Exam Questions Chapter 13 Statement Of Cash Flows

Managerial Accounting, 6e (Braun et al.)

Chapter 13 Statement of Cash Flows

13.1 Classify cash flows as operating, investing, or financing activities

1) The statement of cash flows shows not only the amount of cash used during a particular time, but also how the cash was used.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

2) The statement of cash flows reflects cash flows during a period of time.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

3) The statement of cash flows does not report why cash increased or decreased during the period.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

4) Investors and management use the statement of cash flows to evaluate a firm's profitability.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

5) For purposes of the statement of cash flows, "cash" includes cash on hand, cash in the bank and cash equivalents.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1; A13-40-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

6) Cash equivalents include investments that cannot be readily converted into cash.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1; A13-40-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

7) Operating activities on the statement of cash flows include activities that affect net income, current liabilities and current assets.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

8) The operating activities section of the statement of cash flows includes paying dividends and paying off loans.

Diff: 1

LO: 13-1

EOC: S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

9) Investing activities include activities that affect the current asset section of the balance sheet.

Diff: 1

LO: 13-1

EOC: S13-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

10) Financing activities include transactions that affect long-term liabilities and stockholders' equity on the balance sheet.

Diff: 1

LO: 13-1

EOC: S13-3; QC13-2; QC13-6; A13-40-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

11) The three sections of the Statement of Cash Flows are operating activities, investing activities, and financing activities.

Diff: 1

LO: 13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

12) The three sections of the Statement of Cash Flows are operating activities, investing activities, and capital activities.

Diff: 1

LO: 13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

13) Which of the following parties would have an interest in the amount of cash at a company?

A) Creditors expecting consumers to repay loans and interest

B) Employees expecting payment for their work

C) Investors expecting a dividend

D) All of the above are parties interested in the amount of cash at a company.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

14) Regarding the statement of cash flows, which of the following is true?

A) The statement of cash flows reports why cash increased or decreased during the period.

B) The statement of cash flows covers a span of time and is dated "Year Ended, Month, Day, and Year."

C) The statement of cash flows shows where cash came from and how cash was spent.

D) All of the above are true of the statement of cash flows.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

15) A statement of cash flows is generated to show

A) the revenues the company has earned during the period.

B) the expenses the company incurred during the period.

C) how profits were generated during the period.

D) the inflow and outflow of cash during the time period.

Diff: 1

LO: 13-1

EOC: S13-1; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

16) For an investment to be considered as a "cash equivalent," the investment must be

A) convertible to a known amount of cash.

B) convertible to cash within 5 years.

C) convertible to cash without loss of value.

D) convertible to cash within 1 year.

Diff: 1

LO: 13-1

EOC: S13-1; A13-40-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

17) The ________ reports an entity's cash receipts and cash payments during the period.

A) income statement

B) statement of retained earnings

C) balance sheet

D) statement of cash flows

Diff: 1

LO: 13-1

EOC: S13-1; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

18) Which of the following is/are created by operating activities?

A) An increase in long-term debt

B) An increase in common stock

C) Revenues and expenses

D) An investment in machines

Diff: 1

LO: 13-1

EOC: QC13-4; QC13-5; S13-1; S13-2; A13-40-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

19) Which of the following statements is true about the information in a statement of cash flows?

A) The statement of cash flows contains information about stock splits and stock dividends distributed by the company.

B) The statement of cash flows contains information about the business's ability to generate positive cash flows in future periods.

C) The statement of cash flows contains information about the business's percentage change in each item of revenue and expense.

D) The statement of cash flows contains information about the differences between net income and additions to retained earnings.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

20) Which of the following statements is true about information in a statement of cash flows?

A) The statement of cash flows is one of the required financial statements for publicly held companies.

B) The statement of cash flows is prepared at the option of management.

C) The statement of cash flows is combined with the income statement.

D) The statement of cash flows is not completed when an income statement is prepared.

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

21) Which of the following is an acceptable basis for the preparation of the statement of cash flows?

A) The sum of cash, inventory, and money market accounts

B) The sum of cash and accounts receivable

C) Cash

D) The sum of cash and cash equivalents

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

22) Which of the following items is one of the three sections on the statement of cash flows?

A) Retained earnings

B) Total liabilities

C) Total stockholder's equity

D) Cash from investing activities

Diff: 1

LO: 13-1

EOC: S13-1; S13-2; A13-40-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

23) Which of the following items is not one of the three sections on the statement of cash flows?

A) Cash from capital activities

B) Cash from operating activities

C) Cash from financing activities

D) Cash from investing activities

Diff: 1

LO: 13-1

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

24) If a corporation shows a net loss on its income statement, which of the following is true?

A) The company may not be able to sell stock.

B) The company may continue to have a net increase in cash.

C) The company may not be able to pay dividends.

D) The company may continue to have an increase in retained earnings.

Diff: 1

LO: 13-1

EOC: S13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

25) Which of the following descriptions apply to cash equivalents?

A) Cash equivalents' values change because the interest rate changes.

B) Cash equivalents are invested in fixed assets.

C) Cash equivalents are highly liquid.

D) Cash equivalents are long-term.

Diff: 1

LO: 13-1

EOC: S13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

26) The correct order of the sections on a statement of cash flows is

A) operating, investing, financing.

B) financing, investing, operating.

C) investing, operating, financing.

D) operating, financing, investing.

Diff: 1

LO: 13-1

EOC: S13-2; S13-1; A13-40-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

27) The three major categories included on the statement of cash flows are

A) investing, capital and financing activities.

B) investing, operating and financing activities.

C) investing, operating and capital activities.

D) financial, operating and capital activities.

Diff: 1

LO: 13-1

EOC: S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

28) Activities that are included in the operating activities section of the statement of cash flows include which of the following activities?

A) Activities that obtain the cash needed to launch and sustain the business

B) Activities that increase or decrease long-term assets

C) Activities that create revenue or expenses in the entity's major line of business

D) Activities that affect long-term liabilities and equity

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

29) The ________ section from the statement of cash flows includes activities that create revenue, expenses, gains and losses.

A) investing

B) operating

C) financing

D) capital

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

30) The ________ section from the statement of cash flows includes activities that affect net income on the income statement.

A) operating

B) financing

C) investing

D) capital

Diff: 1

LO: 13-1

EOC: S13-7; A13-40-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

31) The ________ section from the statement of cash flows includes activities that affect current assets and current liabilities on the balance sheet.

A) investing

B) operating

C) financing

D) capital

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

32) The ________ is the most important section on the statement of cash flows because it reflects the day-to-day operations that determine the future of an organization.

A) operating section

B) financing section

C) investing section

D) capital section

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

33) The ________ section from the statement of cash flows includes activities that affect the buying and selling of long-term assets on the balance sheet.

A) investing

B) operating

C) financing

D) capital

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

34) Which of the following sections from the statement of cash flows includes activities that increase and decrease long-term assets?

