Q&A Hero

Q: The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. Current Year Prior Year Balance Sheet Assets Cash $ 50,000 $ 72,000 Accounts Receivable 80,000 70,000 Merchandise Inventory 60,000 65,000 Property and Equipment 110,000 60,000 Less: Accumulated Depreciation (30,000) (15,000) Total Assets $270,000 $252,000 Liabilities: Accounts Payable $ 10,000 $ 12,000 Salaries and Wages Payable 2,000 1,000 Notes Payable, Long-Term 50,000 60,000 Stockholders Equity: Common Stock 100,000 80,000 Retained Earnings 108,000 99,000 Total Liabilities and Stockholders Equity $270,000 $252,000 Income Statement Sales $200,000 Cost of Goods Sold 110,000 Depreciation Expense 15,000 Other Expenses 50,000 Net Income $ 25,000 Other information from the companys records includes the following: Bought equipment for cash, $50,000. Paid $10,000 on long-term note payable. Issued new shares of common stock for $20,000 cash. Cash dividends of $16,000 were declared and paid to stockholders. Accounts Payable arose from inventory purchases on credit. Income Tax Expense ($4,000) and Interest Expense ($3,000) were paid in full at the end of both years and are included in Other Expenses. Required: Prepare a schedule summarizing operating, investing, and financing cash flows using the T-account approach

Q: Equipment with a cost of $80,000 and accumulated depreciation of $75,000 is sold for $12,000 cash. Required: Part a. Prepare the journal entry to record this transaction. Part b. Explain how this transaction would be reported on the statement of cash flows prepared using the indirect method.

Q: The Extra Surplus Company's Balance Sheet for December 31, 2015 and the Income Statement for 2016 are shown below. Extra Surplus Company Balance Sheet December 31, 2015 Assets Cash $10,000 Accounts Receivable 5,000 Inventory 12,000 Property and Equipment, Net 20,000 $47,000 Liabilities and Stockholders; Equity Accounts Payable $10,000 Note Payable, Long-Term 5,000 Common Stock 20,000 Retained Earnings 12,000 $47,000 Extra Surplus Company Income Statement For the Year Ended December 31, 2016 Sales $13,000 Cost of Goods Sold 3,000 Salaries and Wage Expense 3,000 Interest Expense 1,000 Other Expenses 500 Net Income $ 5,500 Additional data: Sales were $13,000; $8,000 in cash was received from customers. Bought new land for cash, $10,000. Sold other land for its book value of $5,000. Paid $1,000 principal on the long-term note payable and $1,000 in interest. Issued new shares of stock for $10,000 cash. Cash dividends of $1,000 were declared and paid to stockholders. Paid $5,500 on accounts payable. No inventory purchases were made; other expenses were incurred on account. All wages were paid in cash. Other expenses were on account. Required: Part a. Prepare a balance sheet at December 31, 2016. Part b. Prepare the statement of cash flows using the direct method.

Q: Consider the following information: Income Statement Information: Other Information: Net Sales Revenue $200,000 Increase in Accounts Receivable $ 200 Cost of Goods Sold 60,000 Decrease in Inventory 600 Gross Margin 140,000 Increase in Prepaid Expense 700 Salary Expense 60,000 Decrease in Accounts Payable 2,200 Depreciation Expense 30,000 Decrease in Accrued Liabilities 800 Other Expense 20,000 Increase in Income Taxes Payable 1,900 Net Income Before Tax 30,000 Reduction of Long-Term Debt 13,700 Income Tax Expense 9,000 Purchases of Equipment 29,000 Net Income $ 21,000 Required: Use the direct method to compute the amount of net cash flows provided by (used in) operating activities.

