10) Team Shirts, Inc. had net cash from operating activities of $50,000. It paid $40,000 to buy a
new computer system by signing a $30,000 note and paying the balance. Net cash from (or used
for) financing activities for the period was ________.
A) $(30,000)
B) $10,000
C) $30,000
D) $0, however a note discloses the amount of the purchase financed by issuing a note payable
11) Team Shirts, Inc. had net cash from operating activities of $40,000. It paid $25,000 to buy a
new screen-printing system, and repaid a $10,000 loan. Net cash for the period was ________.
A) $40,000
B) $75,000
C) $55,000
D) $5,000
12) Team Shirts, Inc. bought a screen-printing machine for $50,000, received $15,000 for the
sale of its machine, and repaid a loan of $20,000. The amount of net cash from (or used for)
INVESTING activities is ________.
A) $(35,000)
B) $15,000
C) $(5,000)
D) $20,000
13) Team Shirts, Inc. bought a computer system for $100,000 and received $10,000 for the sale
of its used computers. It also received $10,000 from the sale of its inventory. The amount of net
cash from INVESTING activities is ________.
A) $(100,000)
B) $(90,000)
C) $(80,000)
D) $80,000
14) Team Shirts, Inc. issued $100,000 in common stock, borrowed $20,000, and paid $5,000 in
dividends. The amount of net cash from (or used for) FINANCING activities is ________.
A) $80,000
B) $75,000
C) $115,000
D) $(125,000)
15) Team Shirts, Inc. purchased $10,000 worth of treasury stock, paid $5,000 of its accounts
payable, and paid $500 in dividends. The amount of net cash from (or used) for FINANCING
activities is ________.
A) $(10,500)
B) $(13,500)
C) $10,500
D) $13,500
16) Team Shirts, Inc. collected $16,000 from accounts receivable, paid $10,000 of its accounts
payable and paid $1,000 in interest. The amount of net cash from (or used) for OPERATING
activities is ________.
A) $5,000
B) $6,000
C) $(5,000)
D) $(6,000)
17) Team Shirts, Inc. collected $20,000 from customers, recorded depreciation expense of
$5,000, received interest of $100, paid $15,000 of its operating expenses, and paid $500 in
dividends. The amount of net cash from (or used) for OPERATING activities is ________.
A) $10,100
B) $100
C) $5,100
D) $9,600
18) Team Shirts, Inc. sold a piece of equipment for $16,000. The carrying value of the equipment
was $17,000. The original cost of the equipment was $25,000. A loss on the sale of $1,000 was
reported. The amount of net cash from (or used) for INVESTING activities is ________.
A) $16,000
B) $17,000
C) $(1,000)
D) $(25,000)
19) Team Shirts, Inc. sold a piece of equipment for $13,400. The book value of the equipment
was $14,000. The original cost of the equipment was $19,000. A loss on the sale of $600 was
reported. The amount of cash reported on the statement of cash flows was ________.
A) $600 net inflow
B) $17,600 net inflow
C) $13,400 net inflow
D) $5,600 net outflow
20) Cash paid for interest payments is characterized as an ________ activities.
A) inflow from investing
B) outflow for financing
C) inflow from operating
D) outflow for operating
21) Cash collected from accounts receivables is characterized as an ________ activities.
A) inflow from investing
B) outflow for financing
C) inflow from operating
D) outflow for operating
22) Team Shirts, Inc. paid dividends of $1,250 to shareholders. This is an ________ activities.
A) inflow from investing
B) outflow for financing
C) inflow from operating
D) outflow for operating
23) Team Shirts, Inc. paid $3,250 for advertising. This is an ________ activities.
A) inflow from investing
B) outflow for financing
C) inflow from operating
D) outflow for operating
24) Team Shirts, Inc. issued 100 shares of stock for $15 per share. This is an ________ activities.
A) inflow from financing
B) outflow for financing
C) inflow from operating
D) outflow for investing
25) Which of the following events is not a cash flow?
A) purchase of treasury stock
B) sale of equipment for current carrying value
C) recognition of depreciation
D) collection of an account receivable
26) Which of the following events is not a source of cash?