A) Investing section

B) Operating section

C) Financing section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

35) Which of the following sections from the statement of cash flows includes purchases and sales of long-term assets?

A) Financing section

B) Investing section

C) Operating section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

36) On the statement of cash flows, which of the following section includes activities that increase and decrease long-term liabilities and owners' equity?

A) Operating section

B) Financing section

C) Investing section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

37) On the statement of cash flows, which of the following sections includes the issuance of stock and the payment of dividends?

A) Financing section

B) Investing section

C) Operating section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

38) On the statement of cash flows, which of the following sections includes the purchase and sale of treasury stock?

A) Investing section

B) Operating section

C) Financing section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-7; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

39) On the statement of cash flows, which of the following sections includes borrowing money and paying off loans?

A) Investing section

B) Financing section

C) Operating section

D) Capital section

Diff: 1

LO: 13-1

EOC: A13-40-5; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

40) On the statement of cash flows, which of the following sections would include the purchase of a building paid for with cash?

A) Investing section

B) Operating section

C) Financing section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

41) Which of the following activity sections on the statement of cash flows would include the acquisition of a building by issuing common stock?

A) Investing section

B) Financing section

C) Operating section

D) Capital section

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

42) The ________ activities section from the statement of cash flows includes cash loans paid to others and cash collections on loans from issuing long-term debt.

A) investing

B) financing

C) operating

D) capital

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

43) The ________ activities section from the statement of cash flows would include the payment of a long-term mortgage payable with cash.

A) investing

B) financing

C) operating

D) capital

Diff: 1

LO: 13-1

EOC: S13-7; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

44) Paying cash dividends would be

A) a cash outflow from operations.

B) a cash outflow from financing.

C) a cash outflow from investing.

D) a cash outflow from capital.

Diff: 2

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

45) Issuing preferred stock to stockholders would be a

A) cash inflow from investing.

B) cash inflow from operations.

C) cash inflow from depreciation.

D) cash inflow from financing.

Diff: 2

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

46) Buying and selling property, plant and equipment would be considered in

A) the investing portion of the statement of cash flows.

B) the operating portion of the statement of cash flows.

C) the financing portion of the statement of cash flows.

D) the capital portion of the statement of cash flows.

Diff: 1

LO: 13-1

EOC: S13-7; QC13-3; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

47) All of the following are examples of cash outflows from an investing activity except

A) purchase of equity securities.

B) loans made to another party.

C) purchase of commercial real estate.

D) purchase of treasury stock.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

48) Which of the following is the primary source of cash over the life of a business?

A) Financing activities

B) Operating activities

C) Investing activities

D) Capital activities

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

49) All of the following are cash inflows from a financing activity except

A) additional owner investment.

B) issuance of stock.

C) mortgage proceeds.

D) interest revenue on loans.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

50) Of the following, which is not a cash outflow from an investing activity?

A) Payment of cash dividends

B) Loans made to another party

C) Investments in subsidiary

D) Purchase of new building

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

51) The primary source of cash over the life of a business is

A) investing activities.

B) financing activities.

C) operating activities.

D) capital activities.

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

52) Of the following, which is not a cash inflow from a financing activity?

A) Issuance of preferred stock

B) Issuance of common stock

C) Sale of long-term investment

D) Proceeds from issuance of long-term debt

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

53) An outflow of cash from an investing activity would be

A) making loans to third parties.

B) issuing notes payable.

C) paying cash dividends to stockholders.

D) purchasing treasury stock.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

54) Money borrowed for a mortgage would be a(n) ________ activity.

A) operating

B) financing

C) investing

D) non-cash

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

55) All of the following are cash outflows from an operating activity except

A) payment of interest on a loan.

B) payment for purchasing inventory.

C) payment to the government for tax bill.

D) owner withdrawal from the company.

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

56) A payment of interest on a loan would be considered a

A) cash outflow from investing activities.

B) cash outflow from operating activities.

C) cash outflow from financing activities.

D) cash outflow from depreciation.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

57) Cash received from selling merchandise would be considered a

A) cash inflow from investing activities.

B) cash inflow from financing activities.

C) cash inflow from operating activities.

D) cash outflow from operating activities.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

58) The purchase of inventory would be considered a

A) cash outflow from investing activities.

B) cash outflow from operating activities.

C) cash outflow from financing activities.

D) cash outflow from depreciation.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

59) Cash received from providing services would be considered a

A) cash inflow from investing activities.

B) cash outflow from operating activities.

C) cash inflow from financing activities.

D) cash inflow from operating activities.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

60) Creditor and stockholder transactions are considered ________ activities.

A) financing

B) planning

C) operating

D) investing

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

61) Which section of the statement of cash flows would include a loss of $20,000 from the sale of equipment?

A) Investing

B) Operating

C) Financing

D) Would not be on the statement of cash flows

Diff: 1

LO: 13-1

EOC: S13-7; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

62) Which of the following activities are included in the investing activities section of the statement of cash flows?

A) Activities that obtain the cash needed to launch and sustain the business

B) Activities that increase or decrease long-term assets

C) Activities that create revenue or expenses in the entity's major line of business

D) Activities that affect long-term liabilities

Diff: 1

LO: 13-1

EOC: S13-4; S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

63) The ________ section from the statement of cash flows would include the issuance of a stock dividend.

A) operating

B) financing

C) investing

D) capital

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

64) Which of the following would be considered an operating activity on the statement of cash flows?

A) Dividends paid to stockholders

B) Purchase of land

C) The sale of inventory

D) The receipt of stock dividends from investment stock

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

65) On the statement of cash flows, which of the following items would be reported as an operating activity?

A) A purchase of treasury stock

B) A payment of dividends

C) A payment of interest

D) An issuance of stock

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

66) On the statement of cash flows, which of the following would be considered an investing activity?

A) A purchase of treasury stock

B) A sale of land

C) Depreciation of equipment

D) A sale of inventory

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

67) On the statement of cash flows, which of the following items would be reported in the financing activities section?

A) Cash paid for interest

B) Cash received from customers

C) Cash received from a sale of treasury stock

D) Cash paid for operating expenses

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

68) Which of the following items would be reported as an operating activity on the statement of cash flows?

A) Purchase of equipment

B) A payment of dividends

C) Payment for rent

D) Sale of equipment

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

69) Which of the following would be considered an investing activity on the statement of cash flows?

A) An issuance of stock

B) A sale of equipment

C) Payment of dividends

D) Purchase of inventory

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

70) Which of the following items would be reported in the financing activities section on the statement of cash flows?

A) Cash paid for rent

B) Cash received from sale of inventory

C) Cash received from issuance of long-term debt

D) Cash paid for land

Diff: 1

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

71) Where are noncash investing and financing activities reported?

A) The financing activities section of the statement of cash flows

B) A schedule accompanying the statement of cash flows

C) The investing activities section of the statement of cash flows

D) In both A and B

Diff: 1

LO: 13-1

EOC: S13-7; A13-40-6

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

72) On the statement of cash flows, which of the following activities are included in the financing activities section?

