The Statement Of Cash Flows Revisited Exam Prep Chapter 21

Intermediate Accounting, 10e (Spiceland)

Chapter 21 The Statement of Cash Flows Revisited

1) Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows.

Difficulty: 2 Medium

Topic: Cash-Cash equivalents-Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

2) Generally speaking, cash flows from operating activities include the elements of net income reported on a cash basis.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

3) Cash paid for taxes and interest must be disclosed on the face of the statement or in the disclosure notes under both the direct and indirect methods of reporting cash flows from operating activities.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items; Distinguish direct and indirect methods

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

4) If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, a reconciliation of net income to net cash flows from operating activities also is required.

Difficulty: 1 Easy

Topic: Distinguish direct and indirect methods

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

5) A decrease in cash dividends payable means that dividends declared were less than dividends paid.

Difficulty: 2 Medium

Topic: Reconstruct investing or financing entry

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

6) The purchase of treasury stock is an investing cash outflow.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-05 Identify transactions that are classified as investing activities.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

7) Interest payments on debt are classified as cash outflows from financing activities.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

8) Transactions that represent noncash investing and financing activities must be reported in the statement of cash flows or in disclosure notes.

Difficulty: 2 Medium

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

9) In using a spreadsheet to prepare the statement of cash flows, the summary entries duplicate the actual journal entries used to record the transactions during the year.

Difficulty: 2 Medium

Topic: Spreadsheet preparation

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

10) When one enters a $50,000 credit entry to the Land account in a spreadsheet for the statement of cash flows, it represents a negative change in that account and probably is due to selling such assets.

Difficulty: 2 Medium

Topic: Spreadsheet preparation

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

11) The primary objective of the statement of cash flows is to provide information about a company's:

A) Cash receipts and disbursements.

B) Noncash financing and investing activities.

C) Financial position.

D) Profitability.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

12) Which of the following financial statements is prepared as of a particular point in time rather than for a period of time?

A) Statement of cash flows.

B) Income statement.

C) Statement of shareholders' equity.

D) Balance sheet.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

13) Which one of the following financial statements does not report amounts primarily on an accrual basis?

A) Income statement.

B) Balance sheet.

C) Statement of cash flows.

D) Statement of shareholders' equity.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

14) Which of the following is not required by generally accepted accounting principles?

A) Cash flow per share.

B) Earnings per share.

C) Statement of cash flows.

D) Disclosure notes.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

15) Creditors and investors would generally find the statement of cash flows least useful for assessing the:

A) Ability to generate future cash flows.

B) Ability to pay dividends.

C) Financial position at a point in time.

D) Quality of earnings.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Evaluate

AACSB: Reflective Thinking

AICPA/Accessibility: FN Risk Analysis / Keyboard Navigation

16) During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities in the statement of cash flows?

A) Inflow of $300 million.

B) Outflow of $200 million.

C) Outflow of $300 million.

D) Inflow of $600 million.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

17) Which of the following is always reported as an outflow of cash?

A) The accrual of warranty expense.

B) The declaration of a cash dividend.

C) The purchase of equipment for cash.

D) Amortization expense.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.; 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

18) Which of the following causes a change in cash?

A) Accrual of interest payable.

B) Recording of depreciation expense.

C) Write-off of an uncollectible account.

D) Payment of a cash dividend declared in the previous fiscal year.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

19) In a statement of cash flows:

A) Operating activities are the same activities as reported in the income statement.

B) The two primary reporting classifications of cash flows are inflows and outflows.

C) No noncash transactions are reported in the statement itself or the related footnote.

D) Inflows and outflows for cash equivalents are reported as operating activities.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

20) In a statement of cash flows:

A) Operating activities can be reported by either the direct method or the operating method.

B) One of the three primary reporting classifications of cash flows is financing activities.

C) Investing activities can be reported by either the direct method or the indirect method.

D) Financing activities can be reported by either the direct method or the financing method.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

21) Cash flows from financing activities do not include:

A) cash received from issuing preferred stock.

B) cash paid for treasury stock.

C) declaration of a cash dividend.

D) repayment of a bank loan.

Difficulty: 1 Easy

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

22) All of the following may qualify as cash equivalents except:

A) Money market accounts.

B) Certificates of deposit.

C) U.S. Treasury bills.

D) Newly issued corporate bonds.

Difficulty: 1 Easy

Topic: Cash-Cash equivalents-Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

23) When a transfer is made between cash and cash equivalents with no gain or loss, how is the transaction treated in the statement of cash flows?