A) amortization of a copyright
B) receipt of loan proceeds
C) sale of treasury stock
D) collection of an account receivable
27) Which of the following events is a use of cash?
A) issuance of stock
B) payment of an account payable
C) receipt of loan proceeds
D) collection of an account receivable
28) Which of the following events is a cash flow?
A) purchase of equipment in exchange for stock
B) amortization expense
C) depreciation expense
D) proceeds from sale of long-term assets
29) Which of the following events is not a source of cash?
A) collection of accounts receivable
B) receipt of loan proceeds
C) sale of treasury stock
D) amortization of a patent
30) Which of the following events is not a source of cash?
A) issuance of stock
B) issuance of a bond in exchange for land
C) proceeds from the sale of equipment
D) collection of an account receivable
31) Cash from financing activities includes ________.
A) all cash receipts and all cash disbursements for long-term business assets
B) all cash receipts and all cash disbursements for loans, contributions from owners, and
distributions to owners
C) all cash receipts and cash disbursements for routine sales and purchases made in the course of
doing business
D) detailed estimates of the sources of cash and uses of cash
32) Cash from investing activities includes ________.
A) all cash receipts and all cash disbursements for long-term business assets
B) all cash receipts and all cash disbursements for loans, contributions from owners, and
distributions to owners
C) all cash receipts and cash disbursements for routine sales and purchases made in the course of
doing business
D) detailed estimates of the sources of cash and uses of cash
33) Which of the following statements is true?
A) A company with a positive net income will also have a positive net cash flow.
B) Payment of dividends is a cash outflow for operating activities.
C) Cash paid for dividends is subtracted from net income.
D) Payment of interest is a cash outflow for operating activities.
34) Which of the following statements is true?
A) A company with a net loss will also have a negative net cash flow.
B) Payment of dividends is a cash outflow for financing.
C) Cash paid for accounts payable is added to net income.
D) Purchase of equipment is a cash outflow for operating activities.
35) Which of the following statements is true?
A) Purchase of equipment is a cash outflow for investing activities.
B) Amortization expense is added to cash from financing activities.
C) Cash received from accounts receivable is a cash inflow from financing.
D) Purchase of treasury stock is a cash outflow for operating activities.
36) Which of the following statements is true?
A) Purchase of equipment is a cash outflow for investing activities.
B) Proceeds from the sale of bonds is a cash inflow from investing activities.
C) Cash paid for accounts payable is a cash outflow for financing.
D) Sale of treasury stock is a cash inflow from investing activities.
37) Which of the following will NOT cause cash from operating activities to differ from net
income?
A) Dividends
B) Accounts receivable
C) Depreciation
D) Accounts payable
38) Cash from investing activities includes all cash receipts and all cash disbursements for long-
term business assets.
39) Cash from financing activities includes all cash receipts and all cash disbursements for long-
term business assets.
40) Cash from financing activities includes all cash receipts and all cash disbursements for loan
principal, as well as contributions from, and distributions to, owners.
41) The cash flows reported in the financing activities section reveal information about a
company’s plans for the future.
42) The cash flows reported in the financing activities section reveal information about how a
company is financed.
43) The sale of a long-term asset is reported on the statement of cash flows as an increase to cash
from investing activities. The increase is equal to the cost of the asset.
44) A long-term asset purchased by issuing a note is reported on the statement of cash flows as a
decrease to cash from investing activities.
45) A long-term asset purchased by issuing a note is disclosed in a note on the statement of cash
flows.
46) Cash paid for interest is a financing activity.
47) Cash paid for interest is an operating activity.
48) What are the three types of cash flows shown on the statement of cash flows? Give examples
of each type.
49) Explain the differences between operating, investing, and financing activities.
50) How are the investing and financing activities sections of the statement of cash flows
prepared?
51) Team Shirts, Inc. paid $300 worth of cash dividends to shareholders. How is this amount
reported on the statement of cash flows?
52) Team Shirts, Inc. paid $1,000 of interest. How is this amount reported on the statement of
cash flows?