A) Activities that increase or decrease long-term assets

B) Activities that obtain the cash needed to launch and sustain the business

C) Activities that create revenue or expenses in the entity's major line of business

D) Activities that increase short-term assets

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

73) List three ways that owners and investors use the statement of cash flows.

Diff: 1

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

74) How can a company that has shown net income in recent years be required to declare bankruptcy? How can the statement of cash flows provide an advanced warning about this possibility?

Diff: 2

LO: 13-1

EOC: S13-7

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

75) Identify and describe the three sections of the statement of cash flows.

Diff: 2

LO: 13-1

EOC: S13-7; S13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

76) For each of the following transactions indicate the effect on the cash balance. Use + for increase, - for decrease, and 0 for no effect.

________ a. Payment of cash dividends

________ b. Payment of interest

________ c. Sale of treasury stock

________ d. Conversion of debt to common stock

________ e. Payment of accounts payable

________ f. Payment of salaries

________ g. Receipt of cash dividends

________ h. Sale of merchandise for cash

________ i. Acquisition of a patent by issuing common stock

________ j. Purchase of land

________ k. Receipt of stock dividends

Diff: 2

LO: 13-1

EOC: S13-7; S13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

77) For each of the following transactions, indicate the section in which it may be included. Use O for the operating section, I for the investing activities section, F for the financing section, S for a separate schedule of noncash investing and financing activities, and N for items not disclosed on the statement of cash flows.

________ a. Paid cash dividends

________ b. Paid interest on a short-term note payable

________ c. Sold treasury stock for cash

________ d. Converted debt to common stock

________ e. Paid accounts payable

________ f. Paid salaries

________ g. Received cash dividends

________ h. Sold merchandise for cash

________ i. Acquired a patent by issuing common stock

________ j. Purchase of land using preferred stock

________ k. Received stock dividends

Diff: 2

LO: 13-1

EOC: S13-7; S13-1; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

78) For each of the following transactions, indicate the section in which it may be included. Use O for the operating section, I for the investing activities section, and F for the financing section of the Statement of Cash Flows.

________ a. Payment of dividends

________ b. Issuance of stock

________ c. Payment of salaries

________ d. Cash purchase of equipment

________ e. Payment of accounts payable

________ f. Payment of interest on long-term debt

________ g. Receipt of cash dividends

________ h. Increase in accounts receivable

________ i. Cash sale of building

________ j. Gain on sale of land

Diff: 2

LO: 13-1

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

79) For each of the following independent transactions, indicate the type of activity (operating, investing or financing) and the effect on cash (amount and increase or decrease).

Diff: 2

LO: 13-1

EOC: S13-7; S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

13.2 Prepare the statement of cash flows using the indirect method

1) Comparative balance sheets analyze balance sheets by comparing the ending balances of two fiscal periods, usually highlighting the changes in each account.

Diff: 1

LO: 13-2

EOC: E13-12A

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

2) The indirect method of presenting the investing activities section of the statement of cash flows reconciles net income to net cash provided by investing activities.

Diff: 1

LO: 13-2

EOC: A13-40-8

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

3) When a company uses the indirect method to present the statement of cash flows, depreciation expense must be subtracted from net income to reconcile to net cash provided by operating activities.

Diff: 1

LO: 13-2

EOC: A13-40-8

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

4) When a company uses the indirect method to present the statement of cash flows, a gain on the sale of a long-term asset must be added to net income to reconcile to net cash provided by operating activities.

Diff: 1

LO: 13-2

EOC: S13-8; A13-40-8

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

5) When a company uses the indirect method to present the statement of cash flows, an increase in a current liability must be subtracted from net income to reconcile to net cash provided by operating activities.

Diff: 1

LO: 13-2

EOC: S13-8; A13-40-8

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

6) When a company uses the indirect method to present the statement of cash flows, cash received from the sale of a long-term asset increases the amount of net cash provided by investing activities.

Diff: 1

LO: 13-2

EOC: S13-8; A13-40-8

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

7) The indirect method of presenting the investing activities section of the statement of cash flows reconciles net income to net cash provided by financing activities.

Diff: 1

LO: 13-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

8) When using the indirect method in the statement of cash flows, the company would subtract the net change in a current asset account if the balance increased over time.

Diff: 1

LO: 13-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

9) When using the indirect method in the statement of cash flows, the company would add the net change in a current asset account if the balance increased over time.

Diff: 1

LO: 13-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

10) When using the indirect method in the statement of cash flows, the company would add the net change in a current liability account if the balance increased over time.

Diff: 1

LO: 13-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

11) When using the indirect method in the statement of cash flows, the company would subtract the net change in a current liability account if the balance increased over time.

Diff: 1

LO: 13-2

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

12) A company uses the indirect method to prepare the statement of cash flows. How can amortization be presented on the statement of cash flows?

A) Amortization expense can be added to net income in the financing activities section on the statement of cash flows.

B) Amortization expense can be subtracted from net income in the operating section on the statement of cash flows.

C) Amortization expense can be added to net income in the operating activities section on the statement of cash flows.

D) Amortization expense can be added to net income in the investing activities section on the statement of cash flows.

Diff: 1

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

13) If a company uses the indirect method to prepare the statement of cash flows, how can depreciation be presented on the statement of cash flows?

A) Depreciation expense can be added to net income in the financing activities section on the statement of cash flows.

B) Depreciation expense can be subtracted from net income in the operating section on the statement of cash flows.

C) Depreciation expense can be added to net income in the investing activities section on the statement of cash flows.

D) Depreciation expense can be added to net income in the operating activities section on the statement of cash flows.

Diff: 1

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

14) If a company uses the indirect method to prepare the statement of cash flows, how will a loss from the sale of equipment be presented on the statement of cash flows?

A) A loss from the sale of equipment will be added to net income in the operating activities section in the statement of cash flows.

B) A loss from the sale of equipment will be an addition in the financing activities section in the statement of cash flows.

C) A loss from the sale of equipment will be deducted from net income in the operating activities section in the statement of cash flows.

D) A loss from the sale of equipment will be an addition in the investing activities section in the statement of cash flows.

Diff: 1

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

15) A company uses the indirect method to prepare the statement of cash flows, how will a gain from the sale of equipment be presented on the statement of cash flows?

A) A gain from the sale of equipment will be added to net income in the operating activities section on the statement of cash flows.

B) A gain from the sale of equipment will be an addition in the financing activities section on the statement of cash flows.

C) A gain from the sale of equipment will be deducted from net income in the operating activities section on the statement of cash flows.

D) A gain from the sale of equipment will be an addition in the investing activities section on the statement of cash flows.

Diff: 1

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

16) If a company uses the indirect method to prepare the statement of cash flows, which of the following items would be added to net income to determine the net cash flow from operating activities?

A) An increase in inventory added to net income to determine the net cash flow from operating activities in the statement of cash flows.

B) A decrease in accounts receivable would be added to net income to determine the net cash flow from operating activities in the statement of cash flows.