A) It is included as an operating activity.

B) It is included as a noncash financing activity.

C) It is included as an investing activity.

D) It is not reported.

Difficulty: 2 Medium

Topic: Cash-Cash equivalents-Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

24) Cash equivalents generally would not include short-term investments in:

A) Commercial paper.

B) Certificates of deposit.

C) Held-to-maturity debt securities.

D) Money market funds.

Difficulty: 1 Easy

Topic: Cash-Cash equivalents-Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

25) Cash equivalents have each of the following characteristics except:

A) Little risk of loss.

B) Highly liquid.

C) Maturity of at least three months.

D) Short-term.

Difficulty: 1 Easy

Topic: Cash-Cash equivalents-Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

26) A company purchases a security it considers a cash equivalent. The cash outflow is:

A) Reported as an operating activity.

B) Reported as an investing activity.

C) Reported as a financing activity.

D) Not reported on a statement of cash flows.

Difficulty: 2 Medium

Topic: Cash-Cash equivalents-Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

27) A firm reported salaries expense of $239,000 for the current year. The beginning and ending balances in salaries payable were $40,000 and $15,000, respectively. What was the amount of cash paid for salaries?

A) $214,000.

B) $289,000.

C) $264,000.

D) $239,000.

Difficulty: 1 Easy

Topic: Direct method—Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

28) Ludwig Company's prepaid rent was $9,000 at December 31, 2020, and $13,000 at December 31, 2021. Ludwig reported rent expense of $19,000 on the 2021 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

A) $15,000.

B) $19,000.

C) $23,000.

D) None of these answer choices are correct.

Difficulty: 2 Medium

Topic: Direct method—Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

29) Pickering Company's prepaid insurance was $8,000 at December 31, 2020, and $10,000 at December 31, 2021. Pickering reported insurance expense of $15,000 on the 2021 income statement. What amount would be reported in the statement of cash flows as insurance paid using the direct method?

A) $13,000.

B) $17,000.

C) $15,000.

D) $23,000.

Difficulty: 2 Medium

Topic: Direct method—Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

30) Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

A) $477.

B) $457.

C) $497.

D) None of these answer choices are correct.

Difficulty: 2 Medium

Topic: Direct method—Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

31) Sneed Corporation reported balances in the following accounts for the current year:

Income tax expense was $230 for the year. What was the amount paid for taxes?

A) $280.

B) $220.

C) $210.

D) $190.

Difficulty: 3 Hard

Topic: Direct method—Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

32) A company reported interest expense of $540,000 for the year. Interest payable was $35,000 and $75,000 at the beginning and the end of the year, respectively. What was the amount of interest paid?

A) $580,000.

B) $615,000.

C) $500,000.

D) $575,000.

Difficulty: 2 Medium

Topic: Direct method—Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

33) Cash paid to suppliers under the direct method is computed as:

A) Cost of goods sold plus a decrease in inventory and minus an increase in accounts payable.

B) Cost of goods sold plus an increase in inventory and minus an increase in accounts payable.

C) Cost of goods sold minus a decrease in inventory and plus an increase in accounts payable.

D) Cost of goods sold minus an increase in inventory and plus an increase in accounts payable.

Difficulty: 3 Hard

Topic: Direct method—Cash paid to suppliers

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

34) Cost of goods sold as reported in the income statement will be less than cash paid to suppliers if:

A) The increase in accounts payable is greater than the increase in inventory during the period.

B) The decrease in accounts payable is equal to the increase in inventory during the period.

C) The decrease in accounts payable is less than the decrease in inventory during the period.

D) The increase in accounts payable is equal to the decrease in inventory during the period.

Difficulty: 3 Hard

Topic: Direct method—Cash paid to suppliers

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

35) Dooling Corporation reported balances in the following accounts for the current year:

Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

A) $7,000.

B) $7,200.

C) $7,300.

D) $7,500.

Difficulty: 3 Hard

Topic: Direct method—Cash paid to suppliers

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

36) Cost of goods sold is $100,000. Accounts payable increased by $2,000. Inventory increased by $5,000. Cash paid to suppliers is:

A) $93,000.

B) $100,000.

C) $103,000.

D) $107,000.

Difficulty: 2 Medium

Topic: Direct method—Cash paid to suppliers

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

37) Using the direct method, cash received from customers is calculated as sales:

A) On account.

B) On account plus cash sales.

