Chapter 13—Statement of Cash Flows Key
1. The statement of cash flows replaces the
2. The statement of cash flows
3. Which of the following is NOT a purpose of the statement of cash flows?
4. Which of the following statements is NOT true?
5. In addition to the three primary financial statements, which of the following is also required under GAAP?
6. Those transactions and events that enter into the determination of net income are reported under which
section of the statement of cash flows?
7. Which of the following is the typical sequencing of activities on the statement of cash flows?
8. Which of the following would NOT be included in the operating activities section of the statement of cash
flows?
9. Significant noncash financing and investing transactions are
10. Which of the following would NOT be considered cash or cash equivalents for purposes of preparing a
statement of cash flows?
11. Which of the following would be reported as a cash flow from financing activities?
12. The exchange of debt for equipment would
13. Which of the following would be classified as an investing activity on a statement of cash flows?
14. Which of the following would be classified as an operating activity on a statement of cash flows?
15. A statement of cash flows will help investors understand all the following EXCEPT
16. Which of the following would NOT be reported as an investing activity on a statement of cash flows?
17. Which of the following would be reported as a financing activity on a statement of cash flows?
18. Which of the following would be reported as an operating activity on a statement of cash flows?
19. The repayment of the principal on a loan used to finance the purchase of equipment should be classified as
a(n)
20. Significant noncash financing transactions
21. Simpson purchased money market funds with cash during the current year. This transaction will result in a
decrease in cash from
22. Durning Company loaned $1,000,000 at 8 percent interest to Silva Company. The interest revenue would be
classified as a(n)
23. Durning Company loaned $1,000,000 at 8 percent interest to Silva Company. Durning Company would
classify the loan as a(n)
24. Durning Company loaned $1,000,000 at 8 percent interest to Silva Company. Silva Company would classify
the loan as a(n)
25. A simple statement of cash flows can be prepared by using
26. Yuka Company had a beginning cash balance of $1,875. In addition, Yuka Company reported the following
items from its cash flow statement:
Operating activities
$6,450
Investing activities
($4,735)
Financing activities
($1,200)
Given this information, Yuka Company’s ending cash balance is
27. The following financial information is available for the year 2012:
Operating activities
$ 309,800
Investing activities
($118,000)
Financing activities
($190,000)
Ending cash balance
$ 5,600
Given this information, what is the beginning cash balance?
28. Dahbi Corporation has the following financial information available:
Operating activities
$14,250
Financing activities
$ 3,500
Beginning cash balance
$ 1,450
Ending cash balance
$ 5,650
Given this information, what is the amount of cash provided by (used in) Dahbi’s investing activities?
29. Hee Jung Company had the following information available:
Collections on accounts receivable
$53,200
Payments for equipment purchase
$23,200
Payments for wages and salaries
$18,000
Receipt of interest revenue
$ 2,500
Payments to principal amount on loan
$12,800
Payments for inventory
$22,200
Using this information, compute Hee Jung’s cash provided by (paid for) operating activities.
30. Exhibit 13-1
On December 31, 2012, Lodger Company’s ledger had the following information in its cash account:
Cash
Beg. Bal.
18,475
(1)
70,000
(2)
135,000
(3)
53,000
(4)
7,250
(5)
3,000
(6)
10,000
End. Bal.
25,725
The transactions that are represented in Lodger’s cash account are as follows:
Payments for inventory
Collections on accounts receivables
Payments for wages and salaries
Proceeds from sale of equipment
Payment of dividends to stockholders
Payments for taxes
Refer to Exhibit 13-1. Using the information above, compute the amount of cash provided by (used in) operating activities.
31. Exhibit 13-1
On December 31, 2012, Lodger Company’s ledger had the following information in its cash account:
Cash
Beg. Bal.
18,475
(1)
70,000
(2)
135,000
(3)
53,000
(4)
7,250
(5)
3,000
(6)
10,000
End. Bal.
25,725
The transactions that are represented in Lodger’s cash account are as follows:
Payments for inventory
Collections on accounts receivables
Payments for wages and salaries
Proceeds from sale of equipment
Payment of dividends to stockholders
Payments for taxes
Refer to Exhibit 13-1. Using the information above, compute the amount of cash provided by (used in) investing activities.
32. Exhibit 13-1
On December 31, 2012, Lodger Company’s ledger had the following information in its cash account:
Cash
Beg. Bal.
18,475
(1)
70,000
(2)
135,000
(3)
53,000
(4)
7,250
(5)
3,000
(6)
10,000
End. Bal.
25,725
The transactions that are represented in Lodger’s cash account are as follows:
Payments for inventory
Collections on accounts receivables
Payments for wages and salaries
Proceeds from sale of equipment
Payment of dividends to stockholders
Payments for taxes
Refer to Exhibit 13-1. Using the information above, compute the amount of cash provided by (used in) financing activities.