C) A decrease in accounts payable would be added to net income to determine the net cash flow from operating activities in the statement of cash flows.

D) An increase in preferred dividends payable would be added to net income to determine the net cash flow from operating activities in the statement of cash flows.

Diff: 1

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

17) A company uses the indirect method to prepare the statement of cash flows. Which of the following items would be subtracted from net income to determine the net cash flow from operating activities on the statement of cash flows?

A) An increase in dividends payable would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows.

B) A loss on the sale of equipment would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows.

C) A gain on the sale of equipment would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows.

D) Depreciation expense would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows.

Diff: 1

LO: 13-2

EOC: S13-5

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

18) If a company uses the indirect method to prepare the statement of cash flows, how would the adjustment to reflect the amount of cash payments to employees be presented on the statement of cash flows?

A) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section in the statement of cash flows.

B) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section in the statement of cash flows.

C) The adjustment will be for the increase or decrease in inventory during the period and will adjust net income in the operating activities section in the statement of cash flows.

D) The adjustment will be for the increase or decrease in wages payable during the period and will adjust net income in the operating activities section in the statement of cash flows.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

19) If a company uses the indirect method to prepare the statement of cash flows, how will the adjustment to reflect the amount of cash paid for interest be presented on the statement of cash flows?

A) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section in the statement of cash flows.

B) The adjustment will be for to reflect the increase or decrease in inventory during the period and will adjust net income in the operating activities section in the statement of cash flows.

C) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section in the statement of cash flows.

D) The adjustment will be for the increase or decrease in interest payable during the period and will adjust net income in the operating activities section in the statement of cash flows.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

20) If a company uses the indirect method to prepare the statement of cash flows, how will the adjustment to reflect the amount of cash payments to suppliers be presented on the statement?

A) The adjustment will be for the increase or decrease in inventory during the period and will adjust net income in the operating activities section in the statement of cash flows.

B) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section in the statement of cash flows.

C) The adjustment will be for the increase or decrease in other accrued expenses during the period and will adjust net income in the operating activities section in the statement of cash flows.

D) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section in the statement of cash flows.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

21) If a company uses the indirect method to prepare the statement of cash flows, how will the adjustment to reflect the amount of cash received from customers be presented on the statement?

A) The adjustment will be for the increase or decrease in inventory during the period and will adjust net income in the operating activities section on the statement of cash flows.

B) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section on the statement of cash flows.

C) The adjustment will be for the increase or decrease in accrued expenses during the period and will adjust net income in the operating activities section on the statement of cash flows.

D) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section on the statement of cash flows.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

22) The balance in the ________ is used to check the accuracy on the ending balance of the statement of cash flows.

A) asset and liability accounts

B) liability accounts

C) cash and cash equivalent accounts

D) asset accounts

Diff: 1

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

23) The ________ is needed to prepare the statement of cash flows.

A) accounts receivable ledger

B) accounts payable ledger

C) general journal

D) balance sheet from the beginning and ending of the period

Diff: 1

LO: 13-2

EOC: E13-12A; E13-13A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

24) Operating activities resulting from the sales of goods and services relate to

A) retained earnings reported on the balance sheet.

B) assets and liabilities reported on the balance sheet.

C) the income statement.

D) net income on the retained earnings statement.

Diff: 1

LO: 13-2

EOC: E13-12A; E13-13A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

25) All of the following would be done when calculating the change in cash from operating activities under the indirect method except

A) deduct the purchase of equipment.

B) add an increase in accrued interest payable.

C) add a decrease in merchandise inventory.

D) deduct a decrease in accounts payable.

Diff: 1

LO: 13-2

EOC: S-13-2; E13-12A; E13-13A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

26) On a cash flow statement prepared using the indirect method, which is not reported as an operating activity?

A) Interest expense

B) Interest revenue

C) Proceeds from the sale of equipment

D) Dividend revenue

Diff: 1

LO: 13-2

EOC: S13-2; E13-12A; E13-13A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

27) Which is not reported as an operating activity on a cash flow statement prepared using the indirect method?

A) Decreases in inventories

B) Proceeds from the sales of investments

C) Interest expense

D) Increases in Accounts Payable

Diff: 1

LO: 13-2

EOC: S13-2; E13-12A; E13-13A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

28) Which of the following is reported as an operating activity on a cash flow statement prepared using the indirect method?

A) Cash received from the sale of land

B) Proceeds from the sales of investments

C) Dividends paid to stockholders

D) Increases in Accounts Payable

Diff: 1

LO: 13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

29) A company uses the indirect method to prepare the statement of cash flows. How would a gain from the sale of equipment be presented on the statement?

A) A gain from the sale of equipment would be an addition in the investing activities section.

B) A gain from the sale of equipment would be added to net income in the operating activities section.

C) A gain from the sale of equipment would be a deduction in the financing activities section.

D) A gain from the sale of equipment would be deducted from net income in the operating activities section.

Diff: 1

LO: 13-2

EOC: S13-5; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

30) A company uses the indirect method to prepare the statement of cash flows. How will a loss from the sale of a building be presented on the statement?

A) A loss from the sale of a building can be an addition in the investing activities section.

B) A loss from the sale of a building can be added to net income in the operating activities section.

C) A loss from the sale of a building can be deducted from net income in the operating activities section.

D) A loss from the sale of a building can be a deduction in the financing activities section.

Diff: 1

LO: 13-2

EOC: S13-5; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

31) A company uses the indirect method to prepare the statement of cash flows. In determining the net cash flow from operating activities, which of the following items would be added to net income?

A) An increase in dividends paid would be added to net income.

B) An increase in accrued liabilities would be added to net income.

C) A decrease in accounts payable would be added to net income.

D) A gain on the sale of land would be added to net income.

Diff: 1

LO: 13-2

EOC: S13-7; S13-2

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

32) A company uses the indirect method to prepare the statement of cash flows. It sold a piece of equipment at a loss of $5600. The equipment was purchased several years ago for $75,500 and had accumulated depreciation of $59,900. What is reported under the operating activities section on the statement of cash flows?

A) Cash proceeds of $10,000 are subtracted from net income.

B) Cash proceeds of $10,000 are added to net income.

C) The loss of $5600 is subtracted from net income.

D) The loss of $5600 is added to net income.

Diff: 2

LO: 13-2

EOC: S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

33) A company uses the indirect method to prepare the statement of cash flows. It sold a piece of equipment at a gain of $4600. The equipment was purchased several years ago for $74,500 and had accumulated depreciation of $59,900. What is reported under the operating activities section on the statement of cash flows?

A) Cash proceeds of $19,200 are subtracted from net income.

B) Cash proceeds of $19,200 are added to net income.

C) The gain of $4600 is added to net income.

D) The gain of $4600 is subtracted from net income.

Diff: 2

LO: 13-2

EOC: S13-4

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

34) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to accounts receivable?

A) The increase of $25,000 will be subtracted from sales revenue.

B) The increase of $25,000 will be added to net income.

