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| 1 | |
Cash paid for interest is reported as part of the financing section of the Statement of Cash Flows. |
| | A) | True |
| | B) | False |
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| 2 | |
Cash paid to buy treasury stock is reported in the investing section of the Statement of Cash Flows. |
| | A) | True |
| | B) | False |
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| 3 | |
The financing and investing sections of the statement of cash flows are the same regardless of whether the direct or indirect method is used in the operating section. |
| | A) | True |
| | B) | False |
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| 4 | |
When using the indirect method, depreciation is added back to net income because it increases cash inflows. |
| | A) | True |
| | B) | False |
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| 5 | |
The impact of gains and losses are eliminated from net income because the cash flows associated with these gains and losses are either investing or financing activities and are reported in those sections of the Statement of Cash Flows. |
| | A) | True |
| | B) | False |
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| 6 | |
Which of the following is NOT a primary purpose of the statement of cash flows? |
| | A) | To assess the entity's ability to generate positive future net cash flows. |
| | B) | To assess management's success in limiting the income taxes paid to the federal government. |
| | C) | To assess the reasons for differences between income and associated cash receipts and payments. |
| | D) | To assess both the cash and non-cash aspects of the entity's investing and financing transactions during the period. |
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| 7 | |
The issuance of $200,000 of the company's common stock in exchange for a franchise is reported in which section of the statement of cash flows: |
| | A) | investing activities |
| | B) | operating activities |
| | C) | financing activities |
| | D) | noncash investing and financing activities |
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| 8 | |
Sales totaled $600,000, net accounts receivable had a beginning and ending balance of $49,000 and $40,000, respectively. Cash collections from customers were: |
| | A) | $609,000 |
| | B) | $569,000 |
| | C) | $551,000 |
| | D) | $560,000 |
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| 9 | |
Cost of Goods Sold for the period totaled $1,200,000, accounts payable had a beginning and ending balance of $207,000 and $190,000, respectively, and inventory had a beginning and ending balance of $250,000 and $180,000, respectively. Cash payments for inventory were: |
| | A) | $1,113,000 |
| | B) | $1,200,000 |
| | C) | $1,130,000 |
| | D) | $1,147,000 |
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| 10 | |
Interest expense for the period was $8,000 more than cash payments for interest. This difference will result in a(n): |
| | A) | increase in the interest payable account. |
| | B) | decrease in the interest payable account. |
| | C) | increase in the interest receivable account. |
| | D) | decrease in the interest receivable account. |
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| 11 | |
During the year, cash payments for wages totaled $1,300,000, while wages payable increased $80,000. Wages expense reported on the income statement equaled: |
| | A) | $1,220,000 |
| | B) | $1,300,000 |
| | C) | $1,380,000 |
| | D) | Can't be determined from information given. |
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| 12 | |
Which of the following is not added to net income on the statement of cash flows that uses the indirect format? |
| | A) | Depreciation expense |
| | B) | Loss on sale of equipment |
| | C) | Decrease in accounts receivable |
| | D) | Decrease in wages payable |
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| 13 | |
A building with a cost of $800,000, and accumulated depreciation of $450,000, was sold at a gain of $102,000. This transaction would be reported on a statement of cash flows using the indirect format as a(n): |
| | A) | $902,000 inflow from investing activities and an $102,000 deduction from net income |
| | B) | $452,000 inflow from investing activities and an $102,000 deduction from net income |
| | C) | $552,000 inflow from investing activities and an $102,000 deduction from net income |
| | D) | $452,000 inflow from investing activities and an $102,000 inflow added to operating activities |
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| 14 | |
The retained earnings account began the year with a balance of $640,000 and ended with a balance of 800,000. During the year the company earned $370,000 of net income. If the dividend payable account at the start of the year was $72,000 and at the end of the year was $91,000 how much cash was paid for dividends during the year? |
| | A) | $229,000 |
| | B) | $210,000 |
| | C) | $191,000 |
| | D) | $31,000 |
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| 15 | |
Cash flows from operating activities includes all of the following except: |
| | A) | cash receipts and collections from sales of products. |
| | B) | cash interest paid on bonds. |
| | C) | cash paid for insurance coverage. |
| | D) | cash paid for dividends. |
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