C) Plus an increase in accounts receivable.

D) Plus a decrease in accounts receivable.

Difficulty: 2 Medium

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

38) Sales revenue is $100,000. Accounts receivable increased by $2,000. Cash received from customers is:

A) $98,000.

B) $100,000.

C) $102,000.

D) indeterminable from the information provided.

Difficulty: 1 Easy

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

39) If sales revenue is $80 million and accounts receivable increased by $12 million, the amount of cash received from customers:

A) was $52 million.

B) was $68 million.

C) was $80 million.

D) depends on the mix of cash sales and credit sales.

Difficulty: 1 Easy

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

40) Sales revenue for Hy Marx Tutoring was $220,000. The following data are from the accounting records of Marx:

The cash received from customers was:

A) $165,000.

B) $209,000.

C) $220,000.

D) $231,000.

Difficulty: 1 Easy

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

41) On December 31, 2021, Wellstone Company reported net income of $70,000 and sales of $210,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Wellstone will report cash collected from customers in its 2021 statement of cash flows (direct method) in the amount of:

A) $215,000.

B) $285,000.

C) $135,000.

D) $205,000.

Difficulty: 2 Medium

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

42) Bowers Corporation reported the following ($ in 000s) for the year:

Sales on account were $1,900,000 for the year. How much cash was collected from customers on account?

A) $1,627 thousands.

B) $1,642 thousands.

C) $1,638 thousands.

D) $2,142 thousands.

Difficulty: 2 Medium

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

43) Lite Travel Company's accounting records include the following information:

What is the amount of net cash provided by operating activities indicated by the amounts provided?

A) $50,000.

B) $73,000.

C) $94,000.

D) $(6,000).

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Direct

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

44) Freeman Company's accounting records include the following information:

What is the amount of net cash provided by operating activities indicated by these transactions?

A) $40,000.

B) $45,000.

C) $55,000.

D) $60,000.

Difficulty: 3 Hard

Topic: Calculate net operating cash flow-Direct

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

45) In a statement of cash flows in which operating activities are reported by the direct method, which of the following would increase reported cash flows from operating activities?

A) Gain on sale of equipment.

B) Interest revenue.

C) Gain on early extinguishment of bonds.

D) Proceeds from sale of land.

Difficulty: 2 Medium

Topic: Identify operating transactions

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

46) Which of the following is reported as an operating activity in the statement of cash flows?

A) The payment of dividends.

B) The sale of office equipment.

C) The payment of interest on long-term notes.

D) The issuance of a stock dividend.

Difficulty: 2 Medium

Topic: Identify operating transactions

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

47) Which of the following is reported as an operating activity in the statement of cash flows?

A) The purchase of long-lived assets.

B) The acquisition of treasury stock.

C) The retirement of bonds.

D) The payment of prepaid insurance.

Difficulty: 1 Easy

Topic: Identify operating transactions

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

48) Which of the following does not represent a cash flow relating to operating activities?

A) Cash dividends paid to stockholders.

B) Cash received from customers.

C) Interest paid to bondholders.

D) Cash paid for salaries.

Difficulty: 2 Medium

Topic: Identify operating transactions

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

49) Which of the following is not classified as an operating activity?

A) Interest paid on long-term debt.

B) Dividends received on common stock.

C) Dividends paid on common stock.

D) Payments on accounts payable.

Difficulty: 2 Medium

Topic: Identify operating transactions

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

50) When preparing a statement of cash flows using the direct method, accrual of payroll expense is:

A) Reported as an operating activity.

B) Reported as an investing activity.

C) Reported as a financing activity.

D) None of these answer choices are correct.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

51) Which of the following is not true regarding the statement of cash flows?

A) The indirect method derives cash flows indirectly by starting with sales revenue and "working backwards" to convert that amount to a cash basis.

B) Noncash transactions sometimes are reported in conjunction with the statement.

C) Either the direct or the indirect method can be used to calculate and report the net cash increase or decrease from operating activities.

D) The statement of cash flows provides information about cash flows that the other statements either do not provide or provide only indirectly.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

52) When reporting operating activities in a statement of cash flows, depreciation is:

A) added back to net income in the direct method.

B) ignored in the indirect method.

C) added back to net income in the indirect method.

D) subtracted from net income in the indirect method.

Difficulty: 1 Easy

Topic: Distinguish direct and indirect methods

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

53) A loss on the sale of machinery should be reported in the statement of cash flows as:

A) An adjustment to net income under the indirect method.