Q: Match each item with the correct letter below to indicate how each revenue or expense account on the income statement is adjusted when using the direct method to determine net cash flow provided by operating activities. Account Balance Change 1. _____ Increase in Accrued Expenses 2. _____ Decrease in Accounts Receivable 3. _____ Decrease in Unearned Income 4. _____ Increase in Prepaid Expenses 5. _____ Decrease in Accounts Payable 6. _____ Increase in Long-Term Notes Payable 7. _____ Decrease in Prepaid Insurance 8. _____ Increase in Inventory 9. _____ Increase in Interest Payable 10. _____ Increase in Accumulated Depreciation Type of Adjustment A Add item to related revenue or expense account balance S Subtract item from related revenue or expense account balance N No adjustment necessary

Q: Condensed financial data of Monopoly Corporation appear below: Monopoly Corporation Comparative Balance Sheet December 31 Current Year Prior Year Assets Cash $44,000 $28,000 Accounts receivable A 32,000 Inventories B 70,000 Prepaid rent 2,500 2,000 Property, plant, and equipment 224,000 200,000 Accumulated depreciation (55,000) (40,000) Total assets $341,500 $292,000 Liabilities and Stockholders Equity Accounts payable $38,000 $34,000 Accrued liabilities 10,000 12,000 Notes payable (long-term) 130,000 150,000 Contributed capital 50,000 25,000 Retained earnings 113,500 71,000 Total liabilities and stockholders equity $341,500 $292,000 Monopoly Corporation Income Statement Year Ended December 31 Sales $477,500 Expenses Cost of goods sold $290,000 Selling, general, and administrative expenses 94,000 Depreciation expense C Interest expense 9,000 Income taxes D 425,000 Net income $ 52,500 Monopoly Corporation Cash Flow Statement Year End December 31 Cash Flows from Operating Activities Net income $52,500 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 15,000 Changes in current assets and current liabilities: Accounts Receivable (4,000) Inventories (20,000) Prepaid Expenses E Accounts Payable 4,000 Accrued Liabilities F Net cash provided by (used in) operating activities G Cash flows from investing activities Purchase of property, plant, and equipment (24,000) Net cash provided by (used in) investing activities (24,000) Financing activities Additional capital contributed by stockholders H Payments on long-term debt (20,000) Payment of cash dividends I Net cash provided by (used in) financing activities J Increase in cash and cash equivalents 16,000 Cash and cash equivalents, beginning of period 28,000 Cash and cash equivalents, end of period $44,000 A cash dividend was declared and paid in full to stockholders during the year. Required: Solve for the missing numbers and summarize your answers in the table below. Be sure to indicate in parentheses ( ) if the missing number is negative (that is, a cash outflow). A C E G I B D F H J

Q: The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. Current Year Prior Year Balance Sheet Assets Cash $ 50,000 $ 72,000 Accounts Receivable 80,000 70,000 Merchandise Inventory 60,000 65,000 Property And Equipment 110,000 60,000 Less: Accumulated Depreciation (30,000) (15,000) Total Assets $270,000 $252,000 Liabilities: Accounts Payable $ 10,000 $ 12,000 Salaries and Wages Payable 2,000 1,000 Notes Payable, Long-Term 50,000 60,000 Stockholders Equity: Common Stock 100,000 80,000 Retained Earnings 108,000 99,000 Total Liabilities and Stockholders Equity $270,000 $252,000 Income Statement Sales $200,000 Cost of Goods Sold 110,000 Depreciation Expense 15,000 Other Expenses 50,000 Net Income $ 25,000 Other information from the companys records includes the following: Bought equipment for cash, $50,000. Paid $10,000 on long-term note payable. Issued new shares of common stock for $20,000 cash. Cash dividends of $16,000 were declared and paid to stockholders. Accounts Payable arose from inventory purchases on credit. Income Tax Expense ($4,000) and Interest Expense ($3,000) were paid in full at the end of both years and are included in Other Expenses. Required: Part a. Prepare the statement of cash flows using the indirect method. Include any supplemental disclosures. Part b. Interpret the statement of cash flows by explaining the main sources and uses of cash during the year.