C) The increase of $25,000 will be subtracted from net income.

D) The increase of $25,000 will be added to sales revenue.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

35) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to accounts receivable?

A) The increase of $28,000 will be subtracted from net income.

B) The increase of $28,000 will be added to net income.

C) The increase of $28,000 will be added to sales revenue.

D) The increase of $28,000 will be subtracted from sales revenue.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

36) A cash flow statement shows $17,000 from operations, ($8800) from investing, and $24,000 from financing. The cash balance must have increased or decreased by

A) $32,200.

B) $15,200.

C) $49,800.

D) $41,000.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

37) A cash flow statement shows $25,000 from financing, ($9600) from investing and $21,000 from operations. The cash balance must have increased or decreased by

A) $46,000.

B) $55,600.

C) $36,400.

D) $15,400.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

38) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to accounts payable?

A) The increase of $7000 will be subtracted from net income.

B) The increase of $7000 will be added to net income.

C) The increase of $7000 will be subtracted from cost of goods sold.

D) The increase of $7000 will be added to cost of goods sold.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

39) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to inventory?

A) The decrease of $19,000 will be subtracted from net income.

B) The decrease of $19,000 will be subtracted from cost of goods sold.

C) The decrease of $19,000 will be added to net income.

D) The decrease of $19,000 will be added to cost of goods sold.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

40) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to salary payable?

A) The increase of $4000 will be added to cost of goods sold.

B) The increase of $4000 will be added to net income.

C) The increase of $4000 will be subtracted from cost of goods sold.

D) The increase of $4000 will be subtracted from net income.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

41) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to accounts payable?

A) The increase of $11,000 will be subtracted from net income.

B) The increase of $11,000 will be added to net income.

C) The increase of $11,000 will be subtracted from cost of goods sold.

D) The increase of $11,000 will be added to cost of goods sold.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

42) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to inventory?

A) The decrease of $21,000 will be subtracted from net income.

B) The decrease of $21,000 will be subtracted from cost of goods sold.

C) The decrease of $21,000 will be added to net income.

D) The decrease of $21,000 will be added to cost of goods sold.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

43) A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to salary payable?

A) The decrease of $4000 will be added to net income.

B) The decrease of $4000 will be added to cost of goods sold.

C) The decrease of $4000 will be subtracted from cost of goods sold.

D) The decrease of $4000 will be subtracted from net income.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

44) A company reported beginning plant assets, net of depreciation, of $733,550; and, an ending amount of $657,000. Depreciation expense of $49,400 and a loss on the sale of equipment of $5900 were reported on the income statement. The company acquired $213,800 of plant assets during the year. How much will be reported as cash received from the sale of equipment in the investing activities section of the statement of cash flows?

A) The cash received upon the sale of the equipment was $240,950.

B) The cash received upon the sale of the equipment was $235,050.

C) The cash received upon the sale of the equipment was $246,850.

D) The cash received upon the sale of the equipment was $284,450.

Diff: 3

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

45) A company sold equipment with a book value of $10,000 at a gain of $2600. How much can be reported in the investing activities section of the statement of cash flows as cash received upon the sale of the equipment?

A) The cash received upon the sale of the equipment is $7400.

B) The cash received upon the sale of the equipment is $2600.

C) The cash received upon the sale of the equipment is $12,600.

D) The cash received upon the sale of the equipment is $10,000.

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

46) The beginning and ending balances of long-term debt are $65,000 and $40,200, respectively, and, cash payments for long-term debt during the year were $37,100. How much new long-term debt was issued during the year?

A) New long-term debt issued during the year was $3100.

B) New long-term debt issued during the year was $12,300.

C) New long-term debt issued during the year was $24,800.

D) New long-term debt issued during the year was $77,300.

Diff: 3

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

47) The balance sheet for Sugar Mills Corporation follows:

Operating income during the period was $22,000, while cash dividends paid were $21,200. The total sources of cash at Sugar Mills Corporation during the year was

A) $44,150.

B) $8100.

C) $51,750.

D) $7750.

Diff: 3

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

48) The balance sheet for Sugar Mills Corporation follows:

Operating income during the period was $23,000, while cash dividends paid were $22,300. The total use of cash at Sugar Mills Corporation during the year was

A) $34,100.

B) $54,300.

C) $8200.

D) $46,100.

Diff: 3

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

49) The balance sheet for Rustic Pines Corporation follows:

Operating income during the period was $18,450, while cash dividends paid were $8800. The total uses of cash for Rustic Pines Corporation during the year was

A) $155,150.

B) $8800.

C) $163,950.

D) $305,280.

Diff: 3

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

50) The balance sheet for Rustic Pines Corporation follows:

Operating income during the period was $12,450, while cash dividends paid were $2700. The total sources of cash at Rustic Pines Corporation during the year was

A) $32,850.

B) $15,050.

C) $8700.

D) $39,950.

Diff: 3

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

51) The following data relate to Floral Enterprises for last year:

What is the net cash provided by operating activities for last year on the statement of cash flows for Floral Enterprises?

A) $135,200

B) $137,000

C) $184,700

D) $160,700

Diff: 2

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

52) The following data relate to Denmark Corporation for last year:

What is the net cash provided by operating activities for last year on the statement of cash flows for Denmark Corporation?

A) $213,000

B) $113,000

C) $165,000

D) $99,000

Diff: 2

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

53) The following data relate to Whitman Corporation for last year:

What is the net cash provided by operating activities for last year on the statement of cash flows for Whitman Corporation?

A) $233,000

B) $179,000

C) $151,000

D) $218,000

Diff: 2

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

54) Moore Corporation had the following selected balance sheet changes for the past year:

The company's operating income during the year was $40,000. What is the net cash provided by operating activities during last year on the statement of cash flows for Moore Corporation (using the indirect method)?

A) $30,000

B) $50,700

C) $98,700

D) $10,000

Diff: 2

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

55) The following information is available for three companies. The information relates to the companies' plant assets. For each of the companies, determine the unknown amounts.

Diff: 2

LO: 13-2

EOC: E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

56) A corporation reported net income during the year of $28,500. The following items were reported on the income statement and balance sheet.

Compute cash flows from operating activities using the indirect method.

Diff: 2

LO: 13-2

EOC: S13-3; E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

57) The income statement and a partial balance sheet for Kirsh Company is presented below. Prepare the operating activities section of the statement of cash flows using the indirect method.

Kirsh Company

Income Statement

For the Current Year

Kirsh Company

Partial Balance Sheet

End of this year

Diff: 2

LO: 13-2

EOC: S13-3; E13-14A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

58) The income statement and a partial balance sheet for Cypress Company is presented below. Prepare the operating activities section of the statement of cash flows using the indirect method.

Cypress Company

Income Statement

For the Current Year

Cypress Company

Partial Balance Sheet

End of this year

Diff: 2

LO: 13-2

EOC: S13-3; E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

59) Use the indirect method of preparing a statement of cash flows to answer the question.