B) An operating activity under the direct method.

C) An investing activity cash outflow.

D) A noncash investing activity.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods; Noncash operating items-Depreciation etc

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

54) Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?

A) Cash dividends paid.

B) A change in accounts receivable.

C) Depreciation.

D) A change in a prepaid expense.

Difficulty: 1 Easy

Topic: Distinguish direct and indirect methods

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

55) On December 31, 2021, Tiras Company reported net income of $50,000 and sales of $200,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Tiras will report cash collected from customers in its 2021 statement of cash flows (indirect method) in the amount of:

A) $0.

B) $245,000.

C) $205,000.

D) $195,000.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

56) Which of the following never requires an outflow of cash?

A) Early extinguishment of debt.

B) Retirement of common stock.

C) Payment of dividends.

D) Amortization of patent.

Difficulty: 1 Easy

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

57) Which of the following is not an inflow of cash?

A) Depletion.

B) Cash borrowed on a short-term note.

C) Sale of a computer.

D) Cash borrowed on a long-term note.

Difficulty: 1 Easy

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

58) When using the indirect method to determine cash flows from operating activities, adjustments to net income should not include:

A) An addition for amortization expense.

B) An addition for bond discount amortization.

C) An addition for a gain.

D) An addition for a loss.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

59) In determining cash flows from operating activities (indirect method), adjustments to net income should not include:

A) An addition for depreciation expense.

B) An addition for bond discount amortization.

C) An addition for a gain on sale of equipment.

D) An addition for patent amortization.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods; Noncash operating items-Depreciation etc

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

60) When reporting operating activities by the indirect method in a statement of cash flows:

A) increases in operating assets are added back to net income.

B) increases in operating liabilities are subtracted from net income.

C) gains are added back to net income.

D) amortization is added back to net income.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

61) How is the amortization of patents reported in a statement of cash flows that is prepared using the direct method?

A) Not reported.

B) An increase in cash flows from operating activities.

C) A decrease in cash flows from operating activities.

D) A decrease in cash flows from investing activities.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods; Noncash operating items-Depreciation etc

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

62) Each year, Red Mountain Enterprises (RME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2021 income statement, RME reported a $40,000 loss on the sale of equipment. In its reconciliation schedule, RME should:

A) Report a $40,000 cash outflow for the direct method.

B) Show a $40,000 positive adjustment to net income under the indirect method.

C) Show a $40,000 negative adjustment to net income under the indirect method.

D) None of these answer choices are correct.

Difficulty: 2 Medium

Topic: Distinguish direct and indirect methods; Noncash operating items-Depreciation etc

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

63) How is the amortization of patents reported in a statement of cash flows that is prepared using the indirect method?

A) A decrease in cash flows from investing activities.

B) An increase in cash flows from investing activities.

C) A deduction from net income in arriving at cash flows from operations.

D) An addition to net income in arriving at cash flows from operations.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

64) When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities, depreciation is added to net income because:

A) It was deducted as an expense on the income statement, but does not require cash.

B) It was deducted as an expense on the income statement and affects the amount of cash.

C) It is a significant portion of the year's expenses.

D) It represents a source or inflow of cash.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

65) The amortization of bond discount is included in the statement of cash flows (indirect method) as:

A) A financing cash inflow.

B) An investing activity.

C) An addition to net income.

D) A deduction from net income.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

66) Which of the following is reported as a deduction from net income when using the indirect method to determine net cash flows from operating activities?

A) Depreciation expense.

B) Amortization of a patent.

C) Amortization of premium on bonds payable.

D) Dividends declared.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

67) Moon Company owns 56 million shares of stock as a long-term investment in Center Company and Moon does not have significant influence over Center. During 2021, the fair value of those shares increased by $34 million. What effect does this increase have on Moon's 2021 adjustments in the statement of cash flows?

A) Cash flow from operating activities will be decreased.

B) Cash flow from investing activities will be increased.

C) Cash flow from financing activities will be increased.

D) No effect.

Difficulty: 2 Medium

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

68) On January 1, Jim Shorts Corporation issued $300 million face value bonds for $580 million. During the same year, $1,500,000 of the bond premium was amortized. On a statement of cash flows prepared by the indirect method, Jim Shorts Corporation should report:

A) An addition to net income of $1,500,000.

B) An investing activity of $580 million.

C) A financing activity of $300 million.