Q: Selected balance sheet information and the income statement for Fountainhead Corporation for the current year are presented below. Selected Balance Sheet Accounts Prior Year Current Year Accounts Receivable $15,000 $10,000 Merchandise Inventory 20,000 22,000 Prepaid Rent 1,000 0 Accounts Payable 11,000 14,000 Salaries and Wages Payable 2,000 3,000 Income Statement Sales Revenue $300,000 Expenses: Cost Of Goods Sold 180,000 Depreciation Expense 20,000 Salaries Expense 30,000 Rent Expense 12,000 Insurance Expense 12,000 Interest Expense 11,000 Utilities Expense 10,000 Net Income $25,000 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Q: Indicate whether each of the following would be added to or subtracted from net income when using the indirect method to reconcile net income to cash flows from operating activities. Item Required to Convert Net Income to Cash Flows From Operating Activities Added to or Subtracted From Increase in Accounts Receivable Decrease in Accounts Payable Decrease in Inventory Increase in Accrued Expenses Depreciation Expense Increase in Prepaid Expenses

Q: Choose the appropriate letter to match the account balance change with the type of adjustment made to net income when using the indirect method to determine net cash flow provided by operating activities. Account Balance Change 1. _____ Decrease in Property, Plant, and Equipment 2. _____ Increase in Accounts Receivable 3. _____ Decrease in Inventory 4. _____ Decrease in Prepaid Expenses 5. _____ Increase in Accounts Payable 6. _____ Decrease in Accrued Liabilities 7. _____ Decrease in Income Tax Payable 8. _____ Increase in Dividends Payable 9. _____ Gain on Sales of Property, Plant and Equipment 10. _____ Depreciation Type of Adjustment A Add item to net income S Subtract item from net income N No adjustment necessary

Q: Complete the last two columns in the following table by indicating whether each transaction would be reported: Part a. In the operating (O), investing (I), or financing (F) activities section of the statement of cash flows or if the transaction would be reported instead as a noncash investing and/or financing transaction (Noncash). Part b. As a cash inflow (+) or a cash outflow () on the statement of ash flows. (Leave this cell blank if you entered Noncash for part a.) Transaction Part a Reporting (O, I, F, or Noncash) Part b Type of Cash Flow (+ or ) Payment of salaries and wages Proceeds from sale of bonds for cash Purchase of equipment for cash Purchase of office supplies for cash Cash interest payments made to bondholders Prepayment of insurance for first six months of year Payment of principal amount due to bondholders upon maturity of bonds Cash sales to customers Purchase of long-term investment for cash Payment of cash dividends Receipt of cash upon signing long-term note payable Issuance of common stock for cash Payment of interest due on note payable Issuance of common stock in exchange for land Purchase of treasury stock for cash Payment of principal amount due on a long-term note payable Acquisition of land in exchange for a note payable Receipt of cash dividends Proceeds from the sale of long-term investment

Q: Assume that a company chooses the indirect method to determine net cash flows from operating activities. Required: Part a. Explain why net income is the starting point when the indirect method is used to determine cash flows from operating activities. Part b. Briefly explain why a companys net income is most likely different in amount than its cash flows from operating activities.

Q: Identify whether each of the following list of items is an operating activity cash flow (O), an investing activity cash flow (I), a financing activity cash flow (F), or none of these (None). 1. _____ Proceeds from sale of equipment 2. _____ Cash collected from customers 3. _____ Payments to suppliers 4. _____ Stock repurchases 5. _____ Repayment of bond principal 6. _____ Payment of income tax 7. _____ Purchases of bonds from other companies 8. _____ Purchases of equipment financed with a note 9. _____ Interest and cash dividends received 10. _____ Payment of cash dividends

Q: Using the T-account approach: A) Net income appears on the debit side of the Cash account under operating activities. B) Payment of long-term debt appears on the debit side of the Cash account under financing activities. C) Purchase of equipment appears on the credit side of the Cash account under operating activities. D) An increase in Accounts Receivable appears on the debit side of the Cash account under operating activities.