33. Exhibit 13-2
Avondale Inc. had the following cash transactions during 2012:
Sales receipts
$2,000,000
Inventory payments
1,500,000
Interest payments
20,000
Wage payments
120,000
Dividend receipts
10,000
Interest receipts
6,000
Equipment purchased
150,000
Stock of Canton Company purchased
50,000
Stock issued
300,000
Repaid a note (nonoperating)
100,000
Refer to Exhibit 13-2. What was Avondale’s net cash provided by (used in) operating activities?
34. Exhibit 13-2
Avondale Inc. had the following cash transactions during 2012:
Sales receipts
$2,000,000
Inventory payments
1,500,000
Interest payments
20,000
Wage payments
120,000
Dividend receipts
10,000
Interest receipts
6,000
Equipment purchased
150,000
Stock of Canton Company purchased
50,000
Stock issued
300,000
Repaid a note (nonoperating)
100,000
Refer to Exhibit 13-2. What was Avondale’s net cash provided by (used in) financing activities?
35. Exhibit 13-2
Avondale Inc. had the following cash transactions during 2012:
Sales receipts
$2,000,000
Inventory payments
1,500,000
Interest payments
20,000
Wage payments
120,000
Dividend receipts
10,000
Interest receipts
6,000
Equipment purchased
150,000
Stock of Canton Company purchased
50,000
Stock issued
300,000
Repaid a note (nonoperating)
100,000
Refer to Exhibit 13-2. What was Avondale’s net increase in cash for the year?
36. Which of the following transactions is LEAST likely to be a separate item on a statement of cash flows
prepared using the indirect method?
37. The method that begins with net income or net loss and adjusts that number for items that did not affect cash
is called the
38. Which of the following would be deducted from net income on a statement of cash flows prepared using the
indirect method?
39. Which of the following would be added to net income on a statement of cash flows prepared using the
indirect method?
40. The purchase of inventory on account would increase
41. The direct and indirect methods will usually show different amounts of cash flows from
42. Which of the following would be subtracted from net income on a statement of cash flows prepared by the
indirect method?
43. Which of the following would be subtracted from net income on a statement of cash flows prepared by the
indirect method?
44. Which of the following items would be reported on a statement of cash flows prepared by the indirect
method but NOT by the direct method?
45. A loss from the sale of a building would be reported on an indirect method statement of cash flows as
46. The indirect method of preparing a statement of cash flows
47. The approach to preparing a statement of cash flows that adjusts net income to cash flows from operations is
the
48. The method by which cash flows are presented on a statement of cash flows as operating cash receipts and
payments is the
49. The direct method of presenting a statement of cash flows
50. A gain on the sale of machinery in the ordinary course of business should be presented in a statement of
cash flows (indirect method) as
51. If depreciation expense is $20,000 and the beginning and ending Accumulated Depreciation balances are
$100,000 and $110,000, respectively, cash paid for depreciation is
52. Sales revenue for the period is $500,000 and the beginning and ending Accounts Receivable balances are
$50,000 and $37,500, respectively. How much cash is collected from customers?
53. If interest revenue for the period is $13,200 and the beginning and ending Interest Receivable balances are
$1,650 and $6,600, respectively, cash received from interest is
54. If cost of goods sold is $100,000 and the beginning and ending Inventory balances are $20,000 and $16,000,
respectively, net purchases are
55. If cost of goods sold is $80,000 and the beginning and ending Accounts Payable balances are $10,000 and
$15,000, respectively, cash paid to suppliers is
56. If net purchases are $252,000 and the beginning and ending Accounts Payable balances are $32,000 and
$12,000, respectively, cash paid to suppliers is
57. If wages expense is $100,000 and the beginning and ending Wages Payable balances are $10,000 and
$20,000, respectively, cash paid to employees is
58. If insurance expense is $5,000 and the beginning and ending Prepaid Insurance balances are $1,000 and
$1,500, respectively, cash paid for insurance is
59. Chen Company’s financial statements show a net income of $184,000. The following items also appear on
Chen’s balance sheet:
Depreciation expense
$40,000
Accounts receivable decrease
12,000
Inventory increase
28,000
Accounts payable increase
8,000
What is Chen’s net cash flow from operating activities?
60. Chaffee Company’s financial statements show a net loss of $180,000. The following items also appear on
Chaffee’s balance sheet:
Depreciation expense
$ 84,000
Accounts receivable increase
120,000
Inventory decrease
48,000
Accounts payable decrease
24,000
Accrued liabilities increase
36,000
What is Chaffee’s net cash flow from operating activities?
