Online Tutorial Quiz

Please answer all questions

1		Cash flows is a term that describes both cash receipts and cash payments?
			A)	True
			B)	False
2		The summary of transactions for issuing bonds is shown as an investing activity on the statement of cash flows.
			A)	True
			B)	False
3		The cash sale of a plant asset for an amount greater than its book value would be shown on the statement of cash flows as a financing activity.
			A)	True
			B)	False
4		The sale of an investment for less than its cost would be shown on the statement of cash flows as an operating activity.
			A)	True
			B)	False
5		Transactions involving sales and the cost of goods sold are summarized as operating activities.
			A)	True
			B)	False
6		Since interest and dividend receipts are not related to operating activities, they are not shown as part of the net cash flow from operating activities on the statement of cash flows.
			A)	True
			B)	False
7		The practice of summarizing operating results in terms of cash receipts and cash payments is the cash method of accounting.
			A)	True
			B)	False
8		The practice of recognizing revenue when earned and recognizing expense when incurred is the accrual method of accounting.
			A)	True
			B)	False
9		Treasury bills, money market funds, and commercial paper are considered to be cash equivalents.
			A)	True
			B)	False
10		A transaction in which an asset that cost $45,000, had a book value of $4,000, and was sold for $3,000 would appear on the statement of cash flows as an investing activity of $4,000.
			A)	True
			B)	False
11		If the ending balance of accounts receivable is less than the beginning balance, the net amount of cash received during the period related to sales activities was greater than the amount of reported net sales.
			A)	True
			B)	False
12		If inventory increased by $5,000, accounts payable decreased by $8,000, and the cost of goods sold was $125,000, the cash payment for purchases was $128,000.
			A)	True
			B)	False
13		The beginning balance of the Prepaid Insurance account was $3,200. The ending balance of the account was $5,000. Insurance expense recognized for the period was $4,000. The cash outflow from the purchase of insurance policies was $2,200.
			A)	True
			B)	False
14		The Interest Revenue account has an ending balance of $4,600. The Interest Receivable account increased $800. The total amount of cash flow from interest revenues was $5,400.
			A)	True
			B)	False
15		When the statement of cash flows is completed, the net cash flows from operating activities should be equal to the net income shown on an accrual-basis income statement.
			A)	True
			B)	False
16		The indirect method of preparing net cash flows from operating activities is recommended by the FASB.
			A)	True
			B)	False
17		A format of reporting net cash flows from operating activities that reconciles this figure with the amount of net income shown in the income statement is called the indirect method.
			A)	True
			B)	False
18		A company purchased a building by issuing a check for $45,000 and a mortgage note for $225,000. The mortgage note will be shown on a supplementary schedule to the statement of cash flows.
			A)	True
			B)	False
19		After the basic obligations of the business have been met, the portion of the annual net cash flows from operating activities that remains available for discretionary purposes is called free cash flow.
			A)	True
			B)	False
20		A cash budget is a secondary financial statement.
			A)	True
			B)	False
21		The strategy of charging a higher price for a product or service during periods of high demand, and a lower price during periods of slack demand is called peak pricing.
			A)	True
			B)	False
22		The variety and relative quantities of goods and services that a company offers for sale is called the company's product variety.
			A)	True
			B)	False
23		Paint and paintbrushes sold in a hardware store are complementary products.
			A)	True
			B)	False
24		Which of the following is a financing activity?
			A)	Purchasing production equipment
			B)	Paying a cash dividend
			C)	Receiving interest income
			D)	Selling an investment in marketable securities
			E)	Declaring a cash dividend
25		Which of the following is an investing activity?
			A)	Selling bonds at a price in excess of par value
			B)	Issuing common stock at a price in excess of stated value
			C)	Paying $45,000 down on a $250,000 building
			D)	Issuing a mortgage note for $300,000
			E)	A, B, and C
26		Which of the following is not a financing activity?
			A)	Payments on a mortgage note
			B)	Paying a bond issue at maturity
			C)	Paying an account payable
			D)	Issuing common stock for cash
			E)	Paying a cash dividend

Beginning accounts receivable $ 50,000
Ending accounts receivable $ 30,000
Net sales $600,000
Cost of goods sold $375,000
Operating expenses $ 80,000

27		What was the amount of cash received from customers?
			A)	$620,000
			B)	$580,000
			C)	$630,000
			D)	$395,000
			E)	None of the above

Beginning accounts payable $ 34,000
Ending accounts payable $ 32,000
Beginning inventory $ 80,000
Ending inventory $ 94,000
Cost of goods sold $560,000
Net sales $990,000

28		What was the cash outflow to suppliers for merchandise?
			A)	$588,000
			B)	$548,000
			C)	$572,000
			D)	$576,000
			E)	None of the above

Consider the following:
Beginning accounts payable $ 34,000
Ending accounts payable $ 38,000
Beginning inventory $ 89,000
Ending inventory $ 92,000
Cost of goods sold $490,000
Net sales $870,000

29		What was the cash outflow to suppliers for merchandise?
			A)	$483,000
			B)	$497,000
			C)	$485,000
			D)	$491,000
			E)	None of the above