53) Team Shirts, Inc. purchased a stamping machine for $21,000 from a German company.
Depreciation for the machine was $4,200 for the year. How is the accounting information for the
stamping machine reported on the statement of cash flows prepared using the indirect method?
54) Team Shirts, Inc. purchased 100 shares of Team Shirts’ stock for $17 per share. Cash
dividends paid to shareholders were $1,250. How is the accounting information for these
transactions reported on the statement of cash flows?
55) Team Shirts, Inc. borrowed $10,000 from First Bank of England. During the year, Team
Shirts paid $800 in interest to First Bank of England. How is the accounting information for
these transactions reported on the statement of cash flows?
56) For each of the following items, indicate whether it is either a cash inflow or outflow and in
which section of the statement of cash flows it would be reported.
Item
Inflow or
Outflow
Statement Section
1. Cash paid for supplies
2. Repayment of a loan
3. Cash purchase of store equipment
4. Issuance of stock
5. Payment of dividends
Item
Inflow or
Outflow
Statement Section
2. Repayment of a loan
3. Cash purchase of store equipment
4. Issuance of stock
5. Payment of dividends
57) Indicate whether each of the following items is either a cash inflow or outflow and in which
section of the statement of cash flows it would be reported.
Item
Inflow or
Outflow
Statement Section
1. Collection of an account receivable
2. Cash sale of inventory
3. Purchase of treasury stock
4. Sale of used store equipment
5. Payment of an account payable
58) A truck cost $55,000 and had accumulated depreciation of $45,000 when it was sold for cash
at a gain of $5,000. Proceeds from the sale of the truck are 1. $________ and are 2. a(n)
________ activity.
59) A building cost $550,000 and had accumulated depreciation of $450,000 when it was sold
for cash at a loss of $30,000. Proceeds from the sale of the building are:
1. $________ and are 2. a(n) ________ activity.
Item
Inflow or
Statement Section
1. Collection of an account receivable
2. Cash sale of inventory
3. Purchase of treasury stock
4. Sale of used store equipment
5. Payment of an account payable
60) Show the effect of each cash transaction on the statement of cash flows by putting a plus if
the transaction results in a cash inflow or minus if a cash outflow in either the operating,
investing or financing activity column:
Statement of Cash Flows’ Activities:
Cash transactions:
Operating
Investing
Financing
1.
Proceeds from sale of equipment
2.
Cash received from customers
3.
Cash dividends paid to shareholders
4.
Cash paid to employees
5.
Interest payments
6.
Payment for new machinery
7.
Proceeds from borrowing
8.
Issuance of stock
9.
Cash paid for insurance
10.
Sales of land
Cash transactions:
Operating
Investing
Financing
1.
Proceeds from sale of equipment
2.
Cash received from customers
3.
Cash dividends paid to shareholders
4.
Cash paid to employees
5.
Interest payments
6.
Payment for new machinery
7.
Proceeds from borrowing
8.
Issuance of stock
9.
Cash paid for insurance
10.
Sales of land
61) Indicate whether each of the following items is either a cash inflow or outflow and in which
section of the statement of cash flows it would be reported.
Item
Inflow or
Outflow
Statement Section
1. Cash wages paid to employees
2. Loan proceeds received
3. Cash sale of used equipment
4. Interest paid on loan
5. Purchase of treasury stock
6. Payment of an account payable
7. Purchase of inventory
8. Issuance of stock
9. Purchase of equipment
10. Collection of an account receivable
Item
Inflow or
Statement Section
1. Cash wages paid to employees
2. Loan proceeds received
3. Cash sale of used equipment
4. Interest paid on loan
5. Purchase of treasury stock
6. Payment of an account payable
7. Purchase of inventory
8. Issuance of stock
9. Purchase of equipment
10. Collection of an account receivable
62) Use the following information from Artizan, Inc.’s computerized accounting information
system to prepare the investing activities section of the statement of cash flows for May.