61. Worthy Company’s financial statements show a net income of $540,000. The following items also appear on
Worthy’s balance sheet:
Amortization expense
$144,000
Accounts receivable decrease
135,000
Inventory decrease
63,000
Interest payable increase
90,000
What is Worthy’s net cash flow from operating activities?
62. Booth Company’s financial statements show a net income of $143,000. The following items also appear on
Booth’s balance sheet:
Depreciation expense
$32,000
Accounts receivable decrease
36,000
Prepaid rent increase
22,000
Accounts payable decrease
26,000
What is Booth’s net cash flow from operating activities?
63. In its accrual-basis income statement for the year ended December 31, 2012, Nelson Company reported
revenue of $1,750,000. Additional information is as follows:
Accounts receivable – December 31, 2011
$505,000
Net income for 2012
70,000
Accounts receivable – December 31, 2012
375,000
Nelson should report cash collected from customers in its 2012 statement of cash flows (direct method) in the amount of
64. Exhibit 13-3
The following information relates to Equipment and related accounts of De Soto Corporation:
Equipment, beginning balance
$260,000
Equipment, ending balance
300,000
Equipment sold during the year:
Cost
20,000
Book value
4,000
Fully depreciated equipment written off during the year
10,000
Accumulated Depreciation, beginning balance
180,000
Accumulated Depreciation, ending balance
169,000
Refer to Exhibit 13-3. Assuming that all of De Soto’s equipment purchases are for cash, how much cash was used to purchase equipment during the
year?
65. Exhibit 13-3
The following information relates to Equipment and related accounts of De Soto Corporation:
Equipment, beginning balance
$260,000
Equipment, ending balance
300,000
Equipment sold during the year:
Cost
20,000
Book value
4,000
Fully depreciated equipment written off during the year
10,000
Accumulated Depreciation, beginning balance
180,000
Accumulated Depreciation, ending balance
169,000
Refer to Exhibit 13-3. Assuming De Soto uses the indirect method, the depreciation expense that would be added to net income in computing cash
flows from operations would be
66. Ojeda Corporation had the following cash flows during 2012. The company uses the direct method of
preparing a statement of cash flows.
Cash receipt from the issuance of stock
$20,000
Cash received from customers
9,000
Dividends received on long-term investments
4,000
Cash paid for wages
7,000
Cash paid for insurance
500
Cash paid for dividends
3,000
Cash paid to purchase building
30,000
Loan made to another company
10,000
Given this information, net cash inflow (outflow) from operating activities is
67. Exhibit 13-4
Selected balance sheet and income statement data for Fowler Inc. are presented below. The company uses the
direct method in preparing its statement of cash flows.
Partial Balance Sheet
Beginning
End
of Year
of Year
Accounts Receivable
$10,000
$ 12,000
Inventories
20,000
24,000
Prepaid Insurance
1,500
2,000
Prepaid Rent
1,500
1,000
Accounts Payable
12,000
14,000
Wages Payable
13,000
15,000
Unearned Rent
10,000
6,000
Partial Income Statement
Rent Revenue
$ 20,000
Sales Revenue
100,000
Cost of Goods Sold
60,000
Insurance Expense
10,000
Rent Expense
6,000
Wages Expense
30,000
Refer to Exhibit 13-4. Given the information above, cash collected from customers is
68. Exhibit 13-4
Selected balance sheet and income statement data for Fowler Inc. are presented below. The company uses the
direct method in preparing its statement of cash flows.
Partial Balance Sheet
Beginning
End
of Year
of Year
Accounts Receivable
$10,000
$ 12,000
Inventories
20,000
24,000
Prepaid Insurance
1,500
2,000
Prepaid Rent
1,500
1,000
Accounts Payable
12,000
14,000
Wages Payable
13,000
15,000
Unearned Rent
10,000
6,000
Partial Income Statement
Rent Revenue
$ 20,000
Sales Revenue
100,000
Cost of Goods Sold
60,000
Insurance Expense
10,000
Rent Expense
6,000
Wages Expense
30,000
Refer to Exhibit 13-4. Given the information above, cash collected for rent is
69. Exhibit 13-4
Selected balance sheet and income statement data for Fowler Inc. are presented below. The company uses the
direct method in preparing its statement of cash flows.
Partial Balance Sheet
Beginning
End
of Year
of Year
Accounts Receivable
$10,000
$ 12,000
Inventories
20,000
24,000
Prepaid Insurance
1,500
2,000
Prepaid Rent
1,500
1,000
Accounts Payable
12,000
14,000
Wages Payable
13,000
15,000
Unearned Rent
10,000
6,000
Partial Income Statement
Rent Revenue
$ 20,000
Sales Revenue
100,000
Cost of Goods Sold
60,000
Insurance Expense
10,000
Rent Expense
6,000
Wages Expense
30,000
Refer to Exhibit 13-4. Given the information above, cash paid for insurance is