Q: The T-account approach: A) may be used with the direct method. B) creates one big T-account for cash that replaces separate schedules to show all the changes in the cash account. C) shows cash provided as credits and cash used as debits. D) does not determine the change in each balance sheet account.

Q: The following information is taken from the income statement of Muir Company: Depreciation Expense $ 30,000 Amortization Expense 5,000 Loss on Sale of Equipment 3,000 Gain on Sale of Building 9,000 Net Income 105,000 Based on this information, what is the amount of net cash flow provided by operating activities? A) $149,000 B) $140,000 C) $146,000 D) $134,000

Q: Use the information above to answer the question below. The company uses the indirect method in preparing the statement of cash flows. What is the amount of depreciation expense that will be reported in the operating activities section of the statement? A) $4,000 B) $11,000 C) $7,000 D) $10,000

Q: Use the information above to answer the following question. What was the amount of cash paid for purchases of equipment during the year? A) $40,000 B) $43,000 C) $50,000 D) $31,000

Q: A company bought $250,000 of equipment with an expected life of ten years and no residual value. After six years the company sold the equipment for $94,000. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows? A) $94,000 is recorded as a cash inflow from investing activities and no other sections of the statement are affected. B) $94,000 is recorded as a cash inflow from investing activities and $6,000 is added to convert net income to net cash flow provided by operating activities. C) $94,000 is recorded as a cash inflow from investing activities and $6,000 is subtracted to convert net income to net cash flow provided by operating activities. D) $94,000 is recorded as a cash inflow from operating activities.

Q: Your company owned equipment with a book value of $120,000 that was sold during this accounting period for $30,500 in cash, and purchased new equipment for cash of $148,000. Your company would record a debit of: A) $148,000 and a credit of $30,500 to the cash account for a net cash inflow of $117,500. B) $148,000 and a credit of $89,500 to the cash account for a net cash inflow of $58,500. C) $30,500 and a credit of $148,000 to the cash account for a net cash outflow of $117,500. D) $89,500 and a credit of $148,000 to the cash account for a net cash outflow of $58,500.

Q: A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is: A) $50,000. B) $5,000. C) $45,000. D) $0; this transaction is a financing activity.

Q: Which of the following would not be added to net income in calculating cash flows from operating activities on a statement of cash flows prepared using the indirect method? A) Amortization Expense B) A decrease in Accounts Receivable C) An increase in Salaries and Wages Payable D) A gain on sale of equipment

Q: If a company uses the indirect method to determine cash flows from operating activities, gains: A) must be added to net income and losses subtracted from net income. B) and losses must be added to net income. C) must be subtracted from net income and losses added to net income. D) and losses must be subtracted from net income.

Q: Use the information above to answer the following question. If the cash balance at the beginning of the current year was $0, what is the amount of cash at the end of the year? A) $112,500 B) $425,000 C) $737,500 D) $311,500

Q: Use the information above to answer the following question. What is the net cash flows provided by (used in) financing activities? A) $620,000 B) $410,000 C) $610,000 D) $490,000

Q: Use the information above to answer the following question. What is the net cash provided by (used in) investing activities? A) ($200,000) B) $420,000 C) $410,000 D) ($190,000)

Q: Use the information above to answer the following question. What is the net cash provided by (used in) operating activities? A) $15,000 B) $6,000 C) ($4,000) D) ($75,000)

Q: When the direct method is used to determine the cash flows from operating activities, which of the following adjustments must be made to income tax expense to determine total income tax payments? A) Add all changes in income taxes and income taxes payable. B) Add decreases in income taxes payable and subtract increases in income taxes payable. C) Add increases in income taxes payable and subtract decreases in income taxes payable. D) Subtract all changes in income taxes payable.

