Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
139) At the beginning of the period, Utilities Payable equals $500. At the end of the period,
Utilities Payable equals $700. If Utilities Expense for the period equals $1,500, what was the cash
paid for utilities for the period?
A) $500.
B) $1,500.
C) $1,300.
D) $700.
140) At the beginning of the period, Accounts Receivable equals $1,700. At the end of the period,
Accounts Receivable equals $2,200. If Service Revenue for the period equals $15,400, what was
the cash received from customers for the period?
A) $13,200.
B) $15,900.
C) $14,900.
D) $15,400.
141) A company reports cost of goods sold of $40 million. Inventory at the beginning and end of
the year is $4 million and $3 million, respectively. Accounts payable at the beginning and end of
the year are $3 million and $6 million, respectively. What is the amount of cash paid to suppliers?
A) $40 million.
B) $36 million.
C) $44 million.
D) $42 million.
142) A company reports operating expenses of $2 million. Operating expenses include rent
expense. Prepaid rent at the beginning and end of the year is $20,000 and $70,000, respectively.
All other operating expenses were paid in cash as incurred. What is the amount of cash paid for
operating expenses?
A) $2,000,000.
B) $2,070,000.
C) $1,950,000.
D) $2,050,000.
143) A company reports income tax expense of $800,000. Income tax payable at the beginning and
end of the year is $50,000 and $70,000, respectively. What is the amount of cash paid for income
taxes?
A) $780,000.
B) $800,000.
C) $820,000.
D) $870,000.
144) A company reports sales of $100 million. Accounts receivable at the beginning and end of the
year are $6 million and $9 million, respectively. What is the amount of cash received from
customers?
A) $100 million.
B) $103 million.
C) $97 million.
D) $109 million.
145) A company reports cost of goods sold of $75 million. Inventory at the beginning and end of
the year is $8 million and $9 million, respectively. Accounts payable at the beginning and end of
the year are $5 million and $3 million, respectively. What is the amount of cash paid to suppliers?
A) $78 million.
B) $72 million.
C) $75 million.
D) $76 million.
146) A company reports operating expenses of $5 million. Operating expenses include rent
expense. Prepaid rent at the beginning and end of the year is $120,000 and $80,000, respectively.
All other operating expenses were paid in cash as incurred. What is the amount of cash paid for
operating expenses?
A) $5,000,000.
B) $5,040,000.
C) $4,960,000.
D) $5,080,000.
147) A company reports income tax expense of $1,700,000. Income taxes payable at the beginning
and end of the year are $250,000 and $370,000, respectively. What is the amount of cash paid for
income taxes?
A) $1,700,000.
B) $1,820,000.
C) $2,070,000.
D) $1,580,000.
148) A company purchases its inventory from suppliers on account. During the year, its Inventory
account increased by $10 million and its accounts payable to suppliers decreased by $3 million. If
cost of goods sold was $440 million, its cash outflows to inventory suppliers totaled:
A) $453 million.
B) $447 million.
C) $433 million.
D) $427 million.
149) A company's Income Tax Payable account decreased from $14 million to $12 million during
the year. If its income tax expense was $80 million, what would be shown as cash paid for income
taxes under the direct method?
A) A cash outflow of $12 million.
B) A cash outflow of $78 million.
C) A cash outflow of $80 million.
D) A cash outflow of $82 million.
150) A company began operations in Year 1. The following information is provided at the end of
each year:
Year 1
Year 2
Total salaries earned by employees
$
150,000
$
180,000
Salaries payable
20,000
30,000
What would be the cash paid to employees in Year 2?
A) $150,000.
B) $160,000.
C) $170,000.
D) $180,000.
151) A company collects $50,000 from customers for the year. Accounts Receivable at the
beginning of the year is $5,000, and Accounts Receivable at the end of the year is $15,000. What is
Sales Revenue for the year?
A) $60,000.
B) $55,000.
C) $65,000.
D) $40,000.
152) Which of the following items is not reported in the operating section of the statement of cash
flows using the direct method?
A) Depreciation expense.
B) Cash paid to suppliers.
C) Cash received from customers.
D) Cash paid for income taxes.
153) Which of the following items is reported in the operating section of the statement of cash
flows using the direct method?
A) Depreciation expense.
B) Gain on sale of an asset.
C) Cash received from customers.
D) Loss on sale of an asset.
