Chapter 13 – Statement of Cash Flows
Accounts receivable, Jan. 1
Accounts receivable, Dec. 31
Accounts payable, Jan. 1
b.
$47,000
c.
$51,000
d.
$53,000
ANSWER:
a
RATIONALE:
Purchases during the year = Ending inventory + Cost of goods sold during the year –
Beginning inventory = $10,500 + $50,000 – $12,500 = $48,000
Cash payments for merchandise = Beginning accounts payable + Purchases during the
year – Ending accounts payable = $6,000 + $48,000 – $5,000 = $49,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–APP2 – LO: 13–APP2
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
118. Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the
year, respectively. Cash received from customers to be reported on the statement of cash flows using the direct method is
a.
$700,000
b.
$600,000
c.
$580,000
d.
$620,000
ANSWER:
d
RATIONALE:
Cash received from customers = Beginning accounts receivable + Sales – Ending
Accounts receivable = $100,000 + $600,000 – $80,000 = $620,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–APP2 – LO: 13–APP2
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
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123. Free cash flow is cash from operations less cash used for
a.
investments in PP&E needed to maintain current operations
b.
dividends and cash to redeem bonds payable
c.
investments in PP&E needed to achieve desired future operations
d.
fixed assets needed to maintain current operations and cash to redeem bonds payable
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–06 – LO: 13–06
ACCREDITING STANDARDS:
ACBSP-APC–23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
124. The operating cash flow available for company use after purchasing the fixed assets that are necessary to maintain
current operations is called the
a.
free cash flow
b.
modified cash flow
c.
PPE cash flow
d.
restricted cash flow
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–06 – LO: 13–06
ACCREDITING STANDARDS:
ACBSP-APC–23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:33 PM
DATE MODIFIED:
10/16/2017 6:30 PM
125. The cost of goods sold during the year was $45,000. Inventories were $13,500 and $10,500 at the beginning and end
of the year, respectively. Accounts payable (all owed to merchandise suppliers) 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
a.
$46,000
b.
$44,000
c.
$50,000
d.
$40,000
Chapter 13 – Statement of Cash Flows
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Page 55
ANSWER:
b
RATIONALE:
Purchases during the year = Ending inventory + Cost of goods sold during the year –
Beginning inventory = $10,500 + $45,000 – $13,500 = $42,000
Cash payments for merchandise = Beginning accounts payable + Purchases during the
year – Ending accounts payable = $7,000 + $42,000 – $5,000 = $44,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–APP2 – LO: 13–APP2
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
126. When using the spreadsheet (work sheet) method to analyze noncash accounts, it is best to start with
a.
cash
b.
net income
c.
retained earnings
d.
revenue
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.13–APP1 – LO: 13–APP1
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
127. When using the spreadsheet (work sheet) method for the statement of cash flows, indirect method, entries made on
the spreadsheet are
a.
not recorded in the journal or posted to the ledger
b.
recorded in the journal and posted to the ledger
c.
recorded in the journal but not posted to the ledger
d.
not recorded in to the journal but are posted to the ledger
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
Matching
False
ANSWER:
a
POINTS:
1
132. Payment of dividends
ANSWER:
f
POINTS:
1
133. Sale of land
ANSWER:
c
POINTS:
1
134. Gain on sale of investments
ANSWER:
b
POINTS:
1
135. Acquisition of treasury stock
ANSWER:
f
POINTS:
1
136. Increase in accounts receivable balance
ANSWER:
b
POINTS:
1
137. Decrease in accounts payable balance
ANSWER:
b
POINTS:
1
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Page 58
139. Dividends received on investment
ANSWER:
a
POINTS:
1
140. Sale of machinery held for use by the company
ANSWER:
c
POINTS:
1
141. Issuance of bond payable
ANSWER:
b
POINTS:
1
142. Purchase of the stock of another company as investment
ANSWER:
c
POINTS:
1
143. Decrease in inventory
ANSWER:
a
POINTS:
1
144. Exchange of land for note payable
ANSWER:
d
POINTS:
1
145. Payment of dividends to stockholders
ANSWER:
b
POINTS:
1
146. Increase in accounts receivable
ANSWER:
a
POINTS:
1
147. Loss on sale of equipment
ANSWER:
a
POINTS:
1
148. For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I)
activity on the statement of cash flows under the indirect method.
a.
purchased buildings
b.
sold patents
c.
net income
d.
issued common stock
e.
paid cash dividends
f.
depreciation expense
ANSWER:
a.
I – investing
b.
I – investing
c.
O – operating
