Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
41
56) Which of the following sections from the statement of cash flows includes borrowing cash and paying
off loans?
A) the investing activities section
B) the operating activities section
C) the financing activities section
D) the non-cash investing and financing section
57) Which of the following is a cash outflow for a financing activity on the statement of cash flows?
A) purchase of long-term investments, such as the stock of another company
B) loans made to another party
C) purchase of treasury stock
D) purchase of land
58) Cash borrowed on a mortgage note is a(n) ________ activity on the statement of cash flows.
A) operating
B) investing
C) financing
D) non-cash investing and financing
42
59) Which of the following is a cash outflow for a financing activity on the statement of cash flows?
A) payment of interest on a loan
B) payment for purchasing Merchandise Inventory
C) payment of dividends
D) payments to the government for taxes
60) Cash received from the issuance of notes payable is a(n) ________ activity on the statement of cash
flows.
A) non-cash investing and financing
B) financing
C) operating
D) investing
61) Washington Company is preparing its statement of cash flows using the indirect method. Refer to the
following portion of the comparative balance sheet:
Washington Company
Comparative Balance Sheet
December 31, 2019 and 2018
2019
2018
Increase/(Decrease)
Accounts Payable
$9000
$5000
$(4000)
Accrued Liabilities
3000
1400
1600
Long-term Notes Payable
55,000
66,000
(11,000)
Total Liabilities
$67,000
$72,400
$(5400)
Additional information provided by the company includes the following:
1. During 2019, the company repaid $35,000 of long-term notes payable.
2. During 2019, the company borrowed $24,000 on a new long-term note payable.
Based on the above information only, what amount of net cash flow would be shown in the financing
section of the statement of cash flows?
A) $(11,000)
B) $11,000
C) $59,000
D) $(59,000)
62) Arkansas Company is preparing its statement of cash flows using the indirect method. Refer to the
following information:
1. Repayments on Long-term Notes Payable $60,000
2. New borrowing on Long-term Notes Payable $23,000
Which of the following statements is correct?
A) Net cash used for financing activities is $(37,000).
B) Net cash used for investing activities will is $60,000.
C) Net cash provided by financing activities is $37,000.
D) Net cash provided by investing activities is $37,000.
45
63) Wyoming Company uses the indirect method to prepare its statement of cash flows. Refer to the
following portion of the comparative balance sheet:
Wyoming Company
Comparative Balance Sheet
December 31, 2018 and 2017
2018
2017
Increase/(Decrease)
Common Stock
$20,000
$12,300
$7700
Retained Earnings
113,000
79,000
34,000
Treasury Stock
(8200)
(5300)
(2900)
Total Equity
$124,800
$86,000
$38,800
Note:
1. There was no retirement of stock during the year.
2. There were no sales of treasury stock during the year.
Which of the following statements is correct?
A) There was zero net cash flow from transactions involving Common Stock.
B) There was a negative cash flow of $7700 from the issuance of Common Stock.
C) There was a positive cash flow of $7700 from the issuance of Common Stock.
D) There was positive cash flow of $20,000 from issuance of Common Stock.
64) The issuance of common stock for cash is shown as a ________.
A) negative cash flow in the investing activities section of the statement of cash flows
B) positive cash flow in the investing activities section of the statement of cash flows
C) negative cash flow in the financing activities section of the statement of cash flows
D) positive cash flow in the financing activities section of the statement of cash flows
65) Louisiana Company uses the indirect method to prepare its statement of cash flows. Refer to the
following portion of the comparative balance sheet:
Louisiana Company
Comparative Balance Sheet
December 31, 2019 and 2018
2019
2018
Increase/(Decrease)
Common Stock
$32,000
$2400
$29,600
Retained Earnings
123,000
76,000
47,000
Treasury Stock
(15,000)
(8200)
(6800)
Total Equity
$140,000
$70,200
$69,800
Note:
1. There were no stock retirements during the year.
2. There were no sales of treasury stock during the year.
Compute the cash flow from transactions involving treasury stock.
A) zero net cash flow
B) $6800 of positive cash flow
C) $6800 negative cash flow
D) $15,000 negative cash flow
47
66) New Orleans Chemicals Company follows the indirect method to prepare its statement of cash flows.
Refer to the following portion of the comparative balance sheet:
New Orleans Chemicals Company
Comparative Balance Sheet
December 31, 2018 and 2017
2018
2017
Increase/(Decrease)
Common Stock
$33,000
$2200
$30,800
Retained Earnings
155,000
89,000
66,000
Treasury Stock
(8100)
(5200)
(2900)
Total Equity
$179,900
$86,000
$93,900
Net Income for 2018 was $91,000.
Based on the above information, determine the amount of dividends declared during 2018.
A) $2900
B) $91,000
C) $66,000
D) $25,000
48
67) Florida Chemicals Company uses the indirect method to prepare its statement of cash flows. Refer to
the following portion of the comparative balance sheet:
Florida Chemicals Company
Comparative Balance Sheet
December 31, 2018 and 2017
2018
2017
Increase/(Decrease)
Common Stock
$30,000
$2500
$27,500
Retained Earnings
159,000
154,000
5000
Treasury Stock
(8400)
(5200)
(3200)
Total Equity
$180,600
$151,300
$29,300
Net Income for the year was $57,000.
Which of the following statements is true of Florida Chemicals Company's statement of cash flows for
2018?
A) The company issued stocks for $30,000.
B) The company declared $52,000 as dividends.
C) The company purchased treasury stock for $8400.
D) The net cash flow from financing activities is $180,600.
68) Boston Recyclers Company uses the indirect method to prepare its statement of cash flows. Refer to
the following information for 2019:
1. Retained Earnings, beginning balance, $139,000
2. Retained Earnings, ending balance, $120,000
3. There is a net loss of $15,000 for the year.
What is the amount of dividends declared during the year?
A) $34,000
B) $5000
C) $4000
D) $14,000
50
69) Oklahoma Corp. uses the indirect method to prepare its statement of cash flows. Refer to the
following information for 2018:
1. Long-Term Notes Payable, beginning balance, $84,000
2. Long-Term Notes Payable, ending balance, $99,000
3. Common Stock, beginning balance, $3400
4. Common Stock, ending balance, $26,000
5. Retained Earnings, beginning balance, $78,000
6. Retained Earnings, ending balance, $120,000
7. Treasury Stock, beginning balance, $5800
8. Treasury Stock, ending balance, $10,600
9. No stock was retired.
10. No treasury stock was sold.
11. During 2018, the company repaid $35,000 of long-term notes payable.
12. During 2018, the company borrowed $27,000 on new long-term notes payable.
13. Net income for the year was $50,000.
14. Assume all dividends declared during the year were paid.
What is the net cash provided by financing activities?
A) $17,800
B) $9800
C) ($8000)
D) $1800
