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Chapter 14(13): Statement of Cash Flows
61.
Cash paid for preferred stock dividends should be shown on the statement of cash flows under
a.
investing activities
b.
financing activities
c.
noncash investing and financing activities
d.
operating activities
62.
The last item on the statement of cash flows prior to the schedule of noncash investing and financing
activities
reports
a.
the increase or decrease in cash
b.
cash at the end of the year
c.
net cash flow from investing activities
d.
net cash flow from financing activities
63.
Which of the following is a noncash investing and financing activity?
a.
payment of a cash dividend
b.
payment of a six-month note payable
c.
purchase of merchandise inventory on account
d.
issuance of common stock to acquire land
64.
Which of the following should be shown on a statement of cash flows under the financing activities section?
a.
the purchase of a long-term investment in the common stock of another company
b.
the payment of cash to retire a long-term note
c.
the proceeds from the sale of a building
d.
the issuance of a long-term note to acquire land
65.
A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash
flows under
a.
investing activities
b.
financing activities
c.
noncash investing and financing activities
d.
operating activities
66.
Cash flow per share is
a.
required to be reported on the balance sheet
b.
required to be reported on the income statement
c.
required to be reported on the statement of cash flows
d.
not required to be reported on any statement
67.
On the statement of cash flows prepared by the indirect method, the cash flows from operating activities
section
would include
a.
receipts from the sale of investments
b.
amortization of premium on bonds payable
c.
payments for cash dividends
d.
receipts from the issuance of capital stock
68.
The statement of cash flows is not useful for
a.
planning future investing and financing activities
b.
determining a company’s ability to pay its debts
c.
determining a company’s ability to pay dividends
d.
calculating the net worth of a company
69.
Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)
a.
investing activity
b.
operating activity
c.
noncash investing and financing activity
d.
financing activity
70.
Which of the following would not be on the statement of cash flows?
a.
cash flows from investing activities
b.
cash flows from financing activities
c.
cash flows from operating activities
d.
cash flows from contingent activities
71.
The order of presentation of activities on the statement of cash flows is
a.
operating, investing, and financing
b.
operating, financing, and investing
c.
financing, operating, and investing
d.
financing, investing, and operating
72.
Financing activities include
a.
lending money
b.
acquiring investments
c.
issuing debt
d.
acquiring long-lived assets
73.
Depreciation on factory equipment would be reported in the statement of cash flows prepared by the
indirect
method in
a.
the cash flows from financing activities section
b.
the cash flows from investing activities section
c.
a separate schedule
d.
the cash flows from operating activities section
74.
Which of the following should be added to net income in calculating net cash flow from operating activities
using
the indirect method?
a.
an increase in inventory
b.
a decrease in accounts payable
c.
preferred dividends declared and paid
d.
a decrease in accounts receivable
75.
Which of the following should be deducted from net income in calculating net cash flow from operating
activities
using the indirect method?
a.
depreciation expense
b.
gain on sale of land
c.
a loss on the sale of equipment
d.
dividends declared and paid
76.
Which of the following increases cash?
a.
depreciation expense
b.
acquisition of treasury stock
c.
borrowing money by issuing a six-month note
d.
the declaration of a cash dividend
77.
Which of the following would not be classified as an operating activity?
a.
interest expense
b.
income taxes
c.
payment of dividends
d.
selling expenses
78.
Which of the following should be added to net income in calculating net cash flow from operating activities
using
the indirect method?
a.
a gain on the sale of land
b.
a decrease in accounts payable
c.
an increase in accrued liabilities
d.
dividends paid on common stock
79.
On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments
would
be
a.
deducted from net income in converting the net income reported on the income statement to cash flows
from
operating activities
b.
added to net income in converting the net income reported on the income statement to cash flows
from
operating activities
c.
added to dividends declared in converting the dividends declared to the cash flows from financing
activities
related to dividends
d.
deducted from dividends declared in converting the dividends declared to the cash flows from
financing
activities related to dividends
80.
Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of
the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of
other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared
by the indirect method is
a. $105,000
b. $118,000
c. $92,000
d. $169,000
81.
The net income reported on the income statement for the current year was $275,000. Depreciation recorded on
fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current
asset and current liability accounts at the end and at the beginning of the year are as follows:
End
Beginning
Cash
$ 50,000
$ 60,000
Accounts receivable
112,000
108,000
Inventories
105,000
93,000
Prepaid expenses
4,500
6,500
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. $198,000
b. $324,000
c. $352,000
d. $296,000
82.
The following information is available from the current period financial statements:
Net income
$175,000
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. $166,000
b. $184,000
c. $110,000
d. $240,000
83.
On the statement of cash flows, the cash flows from investing activities section would include
a.
receipts from the issuance of capital stock
b.
payments for dividends
c.
payments for retirement of bonds payable
d.
receipts from the sale of investments
84.
A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction
should
be shown on the statement of cash flows as follows:
a.
an increase of $54,000 from investing activities
b.
an increase of $63,000 from investing activities and a deduction from net income of $9,000
c.
an increase of $9,000 from investing activities
d.
an increase of $54,000 from investing activities and an addition to net income of $9,000
85.