Q: During the current year, a company paid $4,500 which it owed from its prior year income tax liability and $30,000 for its current year tax liability. The company still owes $6,000 at the end of the current year. How much should the company report as cash paid for income taxes on its statement of cash flows for the current year? A) $34,500 B) $40,500 C) $30,000 D) $3,500

Q: Which of the following would be reported on the statement of cash flows, using the direct method, as a cash flow from operating activities? A) Payment of income taxes B) Payment of cash dividends C) Purchase of a building D) Purchase of treasury stock

Q: When the direct method is used to determine the cash flows from operating activities, which of the following adjustments must be made to interest expense to determine total interest payments? A) Add all changes in Interest Payable B) Add decreases in Interest Payable and subtract increases in Interest Payable C) Add increases in Interest Payable and subtract decreases in Interest Payable D) Subtract all changes in Interest Payable

Q: If Salaries and Wages Expense is $450,000 during the year and the beginning and ending balances of Salaries and Wages Payable are $18,000 and $16,500, respectively, the cash paid to employees is: A) $450,000. B) $433,500. C) $448,500. D) $451,500.

Q: If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid Insurance are $1,500 and $2,000, respectively, the cash paid for insurance is: A) $7,000. B) $6,500. C) $5,000. D) $7,500.

Q: When the direct method is used to determine the cash flows from operating activities, other operating expenses are converted into cash outflows by: A) adding changes in prepaid expenses and accrued liabilities to other expenses. B) subtracting increases in prepaid expenses and subtracting decreases in accrued liabilities from other expenses. C) adding increases in prepaid expenses and adding decreases in accrued liabilities to other expenses. D) subtracting changes in prepaid expenses and accrued liabilities from other expenses.

Q: If a companys Cost of Goods Sold is $158,000 for the period, beginning and ending Inventory balances are $18,000 and $13,000, respectively, and the beginning and ending Accounts Payable balances are $19,000 and $7,500, respectively, what is the amount of the cash paid to suppliers? A) $157,000 B) $163,500 C) $164,500 D) $151,500

Q: If Cost of Goods Sold is $145,000 and the beginning and ending Inventory balances are $18,000 and $13,000, respectively, inventory purchases equal: A) $145,000. B) $140,000. C) $150,000. D) $132,000.

Q: Assume a company uses the direct method to prepare its statement of cash flows. If the companys inventory and accounts payable both increase during the accounting period, how would these changes affect cash flow calculations? A) The changes in each account are both added to net income. B) The change in inventory is subtracted from cost of goods sold and the change in accounts payable is added to cost of goods sold to find the cash paid to suppliers. C) The changes in each account are both subtracted from net income. D) The change in inventory is added to cost of goods sold and the change in accounts payable is subtracted from cost of goods sold to find the cash paid to suppliers.

Q: If interest revenue for the period is $14,000 and the beginning and ending interest receivable balances are $1,320 and $5,900, respectively, cash received for interest is: A) $14,000. B) $9,420. C) $18,500. D) $8,100.

Q: If Sales are $850,000 and the beginning and ending balances of Accounts Receivable are $43,000 and $48,000, respectively, the cash collected from customers is: A) $850,000. B) $802,000. C) $845,000. D) $855,000.

Q: If a companys Sales Revenue was $171,356 and cash collected from customers was $167,803, which of the following would be consistent with this difference? A) Accounts Receivable could have decreased. B) Cash payments could have been larger than the related expense accounts. C) Accounts Receivable could have increased. D) Cash payments could have been smaller than the related expense accounts.

Q: Assume a company uses the direct method to prepare its statement of cash flows. If the companys Accounts Receivable increase during the accounting period, the change in Accounts Receivable is: A) added to the change in the Cash account to calculate cash collected from customers. B) subtracted from Sales Revenue to calculate the cash collected from customers. C) added to Sales Revenue to calculate the cash collected from customers. D) subtracted from the change in the Cash account to calculate cash collected from customers.

Q: Which of the following items would be reported on a statement of cash flows using the indirect method, but not on a statement prepared using the direct method? A) Cash paid for dividends B) Cash received from stock issuances C) Depreciation D) Cash paid for purchase of treasury stock

Q: Which of the following statements about the calculation of cash flows from operating activities under the direct method is correct? A) When the direct method is used, each revenue and expense account on the income statement is individually examined to calculate the cash flows from operating activities. B) Noncash revenues and expenses must be included in cash flows from operating activities when preparing a statement of cash flows using the direct method. C) Depreciation is reported as a cash inflow in the cash flows from operating activities when the direct method is used. D) A loss on the sale of a long-term asset is subtracted in the cash flows from operating activities when the direct method is used.

