Chapter 13 – Statement of Cash Flows
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Accounts payable (merchandise creditors)
75,000
89,000
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the
indirect method?
a.
$271,000
b.
$279,000
c.
$327,000
d.
$256,000
ANSWER:
a
RATIONALE:
Cash flows from operating activities:
Net income
$250,000
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
$271,000
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
99. The following information is available from the current period financial statements:
Net income
$165,000
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.
$230,000
b.
$188,000
c.
$198,000
d.
$156,000
Chapter 13 – Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 42
ANSWER:
d
RATIONALE:
Cash flows from operating activities:
Net income
$165,000
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation expense
28,000
Changes in current operating assets and
liabilities:
Increase in accounts receivable
(16,000)
Decrease in accounts payable
(21,000)
Net cash flow from operating activities
$156,000
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
100. Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000 at the
beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is
a.
$55,000
b.
$50,000
c.
$65,000
d.
$60,000
ANSWER:
a
RATIONALE:
Cash payment of dividends = Dividends payable at the beginning of the year +
Dividends declared during the year – Dividends payable at the end of the year =
$10,000 + $50,000 – $5,000 = $55,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
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
Copyright Cengage Learning. Powered by Cognero.
Page 43
101. Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year,
respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other
adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect
method is
a.
$118,000
b.
$110,000
c.
$102,000
d.
$150,000
ANSWER:
a
RATIONALE:
Cash flows from operations = Net income + Decrease in accounts receivable =
$110,000 + ($40,000 – $32,000) = $118,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
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
102. Baxter Company reported a net loss of $13,000 for the year ended December 31. During the year, accounts
receivable decreased by $5,000, inventory increased by $8,000, accounts payable increased by $10,000, and depreciation
expense of $4,000 was recorded. During the year, operating activities
a.
provided net cash of $8,000
b.
provided net cash of $2,000
c.
used net cash of $8,000
d.
used net cash of $2,000
ANSWER:
d
RATIONALE:
Cash flows used in operating activities:
Net income
$(13,000)
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation expense
4,000
Changes in current operating assets and
liabilities:
Decrease in accounts receivable
5,000
Increase in inventory
(8,000)
Increase in accounts payable
10,000
Net cash flow used in operating activities
$(2,000)
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
Chapter 13 – Statement of Cash Flows
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Page 45
accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $5,300. The value of this
transaction in the investing section of the statement of cash flows is
a.
$12,500
b.
$5,300
c.
$2,750
d.
$2,550
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
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
105. Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the
beginning of the year and $25,000 at the end of the year. The amount of cash Norris Co. used for payment of dividends
during the year was
a.
$55,000
b.
$80,000
c.
$105,000
d.
$65,000
ANSWER:
a
RATIONALE:
Cash used for payment of dividends = Dividends payable at the beginning of the year
+ Dividends declared during the year – Dividends payable at the end of the year =
$20,000 + $60,000 – $25,000 = $55,000
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
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
106. A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for
$25,000 representing a gain of $4,500. The value in the operating activities section regarding this event would be
a.
$25,000
b.
$(4,500)
Chapter 13 – Statement of Cash Flows
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Page 46
c.
$29,500
d.
$4,500
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
Bloom’s: Applying
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
107. Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of
the year, respectively. Net income reported on the income statement for the year was $120,000. Exclusive of the effect of
other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the
indirect method is
a.
$120,000
b.
$129,000
c.
$151,000
d.
$111,000
ANSWER:
b
RATIONALE:
Cash flows from operations = Net income + Decrease in accounts receivable =
$120,000 + ($40,000 – $31,000) = $129,000
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
108. If accounts payable have increased during a period,
a.
revenues on an accrual basis are less than revenues on a cash basis
b.
expenses on an accrual basis are less than expenses on a cash basis
c.
expenses on an accrual basis are the same as expenses on a cash basis
d.
expenses on an accrual basis are greater than expenses on a cash basis
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