69
Match the following:
A) Inflow from investing activities
B) Add to net income
C) Subtract from net income
D) Outflow from financing activities
E) Outflow from investing activities
F) Inflow from financing activities
154) Gain on sale of land.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
155) Purchase equipment.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
156) Obtain loan from the bank.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
70
157) Sale of investments.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
158) Increase in salaries payable.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
159) Pay dividends.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
71
Match the following:
A) Outflow from investing activities
B) Inflow from financing activities
C) Inflow from investing activities
D) Subtract from net income
E) Add to net income
F) Outflow from financing activities
160) Depreciation expense.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
161) Issue common stock.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
162) Increase in prepaid rent.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
72
163) Sale of building.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
164) Repay amount borrowed from the bank.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
165) Purchase of equipment.
Difficulty: 2 Medium
Topic: Classification of Transactions; Operating Activities - Indirect Method; Investing
Activities; Financing Activities
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-03 Prepare the operating activities section of the statement of cash flows using the
indirect method.; 11-04 Prepare the investing activities section of the statement of cash flows.;
11-05 Prepare the financing activities section of the statement of cash flows.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
73
Match the following:
A) Indirect method
B) Asset turnover
C) Investing activities
D) Operating activities
E) Direct method
F) Noncash activities
G) Financing activities
H) Statement of cash flows
I) Cash return on assets
J) Cash flow to sales
166) Begins with net income and then lists adjustments to net income in order to arrive at operating
cash flows.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
167) Significant investing and financing activities that do not affect cash.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
74
168) Sales revenue divided by average total assets; measures the sales revenue generated per dollar
of assets.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
169) Includes cash receipts and cash payments for transactions relating to revenue and expense
activities.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
75
170) Net cash flows from operating activities divided by average total assets; measures the
operating cash flow generated per dollar of assets.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
171) A summary of cash inflows and cash outflows during the reporting period sorted by
operating, investing, and financing activities.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
76
172) Net cash flows from operating activities divided by sales revenue; measures the operating
cash flow generated per dollar of sales.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
173) Includes cash transactions resulting from the external financing of a business.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
77
174) Includes cash transactions involving the purchase and sale of long-term assets and current
investments.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
175) Adjusts the items on the income statement to show items such as cash received from
customers, and cash paid for inventory, salaries, rent, interest, and taxes.
Difficulty: 2 Medium
Topic: Classification of Transactions; Basic Steps and Formatting of the Statement of Cash
Flows; Operating Activities - Indirect Method; Investing Activities; Financing Activities; Analysis
- Cash Return on Assets; Analysis - Components of Cash Return on Assets; Operating Activities -
Direct Method
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing
activities.; 11-02 Understand the steps and basic format in preparing the statement of cash flows.;
11-03 Prepare the operating activities section of the statement of cash flows using the indirect
method.; 11-04 Prepare the investing activities section of the statement of cash flows.; 11-05
Prepare the financing activities section of the statement of cash flows.; 11-06 Perform financial
analysis using the statement of cash flows.; 11-07 Prepare the operating activities section of the
statement of cash flows using the direct method.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: BB Critical Thinking
176) For each of the following ten transactions, indicate by letter whether the cash effect of each
transaction is reported in a statement of cash flows as an operating (O), investing (I), financing (F),
or noncash (NC) activity. Also, indicate whether the transaction is a cash inflow (CI), cash outflow
(CO), or no effect on cash (NE). The first answer is provided as an example.
Type of
Activity
Cash Inflow
or Outflow
Transaction
O
CO
Payment of employee salaries
1. Issuance of bonds
2. Payment of income taxes
3. Payment of a long-term note payable
4. Sale of treasury stock
5. Payment of an account payable
6. Sale of land for cash
7. Purchase of long-term assets by issuing debt
8. Collection of an account receivable
9. Issuance of common stock
10. Purchase of inventory
177) For each of the following five transactions, indicate by letter whether the cash effect of each
transaction is reported in a statement of cash flows as an operating (O), investing (I), financing (F),
or noncash (NC) activity.
Type of
Activity
Transaction
1. Investment in bonds
2. Payment of interest on bonds payable
3. Payment of a cash dividend
4. Purchase of a building
5. Collection of a note receivable
178) For each of the following five transactions, indicate by letter whether the cash effect of each
transaction is reported in a statement of cash flows as an operating (O), investing (I), financing (F),
or noncash (NC) activity.
Type of
Activity
Transaction
1. Issuance of common stock
2. Sale of land for cash
3. Purchase of treasury stock
4. Collection of an account receivable
5. Issuance of a note payable