Q: When a company uses the direct method to determine the cash flows from operating activities, cash flows from operating activities will: A) be identical to the amount reported using the indirect method. B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method. C) always be larger than the amount reported using the indirect method. D) be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect method.

Q: The advantages of the direct method include all of the following except: A) it allows for more detailed analysis of operating cash flows. B) it provides more information than the indirect method to relate cash inflows and outflows. C) it allows for more reliable prediction of future cash flows. D) comparisons between companies are facilitated since most U.S. companies use the direct method.

Q: Which of the following statements about preparation of the statement of cash flows is correct? A) GAAP allows the indirect method only. B) GAAP allows the direct method only. C) GAAP allows either the indirect or direct method. D) Although GAAP allows either method for the preparation of the operating activities section of the statement of cash flows, the indirect method must be used to prepare the investing activities section of the statement of cash flows.

Q: Which of the following statements about the reporting of operating cash flows using the direct method is correct? A) Although most U.S. companies use the indirect method, the Financial Accounting Standards Board (FASB) prefers the direct method of accounting for cash flows from operating activities. B) The FASB prefers the indirect method of calculating cash flows from operating activities because it gives a more accurate calculation of cash provided by operating activities. C) The direct method results in a larger amount of cash flow from operating activities than does the indirect method. D) The direct and indirect methods use different presentations for cash flows from investing and financing activities.

Q: Almost all U.S. companies have used the indirect method of preparing the statement of cash flows: A) because most users of the financial statements do not understand the direct method. B) in spite of the FASBs stated preference for the direct method. C) because it usually requires less space in the annual report. D) so that stockholders cannot determine how much cash was spent on executives' salaries.

Q: The difference between net income and cash flow may be due to all of the following except: A) use of the direct method of presenting cash flows from operating activities. B) the company being brand new. C) fraudulent financial reporting. D) seasonal variations in a companys operating activities.

Q: A company has positive cash flow from investing and financing activities, but negative cash flow from operating activities. The likely result is: A) investors may not buy the companys stock because the receipt of dividends is unlikely. B) investors will continue to buy stock since the companys growth prospects are good. C) Creditors will continue to lend money to the company. D) Creditors will demand immediate repayment of all outstanding debt.

Q: An outdoor water park that has a calendar year-end and is located in an area of the country that has warmer weather during April through September and colder weather during the rest of the year is likely to have: A) unpredictable fluctuations in cash flow from quarter to quarter. B) the largest cash inflow from operating activities in the second and third quarters (April through September). C) a fairly stable cash flow across all four quarters. D) the largest cash inflow from operating activities in the fourth and first quarters (October through March).

Q: A toy store with a calendar year-end is likely to have: A) unpredictable fluctuations in cash flow from quarter to quarter. B) the largest cash inflow from operating activities in the second and third quarters (April September). C) a fairly stable cash flow across all four quarters. D) the largest cash inflow from operating activities in the fourth and first quarters (October March).

Q: All of the following might be used to evaluate cash flow performance, except: A) the absolute amount of cash flow. B) whether cash flow is positive or negative. C) the relationship between net income and cash flow. D) the trend in sales and operating expenses.

Q: Negative operating cash flow may indicate all of the following except: A) the company may not be able to replace property, plant and equipment. B) stockholders may not receive a dividend. C) the company may be in the introductory phase of its life cycle. D) the company did not earn a profit from its core business activity.

Q: Free cash flow may be used for all of the following except: A) expanding the business. B) paying off debt. C) building up the cash balance. D) paying employees.

