Chapter 13 – Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 31
activities related to dividends
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–04 – LO: 13–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
79. Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the
year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect
method is
a.
$105,000
b.
$118,000
c.
$92,000
d.
$169,000
ANSWER:
RATIONALE:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
80. The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed
assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and
current liability accounts at the end and at the beginning of the year are as follows:
End
Beginning
Cash
$50,000
$60,000
Accounts receivable
112,000
108,000
Inventories
105,000
93,000
Prepaid expenses
4,500
6,500
Accounts payable (merchandise creditors)
75,000
89,000
Chapter 13 – Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 32
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the
indirect method?
a.
$198,000
b.
$324,000
c.
$352,000
d.
$296,000
ANSWER:
d
RATIONALE:
Cash flows from operating activities:
Net income
$275,000
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation
40,000
Amortization of patents
9,000
Changes in current operating assets and
liabilities:
Increase in accounts receivable
(4,000)
Increase in inventories
(12,000)
Decrease in prepaid expenses
2,000
Decrease in accounts payable
(14,000)
Net cash flow from operating activities
$296,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–02 – LO: 13–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
81. The following information is available from the current period financial statements:
Net income
$175,000
Depreciation expense
28,000
Increase in accounts receivable
16,000
Decrease in accounts payable
21,000
The net cash flow from operating activities using the indirect method is
a.
$166,000
b.
$184,000
c.
$110,000
d.
$240,000
ANSWER:
a
Chapter 13 – Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 34
c.
an increase of $9,000 from investing activities
d.
an increase of $54,000 from investing activities and an addition to net income of $9,000
ANSWER:
b
RATIONALE:
Gain on sale of building = $63,000 – $54,000 = $9,000
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–03 – LO: 13–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
84. Cash paid for equipment would be reported on the statement of cash flows in
a.
the cash flows from operating activities section
b.
the cash flows from financing activities section
c.
the cash flows from investing activities section
d.
a separate schedule
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–01 – LO: 13–01
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–03 – LO: 13–03
FNMN.WAJO.19.13–04 – LO: 13–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
85. If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount
reported in the cash flows from investing activities section of the statement of cash flows is
a.
$44,000
b.
$11,000
c.
$55,000
d.
$66,000
ANSWER:
RATIONALE:
Copyright Cengage Learning. Powered by Cognero.
Page 38
92. On the statement of cash flows, a $7,500 gain on the sale of fixed assets would be
a.
added to net income in converting the net income reported on the income statement to cash flows from
operating activities
b.
deducted from net income in converting the net income reported on the income statement to cash flows from
operating activities
c.
added to dividends declared in converting the dividends declared to the cash flows from financing activities
related to dividends
d.
deducted from dividends declared in converting the dividends declared to the cash flows from financing
activities related to dividends
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–03 – LO: 13–03
FNMN.WAJO.19.13–04 – LO: 13–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
93. A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the
statement of cash flows in
a.
a separate schedule
b.
the cash flows from financing activities section
c.
the cash flows from investing activities section
d.
the cash flows from operating activities section
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–01 – LO: 13–01
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–03 – LO: 13–03
FNMN.WAJO.19.13–04 – LO: 13–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
94. Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other
Chapter 13 – Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 39
expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?
a.
$50,000
b.
$71,000
c.
$121,000
d.
$21,000
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–03 – LO: 13–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
95. The current period statement of cash flows includes the following:
Cash balance at the beginning of the period
$310,000
Net cash flow from operating activities
185,000
Net cash flow used for investing activities
43,000
Net cash flow used for financing activities
97,000
The cash balance at the end of the period is
a.
$45,000
b.
$635,000
c.
$355,000
d.
$125,000
ANSWER:
RATIONALE:
POINTS:
DIFFICULTY:
QUESTION TYPE:
HAS VARIABLES:
LEARNING OBJECTIVES:
ACCREDITING STANDARDS:
DATE CREATED:
DATE MODIFIED:
96. Which of the following should be deducted from net income in calculating net cash flow from operating activities
using the indirect method?
Chapter 13 – Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 40
a.
a decrease in inventory
b.
a decrease in accounts payable
c.
preferred dividends declared and paid
d.
a decrease in accounts receivable
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–04 – LO: 13–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
97. Which of the following should be added to net income in calculating net cash flow from operating activities using the
indirect method?
a.
depreciation expense
b.
an increase in inventory
c.
a gain on the sale of equipment
d.
dividends declared and paid
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–02 – LO: 13–02
FNMN.WAJO.19.13–04 – LO: 13–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.24 – Statement of Cash Flows
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
98. The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed
assets and amortization of patents for the year were $40,000, and $9,000, respectively. Balances of current asset and
current liability accounts at the end and at the beginning of the year are as follows:
End
Beginning
Cash
$ 50,000
$ 60,000
Accounts receivable
112,000
108,000
Inventories
105,000
93,000
Prepaid expenses