Cash paid for equipment would be reported on the statement of cash flows in
a.
the cash flows from operating activities section
b.
the cash flows from financing activities section
c.
the cash flows from investing activities section
d.
a separate schedule
86.
If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the
total
amount reported in the cash flows from investing activities section of the statement of cash flows is
a. $44,000
b. $11,000
c. $55,000
d. $66,000
87.
Which of the following types of transactions would be reported as a cash flow from investing activity on
the
statement of cash flows?
a.
issuance of bonds payable
b.
issuance of capital stock
c.
purchase of treasury stock
d.
purchase of noncurrent assets
88.
Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement
as
other income. On the statement of cash flows, what amount should be reported as an investing activity from
the
sale of land?
a. $173,000
b. $140,000
c. $313,000
d. $33,000
89.
Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As
a result of this transaction, cash would
a.
increase by $48,000
b.
decrease by $7,000
c.
increase by $55,000
d.
decrease by $27,000
90.
On the statement of cash flows, the cash flows from financing activities section would include
a.
receipts from the sale of investments
b.
payments for the acquisition of investments
c.
receipts from a note receivable
d.
receipts from the issuance of capital stock
91.
Cash dividends paid on capital stock would be reported in the statement of cash flows in
a.
the cash flows from financing activities section
b.
the cash flows from investing activities section
c.
a separate schedule
d.
the cash flows from operating activities section
92.
Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning
of
the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is
a. $50,000
b. $40,000
c. $55,000
d. $35,000
93.
On the statement of cash flows, a $7,500 gain on the sale of fixed assets would be
a.
added to net income in converting the net income reported on the income statement to cash flows
from
operating activities
b.
deducted from net income in converting the net income reported on the income statement to cash flows
from
operating activities
c.
added to dividends declared in converting the dividends declared to the cash flows from financing
activities
related to dividends
d.
deducted from dividends declared in converting the dividends declared to the cash flows from
financing
activities related to dividends
94.
A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on
the statement of cash flows in
a.
a separate schedule
b.
the cash flows from financing activities section
c.
the cash flows from investing activities section
d.
the cash flows from operating activities section
95.
Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as
other expense. On the statement of cash flows, what amount should be reported as an investing activity from the
sale of land?
a. $50,000
b. $71,000
c. $121,000
d. $21,000
96.
The current period statement of cash flows includes the following:
Cash balance at the beginning of the period
$310,000
Net cash flow from operating activities
185,000
Net cash flow used for investing activities
43,000
Net cash flow used for financing activities
97,000
The cash balance at the end of the period is
a. $45,000
b. $635,000
c. $355,000
d. $125,000
97.
Which of the following should be deducted from net income in calculating net cash flow from operating
activities
using the indirect method?
a.
a decrease in inventory
b.
a decrease in accounts payable
c.
preferred dividends declared and paid
d.
a decrease in accounts receivable
98.
Which of the following should be added to net income in calculating net cash flow from operating activities
using
the indirect method?
a.
depreciation expense
b.
an increase in inventory
c.
a gain on the sale of equipment
d.
dividends declared and paid
99.
The net income reported on the income statement for the current year was $250,000. Depreciation recorded on
fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current
asset and current liability accounts at the end and at the beginning of the year are as follows:
End
Beginning
Cash
$ 50,000
$ 60,000
Accounts receivable
112,000
108,000
Inventories
105,000
93,000
Prepaid expenses
4,500
6,500
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
100.
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
101.
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
102.
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
103.
Baxter Company reported a net loss of $13,000 for the year ended December 31. During the year, accounts
receivable decreased by $5,000, merchandise 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
104.
A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable
and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased
by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the
net cash flow from operating activities on the statement of cash flows using the indirect method?
a. $217,000.
b. $224,000.
c. $284,000.
d. $305,000.
105.
Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12,500 the
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
106.
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
107.
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)
c. $29,500
d. $4,500
108.
Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and
end
of the year, respectively. 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
109.
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
110.
Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the
a.
operating activities
b.
financing activities
c.
investing activities
d.
separate schedule of noncash activities
111.
In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
a.
added to net income
b.
deducted from net income
c.
ignored because it does not affect cash
d.
reported supplementally as a noncash investing and financing activity
112.
Net income for the year was $45,500. Accounts receivable increased $5,500, and account payable increased by
$11,200. Under the indirect method, the cash flow from operations is
a. $51,200
b. $45,500
c. $62,200
d. $28,800
113.
Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by
$7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash
provided by operating activities for the year is
a. $53,000
b. $47,000
c. $33,000
d. $37,000
114.
On the statement of cash flows, the cash flows from financing activities section would include all of the following
except
a.
receipts from the sale of bonds payable
b.
payments for dividends
c.
payments for purchase of treasury stock
d.
payments of interest on bonds payable
115.
Under GAAP, cash receipts from interest and dividends are classified as
a.
financing activities
b.
operating activities.
c.
investing activities.
d.
either financing or investing activities.