Consider the following:
Total operating expenses $95,000
Depreciation expense $ 5,000
Amortization expense $ 3,000
Beginning prepaids $15,000
Ending prepaids $11,000
Beginning accrued liabilities $ 6,000
Ending accrued liabilities $ 1,000

30		What was the total of cash payments for expenses?
			A)	$ 96,000
			B)	$ 86,000
			C)	$ 94,000
			D)	$ 88,000
			E)	$102,000

31		Net cash provided by operating activities was $45,000. Net cash provided by investing activities was $50,000. The beginning and ending cash and cash equivalent balance was $12,000 and $14,000, respectively. What was the cash flow provided by (or used) in financing activities?
			A)	($95,000)
			B)	($93,000)
			C)	($97,000)
			D)	Cannot be determined from information provided.
			E)	None of the above
32		The net cash provided by investing activities was $450,000. The net cash used by financing activities was $500,000. The beginning and ending balance of cash and cash equivalents was $65,000 and $45,0000, respectively. What was the amount of cash provided by (or used) by operating activities?
			A)	$30,000
			B)	($30,000)
			C)	$20,000
			D)	$25,000
			E)	$(25,000)
33		Which of the following is not an operating activity?
			A)	Receiving dividends
			B)	Paying interest
			C)	Collecting accounts receivable
			D)	Purchasing insurance policies of more than one year
			E)	Dividend payments
34		Which of the following activities is not a financing activity?
			A)	Retiring preferred stock
			B)	Issuing convertible bonds
			C)	Paying cash dividends
			D)	Borrowing money by issuing a long-term note payable
			E)	Purchasing land for cash

Consider the following:
Machinery, beginning balance $114,000
Machinery, ending balance $100,000
Accumulated Depreciation,
Machinery, beginning balance $ 60,000
Accumulated Depreciation,
Machinery, ending balance $ 64,000
Depreciation expense $ 15,000

35		What was the amount of cash inflow from the sale of old machinery during the year? Assume no other transactions affected the Machinery account and that the sale of the machinery did not result in a gain or loss on disposal.
			A)	$ 3,000
			B)	$14,000
			C)	$11,000
			D)	$15,000
			E)	$ 4,000

36		Which of the following would not appear directly on the statement of cash flows but should be shown in a supplementary schedule?
			A)	Cash dividends paid
			B)	Purchase of a building for cash
			C)	Issuing common stock for cash
			D)	Purchasing land by issuing a mortgage note
			E)	Receiving cash dividends from an investment in stock
37		Which of the following activities would not be reported on the Supplementary Schedule of Noncash Investing and Financing Activities?
			A)	Common stock is issued in exchange for title to land.
			B)	Purchasing a building by issuing a mortgage note.
			C)	Holders of convertible bonds exchange the bonds for common stock.
			D)	Bonds are retired three years prior to maturity date.
			E)	All of the above
38		Which of the following would not be reported on a statement of cash flows?
			A)	Common stock was sold at price in excess of its par value.
			B)	Bonds were issued at price less than their par or stated value.
			C)	Cash dividends were declared.
			D)	Land purchased by paying $10,000 down and issuing a mortgage note.
			E)	Equipment that had no book value was sold for $1,000.
39		Which of the following is not an investing activity?
			A)	Borrowing money
			B)	Purchasing assets
			C)	Purchasing an investment
			D)	Collecting the principal of a note receivable
			E)	Selling a fully depreciated asset
40		Which of the following is an operating activity?
			A)	Issuing common stock in exchange for a building
			B)	Retiring bonds payable
			C)	Collecting interest on an investment
			D)	Purchasing the common stock of another corporation
			E)	Selling bonds at a premium
41		Cash dividends of $48,500 were declared. The beginning and ending balance of the Cash Dividends Payable account was $8,000 and $10,500, respectively. On the statement of cash flows, the cash dividend activity would be reported as which of the following?
			A)	Investing activity of $51,000
			B)	Financing activity of $46,000
			C)	Financing activity of $48,500
			D)	Investing activity of $46,000
			E)	Investing activity of $10,500

An analysis of noncash accounts disclosed the following:
a. Machinery was purchased for $4,500 cash.
b. $10,000 was borrowed on a long-term note.
c. 1,000 shares of common stock were issued at $5 each.
d. Cash dividends of $2,000 were declared and paid.
e. An investment was sold for $23,000.
f. $50,000 of bonds was retired at maturity.

42		The net cash provided by (or used in) financing activities was which of the following?
			A)	A $14,000 increase
			B)	A $37,000 decrease
			C)	A $23,000 increase
			D)	A $33,000 increase
			E)	None of the above

43		The net cash flow provided by operations was $23,000. The net cash flow from financing activities was $15,000. The net increase in cash and cash equivalents was $22,000. What was the net cash flow from investing activities?
			A)	A net outflow of $16,000
			B)	A net inflow of $16,000
			C)	A net outflow of $14,000
			D)	A net inflow of $1,000
			E)	None of the above