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54 Cards in this Set
- Front
- Back
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The primary purpose of the statement of cash flows is to provide information
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ABOUT THE CASH RECEIPTS AND CASH PAYMENTS OF AN ENTITY DURING A PERIOD
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All of the following would be classified as financing cash flows except:
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INTEREST PAID ON LONG-TERM DEBT
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Net cash flow from operating activities is determined by eliminating
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NONCASH EXPENSES AND NONCASH REVENUES FROM NET INCOME
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Which method adjusts net income for items that affected reported net income but did not affect cash?
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INDIRECT
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Koppernaes Co. provided the following information on selected transactions during 2012:
Purchase of land by issuing bonds $550,000 Proceeds from issuing stock 510,000 Purchases of inventory 950,000 Purchases of treasury stock 250,000 Loans made to affiliated corporations 175,000 Dividends paid to preferred stockholders 90,000 Proceeds from issuing preferred stock 210,000 Proceeds from sale of land 225,000 The net cash provided (used) by investing activities during 2012 is |
$50,000
$225,000 - $175,000 |
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An analysis of the machinery accounts of Jezak Company for 2012 is as follows:
Machinery Accumulated Depreciation Machinery, net of Accumulated Depreciation Balance at January 1, 2012 $1,650,000 $850,000 $800,000 Purchases of new machinery in 2012 for cash 425,000 — 425,000 Depreciation in 2012 — 275,000 (275,000) Balance at Dec. 31, 2012 $2,075,000 $1,125,000 $950,000 The information concerning Jezak's machinery accounts should be shown in Jezak's statement of cash flows (indirect method) for the year ended December 31, 2012, as a (n) |
ADDITION TO NET INCOME OF $275,000 AND A $425,000 DECREASE IN CASH FLOWS FROM INVESTING ACTIVITIES
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The sources of information used to prepare the statement of cash flows includes all of the following except
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LAST YEAR'S INCOME STATEMENT
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A statement of cash flows typically would not disclose the effects of
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STOCK DIVIDENDS DECLARED
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The last step in the preparation of the statement of cash flows worksheet is to enter the
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INCREASE OR DECREASE IN CASH AT THE BOTTOM OF THE WORKSHEET
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Of the following questions, which one would not be answered by the statement of cash flows?
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WERE ALL THE CASH EXPENDITURES OF BENEFIT TO THE COMPANY DURING THE PERIOD?
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All of the following would be considered investing activities except:
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RECEIPT OF CASH DIVIDENDS FROM INVESTMENTS
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To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by
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ELIMINATING THE EFFECTS OF INCOME STATEMENT TRANSACTIONS THAT DID NOT RESULT IN A CORRESPONDING INCREASE OR DECREASE IN CASH
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When preparing a statement of cash flows (indirect method), which of the following is not an adjustment to reconcile net income to net cash provided by operating activities?
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A CHANGE IN DIVIDENDS PAYABLE
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Cabinis Co. provided the following information on selected transactions during 2012:
Purchase of land by issuing bonds $550,000 Proceeds from issuing bonds 900,000 Purchases of inventory 2, 975,000 Purchases of treasury stock 190,000 Loans made to affiliated corporations 425,000 Dividends paid to preferred stockholders 120,000 Proceeds from issuing preferred stock 325,000 Proceeds from sale of equipment 650,000 The net cash provided by financing activities during 2012 is |
$915,000
$900,000 - $190,000 - $120,000 + $325,000 |
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Collier Company sold some of its plant assets during 2012. The original cost of the plant assets was $1,500,000 and the accumulated depreciation at date of sale was $1,400,000. The proceeds from the sale of the plant assets should be shown on Collier's statement of cash flows (indirect method) for the year ended December 31, 2012, as a(n)
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SUBTRACTION FROM NET INCOME OF $110,000 AND A $210,000 INCREASE IN CASH FLOWS FROM INVESTING ACTIVITIES
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Which of the following is not needed in order to prepare a statement of cash flows?
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LAST YEAR'S STATEMENT OF CASH FLOWS
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The issuance of a stock split would be classified as a(n)
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SIGNIFICANT NONCASH TRANSACTION
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Which of the following statements related to a worksheet used for the preparation of a statement of cash flows is not correct?