D) A deduction from net income of $1,500,000.

Difficulty: 3 Hard

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

69) S Company reported net income for 2021 in the amount of $400,000. The company's financial statements also included the following:

What is net cash provided by operating activities under the indirect method?

A) $432,000.

B) $536,000.

C) $580,000.

D) $832,000.

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

70) An analyst compiled the following information for U Inc. for the year ended December 31, 2021:

• Net income was $1,700,000.

• Depreciation expense was $400,000.

• Interest paid was $200,000.

• Income taxes paid were $100,000.

• Common stock was sold for $200,000.

• Preferred stock (8% annual dividend) was sold at par value of $250,000.

• Common stock dividends of $50,000 were paid.

• Preferred stock dividends of $20,000 were paid.

• Equipment with a book value of $100,000 was sold for $200,000.

Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2021?

A) $2,000,000.

B) $2,030,000.

C) $2,080,000.

D) $2,100,000.

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

71) The net income for Howie Doohan Corporation was $280 million for the year ended December 31, 2021. Related information follows:

Sale of common stock for cash, $34 million.

Amortization of trademark, $2 million.

Cash dividends paid, $28 million.

Decrease in salaries payable, $2 million.

Depreciation expense, $40 million.

Increase in accounts payable, $18 million.

Increase in bonds payable, $26 million.

Net cash flows from operating activities during 2021 should be reported as:

A) $302 million.

B) $338 million.

C) $342 million.

D) $364 million.

Difficulty: 3 Hard

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

72) Hemmer Company reported net income for 2021 in the amount of $40,000. The company's financial statements also included the following:

What is net cash provided by operating activities?

A) $38,000.

B) $43,000.

C) $35,000.

D) $48,000.

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

73) Alpha Company had the following account balances for 2021:

Alpha reported net income of $210,000 for 2021. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2021 reported in the statement of cash flows?

A) $224,000.

B) $206,000.

C) $214,000.

D) $196,000.

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

74) Hogan Company had the following account balances for 2021:

Hogan reported net income of $300,000 for 2021. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2021 reported in the statement of cash flows?

A) $291,000.

B) $290,000.

C) $281,000.

D) $301,000.

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

75) Hanson Company had the following account balances for 2021:

Hanson reported net income of $90,000 for 2021. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2021 reported in the statement of cash flows?

A) $70,000.

B) $80,000.

C) $100,000.

D) $110,000.

Difficulty: 2 Medium

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

76) Creble Company reported net income for 2021 in the amount of $40,000. The company's financial statements also included the following:

In the statement of cash flows what is net cash provided by operating activities under the indirect method?

A) $36,000.

B) $41,000.

C) $40,000.

D) $38,000.

Difficulty: 3 Hard

Topic: Calculate net operating cash flow-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

77) Which of the following is reported as an investing activity in the statement of cash flows?

A) Sale of a subsidiary.

B) Issuance of a long-term promissory note.

C) Sale of treasury stock.

D) Purchase of highly liquid, short-term investments, using excess cash.

Difficulty: 2 Medium

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

78) Which of the following is reported as an investing activity in the statement of cash flows?

A) The receipt of dividend revenue.

B) The payment of cash dividends.

C) The payment of interest on bonds.

D) The sale of machinery.

Difficulty: 1 Easy

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

79) Which of the following would be reported as a cash outflow from investing activities?

A) Issuance of bonds.

B) Purchase of land.

C) Payment of dividends.

D) Retirement of common stock.

Difficulty: 1 Easy

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

80) Which of the following would be an example of an investing activity on a statement of cash flows?

A) Sale of equipment.

B) Issuance of long-term bonds.

C) Receipt of investment revenue.

D) Conversion of a cash equivalent into cash.

Difficulty: 2 Medium

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

81) Which of the following would not be a component of cash flows from investing activities?

A) Sale of land.

B) Purchase of securities.

C) Purchase of equipment.

D) Dividends paid.

Difficulty: 1 Easy

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

82) Of the following, which is not an investing activity?

A) Purchasing a new computer.

B) Buying treasury stock.

C) Selling a parcel of land.

D) Purchasing short-term investments.

Difficulty: 2 Medium

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

83) Cash flows from investing activities do not include cash payments to:

A) acquire equipment.

B) purchase securities of another company.

C) buy land.

D) repay debt.

Difficulty: 1 Easy

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

84) Under U.S. GAAP, cash flows from investing activities do not include:

A) cash payments to acquire equipment.