Q: Free cash flow is a positive cash flow from operating activities: A) beyond what is needed to replace current property, plant, and equipment and pay cash dividends. B) across all three activity components of the statement of cash flows. C) beyond what has been allotted for future property, plant, and equipment replacement and expansion. D) across both financing and investing activities.

Q: Supplemental disclosures required by companies using the indirect method include all of the following except: A) cash paid for interest. B) cash paid for income tax. C) cash paid for dividends. D) noncash investing and financing activities.

Q: A company purchases a $300,000 building, paying $200,000 in cash and signing a $100,000 promissory note. What will be reported on the statement of cash flows as a result of this transaction? A) A $300,000 cash outflow from investing activities B) A $200,000 cash outflow from investing activities and a $100,000 cash inflow from financing activities C) A $200,000 cash outflow from investing activities and a $100,000 noncash transaction D) A $300,000 cash outflow from investing activities and a $100,000 cash inflow from financing activities

Q: The purchase of $100,000 of equipment by issuing a note would be reported: A) as a $100,000 investing inflow, and a $100,000 financing outflow. B) as a$100,000 investing outflow, and a $100,000 financing inflow. C) as a $100,000 operating inflow, and a $100,000 financing outflow. D) in a supplementary schedule.

Q: The direct exchange of debt for equipment would be shown: A) on the statement of cash flows as an operating activity. B) on the statement of cash flows as an investing activity. C) on the statement of cash flows as a financing activity. D) as a supplementary disclosure to the statement of cash flows.

Q: A corporation prepared its statement of cash flows for the year. The following information is taken from that statement: Net cash provided by operating activities $ 14,500 Net cash provided by investing activities 4,200 Net cash flow used in financing activities (12,400) Cash balance, end of year 9,100 What is the cash balance at the beginning of the year? A) $5,600 B) $2,800 C) $6,300 D) $15,400

Q: The net cash flow provided by operating activities is an inflow of $37,042, the net cash flow used in investing activities is $16,831, and the net cash flow used in financing activities is $26,397. If the beginning cash account balance is $11,283, what is the ending cash account balance? A) $5,097 B) ($6,186) C) $38,759 D) $27,476

Q: Use the information above to answer the following question. The company would report net cash provided by (used in) investing activities of: A) $(1,000). B) $(2,000). C) $5,000. D) $7,000.

Q: Use the information above to answer the following question. The company would report net cash provided by (used in) financing activities of: A) $(2,500). B) $2,000. C) $5,000. D) $6,000.

Q: Company X paid Company Y $1.35 million for a new plant. During the same accounting period, Company X experienced the following changes in its balance sheet: Cash decreased by $350,000, Accounts Receivable increased by $321,300, Inventory increased by $275,800, Property, Plant, and Equipment increased by $752,900, and Bonds Payable increased by $1 million. The net cash flow provided by financing activities is: A) An inflow of $1.35 million. B) An outflow of $350,000. C) An inflow of $1 million. D) An inflow of $752,900.

Q: A company issues $1 million of new stock and pays $200,000 in cash dividends during the year. In addition, the company took advantage of falling interest rates to borrow $1.5 million in a new bond issue and paid off existing bonds with a face value of $2 million. The company bought 500 of another company's $1,000 bonds at a $100,000 premium. The net cash flow provided by financing activities is: A) An inflow of $500,000. B) An outflow of $200,000. C) An outflow of $100,000. D) An inflow of $300,000.

Q: A corporation prepared its statement of cash flows for the year. The following information is taken from that statement: Net cash provided by operating activities $14,500 Net cash provided by investing activities 4,200 Cash balance, beginning of year 5,800 Cash balance, end of year 9,100 What is the amount of net cash provided by (used in) financing activities? A) $15,400 B) ($3,300) C) ($15,400) D) $3,300

Q: Cash flows from financing activities: A) includes all cash inflows and outflows associated with a company's lending activities. B) includes all cash inflows and outflows between a company and its stockholders. C) are always negative because of the payments of cash dividends as well as interest and principal on debt. D) are always positive unless the company is experiencing serious financial trouble.