Ending balances for Frosty Mugs are listed below:

Net income for this year was $97,000 and dividends of $24,000 were declared and paid this year.

What was the net cash used for investing activities?

Diff: 2

LO: 13-2

EOC: S13-8; E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

60) Use the indirect method of preparing a statement of cash flows to answer the question.

Ending balances for Frosty Mugs are listed below:

Net income for this year was $97,000.

What was the net cash inflow from financing activities?

Diff: 2

LO: 13-2

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

61) Use the indirect method of preparing a statement of cash flows to answer the question.

Ending balances for Frosty Mugs are listed below:

Net income for this year was $97,000 and dividends of $24,000 were declared and paid during this year.

What was the net cash provided by financing activities?

Diff: 2

LO: 13-2

EOC: S13-8; E13-15A; E13-16A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

62) The managerial accountant at American Memorial Shoppe reported the following data that reflect the balance sheets during the period ending December 31, 20X2 and December 31, 20X3:

Compute the balances and analyze the changes that occurred in 20X3 and 20X2. Which accounts had increases? Which accounts had decreases?

Diff: 3

LO: 13-2

EOC: E13-11A; E13-12A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

63) The managerial accountant at the Organic Food Shoppe used the indirect method to prepare the Statement of Cash Flows and reported the following data:

The managerial accountant is required to determine the amount of free cash flow at the company. Calculate the free cash flow at the company and list at least three ways the company can use the free cash flow at the business.

Diff: 3

LO: 13-2

EOC: A13-43; A13-44

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

64) The managerial accountant at the Willow Springs Family Farm is required to complete the statement of cash flows. The managerial accountant is required to determine the amount of money the company used to purchase property, plant, and equipment (PP&E) during the year. The balance of PP&E at the beginning of the year is $1,750,000 and the balance of PP&E at the end of the year is $2,650,000. The managerial accountant reviewed the general journal and noticed that the original cost of equipment sold during the year was $20,000.

Using the following information, calculate the amount of cash the company paid in cash to purchase new property, plant, and equipment during the year:

A) $20,000

B) $1,750,000

C) $920,000

D) $2,650,000

Diff: 3

LO: 13-2

EOC: S13-5

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

65) A company uses the indirect method to prepare the statement of cash flows. The board of directors declared $165,000 in common stock dividends during the year. At the beginning of the year, there were $48,000 in dividends payable on common stock; and, $44,000 dividends payable at the end of the year.

Answer the following questions:

(a) What was the amount of cash paid for dividends during the year?

(b) Where will this amount appear on the statement of cash flows?

(c) How would the amount appear if the company uses the direct method to prepare the statement?

Diff: 2

LO: 13-2

EOC: E13-12A; E13-13A; E13-14A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

13.3 Prepare the statement of cash flows using the direct method

1) A company pays cash dividends on preferred stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The payment of cash dividends would be presented in the financing activities section as a cash payment under both methods.

B) The payment of cash dividends would be presented in the investing activities section as a cash payment under both methods.

C) The payment of cash dividends would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

D) The payment of cash dividends would be presented in the non-cash investing and financing activities section under both methods.

Diff: 1

LO: 13-3

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

2) A company acquires its own stock to hold as treasury stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The acquisition of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

B) The acquisition of treasury stock would be presented in the non-cash investing and financing activities section under both methods.

C) The acquisition of treasury stock would be presented in the financing activities section as a cash payment under both methods.

D) The acquisition of treasury stock would be presented in the investing activities section as a cash payment under both methods.

Diff: 1

LO: 13-3

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

3) A company sells treasury stock for an amount less than its acquisition cost. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The sale of treasury stock would be presented in the investing activities section as a cash receipt under both methods.

B) The sale of treasury stock would be presented in the non-cash investing and financing activities section under both methods.

C) The sale of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.

D) The sale of treasury stock would be presented in the financing activities section as a cash receipt under both methods.

Diff: 1

LO: 13-3

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

4) A company purchases equipment for use in its business activities. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The purchase of equipment would be presented in the non-cash investing and financing activities section under both methods.

B) The purchase of equipment would be presented in the financing activities section as a cash payment under both methods.

C) The purchase of equipment would be presented in the investing activities section as a cash payment under both methods.

D) The purchase of equipment would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

Diff: 1

LO: 13-3

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

5) A company sells equipment at a loss. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The sale of equipment at a loss would be presented in the investing activities section as a cash payment under both methods.

B) The sale of equipment at a loss would be presented in the investing activities section as a cash receipt under both methods.

C) The sale of equipment at a loss would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.

D) The sale of equipment at a loss would be presented in the financing activities section as a cash receipt under both methods.

Diff: 1

LO: 13-3

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

6) A company purchases land using its common stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A) The purchase of land would be presented in the financing activities section as a cash payment under both methods.

B) The purchase of land would be presented in the investing activities section as a cash payment under both methods.

C) The purchase of land would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

D) The purchase of land would be presented in the non-cash investing and financing activities section under both methods.

Diff: 2

LO: 13-3

EOC: S13-8

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

7) The direct method lists the receipt and payment of cash for specific operating activities.

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

8) When a company uses the direct method to present the statement of cash flows, depreciation expense must be added to net income to reconcile to net cash provided by operating activities.

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

9) The direct method of presenting the financing activities section of the statement of cash flows reconciles net income to net cash provided by financing activities.

Diff: 1

LO: 13-3

EOC: S13-9; S13-10

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

10) When a company uses the direct method to present the statement of cash flows, cash received from the sale of a long-term asset increases the amount of net cash provided by investing activities.

Diff: 1

LO: 13-3

EOC: S13-9; S13-10

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

11) When a company uses the direct method to present the statement of cash flows, cash received from the sale of treasury stock increases the amount of net cash provided by investing activities.

Diff: 1

LO: 13-3

EOC: S13-9; S13-10

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

12) When a company uses the direct method to present the statement of cash flows, the payment of cash dividends reduces the amount of net cash provided by operating activities.

Diff: 1

LO: 13-3

EOC: S13-9; S13-10

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

13) The only difference in a statement of cash flows prepared under the direct method as opposed to the indirect method is the presentation of operating activities.

Diff: 1

LO: 13-3

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

14) The only difference in a statement of cash flows prepared under the direct method as opposed to the indirect method is the presentation of investing activities.

Diff: 1

LO: 13-3

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

15) The only difference in a statement of cash flows prepared under the direct method as opposed to the indirect method is the presentation of financing activities.

Diff: 1

LO: 13-3

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

16) The ending cash balance reported on the statement of cash flows will depend on whether the company uses the direct or indirect method of reporting operating activities.

Diff: 1

LO: 13-3

AACSB: Reflective thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

17) Which of the following would be presented differently on the statement of cash flows under the direct method versus the indirect method?

A) Cash from operating activities

B) Cash from investing activities

C) Cash from financing activities

D) Cash from retained earnings activities

Diff: 1

LO: 13-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

18) Which of the following would be presented exactly the same whether the company used the direct method or indirect method when preparing the statement of cash flows?