B) cash received from selling investments in securities of another company.

C) investment revenue in cash.

D) cash paid to buy land.

Difficulty: 1 Easy

Topic: Identify investing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

85) In a statement of cash flows using the indirect method, an increase in the available-for-sale debt securities account not due to an increase in fair value should be reported as:

A) A deduction from net income in determining cash flows from operating activities.

B) An addition to net income in determining cash flows from operating activities.

C) A net cash outflow from investing activity.

D) A net cash inflow from investing activity.

Difficulty: 3 Hard

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

86) In a statement of cash flows using the indirect method, an increase in the available-for-sale debt securities account due to an increase in the debt's fair value should be reported as:

A) A deduction from net income in determining cash flows from operating activities.

B) An addition to net income in determining cash flows from operating activities.

C) An investing activity.

D) Not reported.

Difficulty: 3 Hard

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

87) Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions):

In its statement of cash flows, Peridot should report net cash outflows from investing activities of:

A) $26 million.

B) $46 million.

C) $72 million.

D) $78 million.

Difficulty: 2 Medium

Topic: Calculate net investing cash flow

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-05 Identify transactions that are classified as investing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

88) In preparing its cash flow statement for the year ended December 31, 2021, Red Co. gathered the following data:

In its December 31, 2021, statement of cash flows, what amount should Red report as net cash outflows from investing activities?

A) $340,000.

B) $352,000.

C) $376,000.

D) $388,000.

Difficulty: 2 Medium

Topic: Calculate net investing cash flow

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-05 Identify transactions that are classified as investing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

89) Selected information from Isadore Bell Corporation's accounting records and financial statements for 2021 is as follows ($ in millions):

In its statement of cash flows, Isadore Bell should report net cash outflows from investing activities of:

A) $39 million.

B) $69 million.

C) $114 million.

D) $117 million.

Difficulty: 2 Medium

Topic: Calculate net investing cash flow

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-05 Identify transactions that are classified as investing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

90) Which of the following is reported as a financing activity in the statement of cash flows?

A) The sale of securities classified as available for sale.

B) The acquisition of stock for the purpose of retiring it.

C) The payment of interest on bonds payable.

D) The receipt of dividend revenue.

Difficulty: 2 Medium

Topic: Identify financing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

91) Which of the following is reported as a financing activity in the statement of cash flows?

A) The amortization of a patent.

B) The exchange of common stock for a building.

C) The acquisition of long-term investments.

D) The repayment of bonds issued at face value.

Difficulty: 2 Medium

Topic: Identify financing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

92) Cash flows from financing activities do not include cash received from:

A) issuing common stock.

B) issuing bonds.

C) selling used equipment.

D) a bank loan.

Difficulty: 1 Easy

Topic: Identify financing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

93) Which of the following would not be a cash inflow from financing activities?

A) Cash from issuing common stock.

B) Cash from issuing bonds.

C) Cash from issuing preferred stock.

D) Cash from the sale of stock of a supplier.

Difficulty: 2 Medium

Topic: Identify financing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

94) In preparing its cash flow statement for the year ended December 31, 2021, Green Co. gathered the following data:

In its December 31, 2021, statement of cash flows, what amount should Green report as net cash from financing activities?

A) $40,000.

B) $54,000.

C) $60,000.

D) $74,000.

Difficulty: 2 Medium

Topic: Calculate net financing cash flow

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

95) During 2021, T Company engaged in the following activities:

In T's statement of cash flows, what were net cash outflows from financing activities for 2021?

A) $392.

B) $440.

C) $560.

D) $732.

Difficulty: 2 Medium

Topic: Calculate net financing cash flow

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

96) Selected information from Jacklyn Hyde Corporation's accounting records and financial statements for 2021 is as follows ($ in millions):

In its statement of cash flows, Jacklyn Hyde should report net cash inflows from financing activities of:

A) $60 million.

B) $165 million.

C) $210 million.

D) $315 million.

Difficulty: 2 Medium

Topic: Calculate net financing cash flow

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

97) Interest payments to creditors are reported in a statement of cash flows as:

A) An investing activity.

B) A borrowing activity.

C) A financing activity.

D) An operating activity.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

98) Red Manufacturing Company owns 40% of the outstanding common stock of Blue Supply Company. During 2021, Red received a $50 million cash dividend from Blue. What effect did this dividend have on Red's 2021 statement of cash flows?