Q: A corporation had a net increase in Retained Earnings of $65,000 for the year. The corporation also paid $20,000 of cash dividends that had been declared in the previous year. This year, the corporation declared $18,000 of dividends but has not paid them as of year-end. Given this information, the net income for the current year must have been: A) $63,000 B) $85,000 C) $65,000 D) $83,000

Q: The Retained Earnings account has a beginning balance of $321,975 and an ending balance of $356,413. Net income is $40,251. Which of the following statements is correct? A) $5,813 would be subtracted when determining cash flows from financing activities. B) $40,251 would be added when determining cash flows from financing activities. C) $34,438 would be added when determining cash flows from financing activities. D) $321,975 would be added when determining cash flows from operating activities.

Q: When the indirect method is used, details from which of the following balance sheet accounts are used in calculating both operating and financing cash flows? A) Bonds Payable B) Taxes Payable C) Retained Earnings D) Common Stock

Q: Which of the following represents a cash inflow from financing activities? A) Issuing stock in exchange for another company's stock. B) Paying a bond's face value at maturity. C) Issuing long-term bonds at a discount. D) Receiving interest on promissory notes.

Q: Which of the following represent cash outflows from financing activities? A) Distributing a stock dividend B) Paying a bond's face value at maturity C) Issuing long-term bonds at a discount D) Paying interest on promissory notes

Q: Which of the following are used to determine cash flows from financing activities? A) Short-term debt, Accrued Liabilities, Common Stock, and Notes Payable B) Long-term debt, Common Stock, and Retained Earnings C) Short-term debt, Accrued Liabilities, Retained Earnings, and Bonds Payable D) Long-term debt, Notes Payable, Interest Expense, and Bonds Payable

Q: To determine net cash provided by or used in financing activities, one must analyze the: A) Notes Receivable and Bonds Payable accounts. B) Cash account. C) Common Stock and Retained Earnings accounts. D) Interest Expense and Dividend Income accounts.

Q: Two years ago, your company bought $40,000 in bonds from another company. This month, it sold half of those bonds for $20,640 and purchased the common stock of another company for $1,000. On the statement of cash flows for this accounting period, your company would report a net cash: A) outflow of $19,640 from investing activities. B) inflow of $19,640 from investing activities. C) inflow of $20,640 from investing activities. D) outflow of $20,640 from investing activities.

Q: A companys income statement for the year shows a net loss of $90,000. Additional information for the year follows: Depreciation Expense $ 40,000 Increase in Accounts Receivable 72,000 Decrease in Inventory 25,000 Decrease in Prepaid Rent 9,000 Decrease in Accounts Payable 11,000 What is the net cash provided by (used in) operating activities? A) ($99,000) B) $27,000 C) $13,000 D) ($45,000)

Q: The following additional information is available from the financial statements of Hitchens Company: Amortization Expense $ 18,000 Purchase of building for cash 135,000 Depreciation Expense 54,000 Increase in Accounts Receivable 15,000 Increase in Bonds Payable 250,000 Increase in Common Stock 60,000 Increase in Inventory 43,000 Decrease in Accounts Payable 68,000 Increase in Salaries and Wages Payable 25,000 Cash dividends paid 100,000 Net income 292,000 What is the net cash provided by operating activities? A) $263,000 B) $285,000 C) $396,000 D) $368,000

Q: Consider the following information: Net income $20,000 Depreciation 3,000 Increase in accounts receivable 1,000 Decrease in prepaid rent (400) Increase in accrued liabilities 900 Cash paid to purchase office equipment 4,000 What is the net cash provided by operating activities? A) $17,500 B) $18,500 C) $21,500 D) $23,300

Q: Chino Company reported net income of $20,000 for the current year. During the year, Inventory decreased by $7,000, Accounts Payable decreased by $8,000, Depreciation Expense was $10,000, and Accounts Receivable increased by $6,500. If the indirect method is used, what is the net cash provided by operating activities? A) $10,500 B) $22,500 C) $38,500 D) $51,500