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THE RECONCILING ITEMS SHOWN IN THE WORKSHEET ARE ENTERED IN A JOURNAL AND POSTED TO THE APPROPRIATE ACCOUNTS
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The primary purpose of the statement of the cash flows is to provide information about the:
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ENTITY'S CASH RECEIPTS AND CASH PAYMENTS DURING A PERIOD
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Activities involving the cash effects of transactions that enter into the determination of net income are:
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OPERATING ACTIVITIES
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The information to prepare the statement of cash flows comes from all of the following sources except:
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RETAINED EARNINGS STATEMENT
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Net cash flow from operating activities is determined by eliminating:
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NONCASH REVENUES AND NONCASH EXPENSES FROM NET INCOME
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The method of calculating net cash flow from operating activities that results in the presentation of a condensed cash receipts and cash disbursements statement is the:
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DIRECT METHOD
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The method of calculating net cash flow from operating activities that adjusts net income for items that affected reported net income but not cash is the:
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INDIRECT METHOD
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The reconciliation of net income to net cash flow from operating activities is reported under:
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BOTH THE DIRECT METHOD AND THE INDIRECT METHOD
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All of the following adjustments are added to net income in computing net cash flow from operating activities except:
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AN INCREASE IN ACCOUNTS RECEIVABLE
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All of the following adjustments would be deducted in determining net cash flow from operating activities except
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INCREASE IN ACCRUED LIABILITIES
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Under the direct method, cash payments to suppliers equals cost of goods sold:
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PLUS AN INCREASE IN INVENTORY AND MINUS AN INCREASE IN ACCOUNTS PAYABLE
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Tucker Co. provided the following information on selected transactions during 2012:
Repayment of bond principal $ 450,000 Proceeds from issuing common stock 760,000 Purchases of inventory 940,000 Proceeds from the sale of treasury stock 120,000 Purchase of 10% interest in stock of Handi Corp. 220,000 Dividends paid to common & preferred stockholders 80,000 Proceeds from issuing preferred stock 150,000 Proceeds from sale of land 280,000 The net cash provided (used) by investing activities during 2012 is |
$60,000
($220,000) + $280,000 |
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Tucker Co. provided the following information on selected transactions during 2012:
Repayment of bond principal $ 450,000 Proceeds from issuing common stock 760,000 Purchases of inventory 940,000 Proceeds from the sale of treasury stock 120,000 Purchase of 10% interest in stock of Handi Corp. 220,000 Dividends paid to common & preferred stockholders 80,000 Proceeds from issuing preferred stock 150,000 Proceeds from sale of land 280,000 The net cash provided (used) by financing activities during 2012 is |
$500,000
$760,000 + $120,000 - $80,000 +150,000 - $450,000 |
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Acquiring land and a building by issuing common stock would be reported as:
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A NONCASH INVESTING AND FINANCING ACTIVITY
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Which of the following statements related to a work sheet used for preparation of the statement of cash flows is not correct?
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THE RECONCILING ITEMS SHOWN IN THE WORK SHEET ARE ENTERED IN A JOURNAL AND POSTED TO APPROPRIATE ACCOUNTS
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The last step in the preparation of the statement of cash flows work sheet is to enter the:
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INCREASE OR DECREASE IN CASH AT THE BOTTOM OF THE WORK SHEET
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Which of the following statements is incorrect about cash flow accounting with respect to IFRS and U.S. GAAP treatments?
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BOTH U.S. GAAP AND IFRS CONSIDER BANK OVERDRAFTS (IN CERTAIN SITUATIONS) TO BE PART OF CASH AND CASH EQUIVALENTS
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TRUE/FALSE The statement of cash flows is divided into four activities
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TRUE
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TRUE/FALSE Only the comparative balance sheet is needed to prepare the statement of cash flows
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FALSE
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TRUE/FALSE An increase in short-term notes receivable will be added to net income under the indirect method of preparing the statement of cash flows
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FALASE
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TRUE/FALSE Payment of a stock divided is classified as a financing activity
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FALSE
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TRUE/FALSE The operating activities section of a statement of cash flows would include cash spent to acquire new equipment
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FALSE
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TRUE/FALSE The investing activities section of a statement of cash flows would include cash received from dividends on long-term investments in stocks
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FALSE
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TRUE/FALSE The financing activities section of a statement of cash flows would include interest paid on bonds and long-term notes payable
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FALSE
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TRUE/FALSE Under the direct method, a loss on the sale of long-term investments would be shown in the operating activities section
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FALSE
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TRUE/FALSE Depreciation expense is an adjustment to net income under the direct method
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FALSE
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TRUE/FALSE Unlike U.S. GAAP, IFRS does not specify that companies must classify cash flows as operating, investing, or financing
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FALSE
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Which of the following is not one of the benefits that creditors and investors can derive from the statement of cash flows?
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ASSESS THE EFFECTIVENESS OF MANAGEMENT'S BORROWING POLICY
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Which of the following is not one of the three activities classified on the statement of cash flows?
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MANAGING
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Which method adjust net income to net cash flows from operating activities?
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INDIRECT
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Caraway Company sold some of its plant assets during 2012. The original cost of the plant assets was $500,000 and the accumulated depreciation at date of sale was $310,000. The proceeds from the sale of the plant assets were $150,000. The information concerning the sale of the plant assets should be shown on Caraway's statement of cash flows (indirect method) for the year ended December 31, 2012, as a(n)
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ADDITION TO NET INCOME OF $40,000 AND A $150,000 INCREASE IN CASH FLOWS FROM INVESTING ACTIVITIES
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The payment of a cash dividend would be classified as a(n)
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FINANCING ACTIVITY
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Which of the following activities would be classified as an investing activity?
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CASH PAID TO PURCHASE LAND TO BE HELD FOR FUTURE USE
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Which of the following is not needed in order to prepare a statement of cash flows?
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LAST YEAR'S STATEMENT OF CASH FLOWS
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Which of the following is the first step in preparing the statement of cash flows?
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DETERMINE THE CHANGE IN CASH
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Under the direct method of preparing the statement of cash flows, cash receipts from customers is equal to:
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SALES REVENUES - INCREASE IN ACCOUNTS RECEIVABLE
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If a plant asset is sold for cash and a loss results, which sections are affected in the statement of cash flows under the indirect method?
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OPERATING AND INVESTING
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