A) Cash from operating activities

B) Cash from investing activities

C) Cash from financing activities

D) Cash from capital activities

Diff: 1

LO: 13-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

19) Which of the following would appear on a statement of cash flows prepared using the direct method?

A) Cash payments for salaries would appear on the statement.

B) A loss of the sale of equipment would appear on the statement.

C) Amortization expenses would appear on the statement.

D) Depreciation expenses would appear on the statement.

Diff: 1

LO: 13-3

EOC: E13-18A; E13-19A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

20) Which of the following would not appear on a statement of cash flows prepared using the direct method?

A) Cash receipts from customers

B) Cash payments for insurance

C) Depreciation expense

D) Cash payments for salaries and wages

Diff: 1

LO: 13-3

EOC: E13-18A; E13-19A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

21) Which of the following would not appear on a statement of cash flows prepared using the direct method?

A) Money received from customers

B) Payments made for interest

C) Net Income

D) Salaries and wages paid to employees

Diff: 1

LO: 13-3

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

22) Which of the following would appear on a statement of cash flows prepared using the direct method?

A) Interest received on a loan would appear on the statement of cash flows.

B) Collections from customers would appear on the statement of cash flows.

C) Cash payment of dividends would appear on the statement of cash flows.

D) All of the above would appear on the statement of cash flows.

Diff: 1

LO: 13-3

EOC: E13-18A; E13-19A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

23) A company's income statement reports $30,000 depreciation expenses during the period. Using the direct method to prepare the statement of cash flows, how would the depreciation expense be reported on the statement of cash flows?

A) Depreciation expense would be an addition under investing activities.

B) Depreciation expense would be an addition under financing activities.

C) Depreciation expense would be a deduction under operating activities.

D) Depreciation expense would not be reported on the statement of cash flows.

Diff: 1

LO: 13-3

EOC: E13-18A; E13-19A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

24) Using the direct method to prepare the statement of cash flows, how would the amount of cash payments to employees categorized on the statement of cash flows?

A) Cash payments to employees would be equal to salary expense plus the beginning balance in salaries payable.

B) Cash payments to employees would be equal to salary expense plus the ending balance in salaries payable.

C) Cash payments to employees would be equal to salary expense plus the decrease in salaries payable.

D) Cash payments to employees would be equal to salary expense plus the increase in salaries payable.

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

25) The ________ section in a statement of cash flows using the direct method of cash flows is not the same compared to the indirect method of cash flows on the statement of cash flows.

A) operating activities

B) financing activities

C) investing activities

D) capital activities

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

26) Under the direct method of cash flow to prepare the statement of cash flows, which of the following is not included in the statement of cash flows?

A) Changes in accounts receivable

B) Changes in depreciation

C) Changes in accounts payable

D) Changes in interest expense

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

27) Under the direct method of cash flow, which of the following is not included in the statement of cash flows?

A) Changes in accounts receivable

B) Changes in accounts payable

C) Changes in inventories

D) Changes in amortization

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

28) All of the following are categories in the operating activities section using the direct method in the statement of cash flows except

A) changes in amortization.

B) changes in accounts receivable.

C) changes in inventory.

D) changes in accounts payable.

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

29) Using the direct method to prepare the statement of cash flows, cash payments for merchandise inventory is categorized on the statement of cash flows as

A) a cash payment in the operating activities section on the statement of cash flows.

B) a cash receipt in the operating activities section on the statement of cash flows.

C) a cash payment in the investing activities section on the statement of cash flows.

D) a cash receipt in the investing activities section on the statement of cash flows.

Diff: 2

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

30) Using the direct method to prepare the statement of cash flows, cash payments to supplies is computed as

A) interest expense minus the decrease in accounts payable.

B) interest expense minus the decrease in merchandise inventory.

C) purchases minus the increase in accounts payable.

D) interest expense minus the increase in merchandise inventory.

Diff: 2

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

31) In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it pays in interest expense is computed as

A) the change in interest payable plus interest expense.

B) the change in interest payable minus interest expense.

C) the ending interest payable balance plus interest expense.

D) the ending interest payable balance minus interest expense.

Diff: 2

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

32) In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it uses to purchase inventory is computed as

A) cost of goods sold plus ending inventory.

B) cost of goods sold plus ending inventory, plus beginning inventory.

C) beginning inventory minus ending inventory, minus cost of goods sold.

D) cost of goods sold plus ending inventory, minus beginning inventory.

Diff: 2

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

33) In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it pays to employees is computed as

A) salary expense plus the ending balance salaries payable.

B) salary expense plus the decrease in salaries payable.

C) salary expense plus the increase in salaries payable.

D) salary expense plus the beginning balance in salaries payable.

Diff: 2

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

34) A company uses the direct method to prepare the statement of cash flow computes the amount of cash it receives from customers as

A) cost of goods sold plus ending inventory minus beginning inventory.

B) cost of goods sold minus ending inventory plus beginning inventory.

C) sales revenue plus the decrease (or minus the increase) in accounts receivable.

D) sales revenue minus the decrease (or plus the increase) in accounts receivable.

Diff: 2

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

35) Using the direct method of cash flow, which of the following is a category in the statement of cash flows?

A) Amortization expense

B) Loss on sale of equipment

C) Collections from customers

D) Net income

Diff: 1

LO: 13-3

EOC: S13-9

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

36) A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements:

*Relates solely to the acquisition of inventory

Which of the following is correct about the accounts receivable in the operating activities category in the statement of cash flows?

A) The increase of $75,000 will be subtracted from net income.

B) The increase of $75,000 will be subtracted from sales to determine cash received from customers.

C) The increase of $75,000 will be added to sales to determine cash received from customers.

D) The increase of $75,000 will be added to net income.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

37) A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

Which of the following is correct about accounts payable transaction in the operating activities category in the statement of cash flows?

A) The increase of $16,000 will be subtracted from net income.

B) The increase of $16,000 will be added to net income.

C) The increase of $16,000 will be added to purchases to determine payments to suppliers.

D) The increase of $16,000 will be subtracted from purchases to determine payments to suppliers.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

38) A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

Which of the following is correct about inventory in the operating activities category of the cash flow statement?

A) The decrease of $28,000 will be subtracted from net income.

B) The decrease of $28,000 will be added to net income.

C) The decrease of $28,000 will be subtracted from cost of goods sold to determine payments to suppliers.

D) The decrease of $28,000 will be added to cost of goods sold to determine payments to suppliers.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

39) A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

Which of the following is correct about salaries payable in the operating activities category of the cash flow statement?

A) The increase of $7000 will be subtracted from salary expense to determine payments to employees.

B) The increase of $7000 will be subtracted from net income.

C) The increase of $7000 will be added to salary expense to determine payments to employees.

D) The increase of $7000 will be added to net income.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

40) A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

Which of the following is correct about accounts receivable in the operating activities category of the cash flow statement?

A) The increase of $19,000 will be subtracted from net income.

