets is reported as a cash inflow from investing activities.
D) Cash received from issuing a long-term payable is reported as a cash inflow from investing activities.

E) B) and D)
F) A) and B)

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Showing 121 - 140 of 143

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