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Exam 14: Statement of Cash Flows

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Question 61

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Under the direct method of reporting cash flows from operations, the major source of cash is cash received from customers.

A) True
B) False

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Question 62

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Under the direct method of preparing a Statement of Cash Flows, the gain on the sale of land is not adjusted or reported as part of cash flows from operating activities.

A) True
B) False

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Question 63

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In preparing the statement of cash flows, the correct order of reporting cash activities is Financing, Operating, Investing.

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash provided by operating activities for the year is

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

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

The comparative balance sheet of Posner Company, for 2011 and the preceding year ended December 31, 2010, appears below in condensed form: The income statement for the current year is as follows: Additional data for the current year are as follows: Prepare a statement of cash flows, using the indirect method of reporting cash flows from operating activities.

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is

On the statement of cash flows, a $7,500 gain on the sale of fixed assets would be

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

To determine cash payments for operating expenses for the cash flow statement using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.

Baxter Company reported a net loss of $13,000 for the year ended December 31, 2010. During the year, accounts receivable decreased by $5,000, merchandise inventory increased by $8,000, accounts payable increased by $10,000, and depreciation expense of $4,000 was recorded. During 2010, operating activities

The following two problems are independent of one another.

Operating expenses other than depreciation for the year were $400,000. Prepaid expenses increased by $17,000 and accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be

Cash flows from investing activities, as part of the statement of cash flows, include receipts from the issuance of bonds payable.

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

Based on the following, what is free cash flow?

A building with a cost of $153,000 and accumulated depreciation of $42,000 was sold for a $11,000 gain. When using the indirect method, the cash generated from this investing activity was $121,000.

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

Rarely would the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.