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Chapter 13 - Statement of Cash Flows
Copyright Cengage Learning. Powered by Cognero.
Page 41
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
Copyright Cengage Learning. Powered by Cognero.
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
Copyright Cengage Learning. Powered by Cognero.
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