B) The increase of $19,000 will be subtracted from sales to determine cash received from customers.

C) The increase of $19,000 will be added to sales to determine cash received from customers.

D) The increase of $19,000 will be added to net income.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

41) A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to accounts payable?

A) The increase of $17,000 will be subtracted from net income.

B) The increase of $17,000 will be added to net income.

C) The increase of $17,000 will be added to purchases to determine payments to suppliers.

D) The increase of $17,000 will be subtracted from purchases to determine payments to suppliers.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

42) A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to inventory?

A) The decrease of $15,000 will be subtracted from net income.

B) The decrease of $15,000 will be added to net income.

C) The decrease of $15,000 will be subtracted from cost of goods sold to determine payments to suppliers.

D) The decrease of $15,000 will be added to cost of goods sold to determine payments to suppliers.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

43) A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements.

*Relates solely to the acquisition of inventory

What will appear in the operating activities section related to salaries payable?

A) The increase of $9500 will be subtracted from salary expense to determine payments to employees.

B) The increase of $9500 will be subtracted from net income.

C) The increase of $9500 will be added to salary expense to determine payments to employees.

D) The increase of $9500 will be added to net income.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

44) A company's inventory account increased $28,800 and its accounts payable account decreased $23,450 during the year. The accounts payable relates only to the acquisition of inventory. Sales were $794,500 and cost of goods sold was $537,700. What was the amount of payments to suppliers of inventory?

A) $561,150

B) $589,950

C) $543,050

D) $846,750

Diff: 3

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

45) The income statement and a partial balance sheet for Systance Company is presented below. Prepare the operating activities section of the statement of cash flows using the direct method.

Systance Company

Income Statement

For the Current Year

Systance Company

Partial Balance Sheet

End of this year

Diff: 2

LO: 13-3

EOC: E13-12A; E13-13A; E13-14A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

46) Use the direct method of cash flows to answer the question.

Beginning A/R: $68,000 Beginning Inventory: $42,500

Ending A/R: $79,000 Ending Inventory: $47,000

Credit Sales: $745,000 Beginning A/P: $29,000

Cost of Goods Sold: $412,000 Ending A/P: $36,300

Compute the change in accounts receivable during the year.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

47) Use the direct method of cash flows to answer the question.

Beginning A/R: $68,000 Beginning Inventory: $42,500

Ending A/R: $79,000 Ending Inventory: $47,000

Credit Sales: $745,000 Beginning A/P: $29,000

Cost of Goods Sold: $412,000 Ending A/P: $36,300

Compute the change in accounts payable during the year.

Diff: 2

LO: 13-3

EOC: S13-10

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

48) Use the direct method of cash flows to answer the following question:

Beginning A/R: $68,000 Beginning Inventory: $42,500

Ending A/R: $79,000 Ending Inventory: $47,000

Credit Sales: $745,000 Beginning A/P: $29,000

Cost of Goods Sold: $412,000 Ending A/P: $36,300

Compute the cash receivables received from customers during the year.

Diff: 2

LO: 13-3

EOC: E13-12A; E13-13A; E13-14A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

49) Use the direct method of cash flows to answer the question.

Beginning A/R: $68,000 Beginning Inventory: $42,500

Ending A/R: $79,000 Ending Inventory: $47,000

Credit Sales: $745,000 Beginning A/P: $29,000

Cost of Goods Sold: $412,000 Ending A/P: $36,300

Calculate the cost of merchandise purchased during the year.

Diff: 2

LO: 13-3

EOC: E13-12A; E13-13A; E13-14A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

50) Use the direct method of cash flows to answer the question.

Beginning A/R: $68,000 Beginning Inventory: $42,500

Ending A/R: $79,000 Ending Inventory: $47,000

Credit Sales: $745,000 Beginning A/P: $29,000

Cost of Goods Sold: $412,000 Ending A/P: $36,300

Calculate the amount of cash paid to purchase merchandise during the year.

Diff: 2

LO: 13-3

EOC: E13-12A; E13-13A; E13-14A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

51) The managerial accountant at the Upscale Boutique is required to determine the amount of cash received from consumers during the year. The managerial accountant reported that the beginning balance in accounts receivable on January 1, 20X2 was $600,000. There were $10,200,000 in sales revenue recorded on the income statement, and the ending balance in accounts receivable on December 31, 20X2 was $420,000. Calculate the amount of cash collections at the company during 20X2 and discuss how the managerial accountant can ensure that all cash transactions from operating activities are recorded during the year. What occurs when accounts receivable increases? What occurs when accounts receivable decreases?

Diff: 3

LO: 13-3

EOC: E13-20A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

52) The managerial accountant at the Seaport Resort & Day Spa is required to determine the amount of cash purchases inventory. The managerial accountant reported a beginning inventory balance of $900,000 and $8,400,000 in cost of goods sold during the year. The ending inventory balance during the year was $850,000. Calculate the amount of cash purchases of inventory during the year. Next, discuss what occurs when there is an increase in the inventory account. What occurs when there is a decrease in the inventory account.

Diff: 3

LO: 13-3

EOC: E13-20A

AACSB: Analytical thinking

Learning Outcome: Describe the components of and prepare the four basic financial statements.

13.4 Analyze financial data for the statement of cash flows using data analytics

1) A slicer is a visual filtering tool that shows how the data in the pivot table is filtered.

Diff: 1

LO: 13-4

AACSB: Reflective thinking

2) A slicer provided less data than the filter feature and therefore saves screen space.

Diff: 1

LO: 13-4

AACSB: Reflective thinking

3) When using the Slicer feature in Excel, users can only filter by one criterion and will have to toggle between options as necessary to review data.

Diff: 1

LO: 13-4

AACSB: Reflective thinking

4) A filter would be used in Excel rather than a slicer if the user wanted to visually see how the data was sorted in the pivot table.

Diff: 1

LO: 13-4

AACSB: Analytical thinking

5) After creating a pivot table in Excel, users can add a slicer by going to what tab in the ribbon?

A) Design

B) Analyze

C) View

D) Help

Diff: 1

LO: 13-4

AACSB: Reflective thinking

6) A slicer allows a user to

A) see how the data is filtered in the pivot table.

B) cut the data down to only pertinent information in the Excel table.

C) delete unnecessary data after all data is analyzed.

D) add different formulas to the pivot table without recreating new tables.

Diff: 1

LO: 13-4

AACSB: Reflective thinking

7) Utilizing a slicer in Excel pivot tables allows the user to filter data

A) based solely on one criterion by clicking on the filtering options available.

B) based on one or multiple criterion by choosing the filtering option individually or the multiple list icon.

C) based on multiple criteria only since slicers are solely used for multiple filtering options.

D) based on color coded cells only after using the conditional formatting feature in Excel.

Diff: 1

LO: 13-4

AACSB: Reflective thinking

8) What are the steps taken to create a PivotTable with a Slicer in Excel.

Diff: 2

LO: 13-4

AACSB: Analytical thinking