Beginning cash balance
$15,375
Ending cash balance
39,669
Cash payments for supplies
10,400
Cash paid for rent
1,200
Cash paid for salaries
3,750
Cash received from customers
17,868
Cash paid for interest
150
Cash paid for dividends
200
Cash received from a loan
10,000
Issuance of stock
25,000
Cash paid for studio equipment
12,874
Cash flows from investing activities:
Purchase of studio equipment
$(12,874)
Net cash used for investing activities
$(12,874)
63) Use the following information from Artizan, Inc.’s computerized accounting information
system to prepare the financing activities section of the statement of cash flows for May.
Beginning cash balance
$15,375
Ending cash balance
39,669
Cash payments for supplies
10,400
Cash paid for rent
1,200
Cash paid for salaries
3,750
Cash received from customers
17,868
Cash paid for interest
150
Cash paid for dividends
200
Cash received from a loan
10,000
Issuance of stock
25,000
Cash paid for studio equipment
12,874
$34,800
64) Use the following information from Artizan, Inc.’s computerized accounting information
system to prepare the statement of cash flows for May using the direct method.
Beginning cash balance
$15,375
Ending cash balance
39,669
Cash payments for supplies
10,400
Cash paid for rent
1,200
Cash paid for salaries
3,750
Cash received from customers
17,868
Cash paid for interest
150
Cash paid for dividends
200
Cash received from a loan
10,000
Issuance of stock
25,000
Cash paid for studio equipment
12,874
Cash flows from operating activities:
Cash received from customers
Cash paid for supplies
(10,400)
Cash paid for rent
(1,200)
Cash paid for salaries
(3,750)
Cash paid for interest
(150)
Net cash from operating activities
Cash flows from investing activities:
Purchase of studio equipment
Net cash used for investing activities
Cash flows from financing activities:
Issuance of stock
Loan proceeds
Cash paid for dividends
(200)
Net cash from financing activities
Net increase in cash
Beginning cash balance
Ending cash balance
65) Use the following information from Artizan, Inc. to prepare the investing activities section of
the statement of cash flows for May.
Beginning cash balance
$21,470
Ending cash balance
63,735
Net change in accounts receivable
1,800
Net change in inventory
(2,675)
Net change in accounts payable
(890)
Depreciation expense
8,000
Net income
23,450
Cash paid for dividends
625
Cash received from a loan
9,000
Purchase of treasury of stock
3,780
Cash received from sale of studio equipment
6,235
Cash flows from investing activities:
Cash received from sale of studio equipment
$6,235
Net cash from investing activities
66) Use the following information from Artizan, Inc., to prepare the financing section of the
statement of cash flows for May.
Beginning cash balance:
$21,470
Ending cash balance:
63,735
Net change in accounts receivable
1,800
Net change in inventory
(2,675)
Net change in accounts payable
(890)
Depreciation expense
8,000
Net income
23,450
Cash paid for dividends
625
Cash received from a loan
9,000
Purchase of treasury of stock
3,780
Cash received from sale of studio equipment
6,235
Cash flows from financing activities:
Cash received from loan
$9,000
Cash paid for dividends
(625)
Cash paid for treasury stock
(3,780)
Net cash from financing activities
$4,595
67) Use the following information from The Mane Event, Inc., to prepare the investing activities
section of the statement of cash flows for the year ended December 31, 2011.
Beginning cash balance
$40,000
Cash paid for dividends
(600)
Cash received from a loan
10,000
Depreciation expense
3,000
Net change in accounts receivable
(1,000)
Net change in inventory
2,000
Net change in accounts payable
900
Net income
10,000
Proceeds from sale of studio equipment
5,000
Purchase of studio equipment
(15,000)
Purchase of treasury of stock
(4,000)
68) Use the following information from The Mane Event, Inc., to prepare the financing activities
section of the statement of cash flows for the year ended December 31, 2011.
Beginning cash balance
$40,000
Cash paid for dividends
(600)
Cash received from a loan
10,000
Depreciation expense
3,000
Net change in accounts receivable
(1,000)
Net change in inventory
2,000
Net change in accounts payable
900
Net income
10,000
Proceeds from sale of studio equipment
5,000
Purchase of studio equipment
(15,000)
Purchase of treasury of stock
(4,000)
(4,000)
$5,400