A) Cash flow from operating activities increased.

B) Cash flow from investing activities increased.

C) Cash flow from financing activities increased.

D) No effect.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

99) Charlene Company sold a printer with a cost of $68,000 and accumulated depreciation of $23,000 for $20,000 cash. This transaction would be reported as:

A) An operating activity.

B) An investing activity.

C) A financing activity.

D) None of these answer choices are correct.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

100) Hugh Morris Comics sold for $110,000 cash a 3D printer that cost $334,000 with accumulated depreciation of $221,000. This transaction would be reported as:

A) An operating activity.

B) An investing activity.

C) A financing activity.

D) None of these answer choices are correct.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

101) Payments to acquire bonds of other corporations should be classified on a statement of cash flows as:

A) A lending activity.

B) An operating activity.

C) A financing activity.

D) An investing activity.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

102) A purchase of equipment for cash is:

A) Reported as an operating activity in the statement of cash flows.

B) Reported as an investing activity in the statement of cash flows.

C) Reported as a financing activity in the statement of cash flows.

D) None of these answer choices are correct.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

103) Proceeds from the sale of a plant site are:

A) Reported as an operating activity in the statement of cash flows.

B) Reported as an investing activity in the statement of cash flows.

C) Reported as a financing activity in the statement of cash flows.

D) None of these answer choices are correct.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

104) When using the indirect method to determine cash flows from operating activities, an increase in held-to-maturity securities that does not arise from the interest component of the debt should be reported as:

A) A deduction from net income in determining cash flows from operating activities.

B) An addition to net income in determining cash flows from operating activities.

C) An investing activity.

D) A financing activity.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

105) A 10% stock dividend is reported in connection with a statement of cash flows as:

A) A financing activity.

B) An investing activity.

C) A noncash activity.

D) Not reported in the statement of cash flows.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

106) When treasury stock is sold at an amount less than its cost, the sale is classified as:

A) A financing activity.

B) An operating activity.

C) A financing activity and an operating activity.

D) An investing activity.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

107) The purchase of treasury stock is:

A) Reported as a financing activity in the statement of cash flows.

B) Reported as an investing activity in the statement of cash flows.

C) Reported as an operating activity in the statement of cash flows.

D) None of these answer choices are correct.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

108) A statement of cash flows and its related disclosure note typically do not report:

A) An acquisition of the use of a building with a finance lease agreement.

B) The purchase of treasury stock.

C) Stock dividends.

D) Notes payable issued for a tract of land.

Difficulty: 2 Medium

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

109) Property dividends distributed are reported in connection with a statement of cash flows as:

A) A financing activity.

B) An investing activity.

C) A noncash activity.

D) Not reported in the statement of cash flows.

Difficulty: 2 Medium

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

110) Acquiring land with a long-term note is:

A) Reported as an investing activity in the statement of cash flows.

B) Reported as a financing activity in the statement of cash flows.

C) Reported as a noncash investing and financing activity.

D) None of these answer choices are correct.

Difficulty: 2 Medium

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

111) Rampart Inc. recorded the following transaction:

In the statement of cash flows, this would be reported as a:

A) $3 million outflow from investing activities.

B) $15 million outflow from investing activities.

C) $3 million outflow from investing activities and $12 million noncash investing and financing activity.

D) None of these answer choices are correct.

Difficulty: 3 Hard

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

112) A statement of cash flows and its related disclosure note typically do not report:

A) Stock dividends.

B) The purchase of treasury stock.

C) A finance lease.

D) Notes payable issued for a building.

Difficulty: 2 Medium

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

113) When using the indirect method to determine cash flows from operating activities, an increase in prepaid expenses should be reported as:

A) An addition to net income in determining cash flows from operating activities.

B) A deduction from net income in determining cash flows from operating activities.

C) An investing activity.

D) Not reported.

Difficulty: 2 Medium

Topic: Effect of operating changes-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

114) Which of the following would be added to net income when determining cash flows from operating activities under the indirect method?

A) A gain on the sale of land.

B) An increase in prepaid expenses.

C) A decrease in accounts payable.

D) A decrease in accounts receivable.

Difficulty: 2 Medium

Topic: Effect of operating changes-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

115) Each year, Grey Mountain Enterprises (GME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2021 income statement, GME reported $440,000 for the cost of goods sold. GME paid inventory suppliers $380,000 in 2021, and its inventory balance decreased by $41,000 during the year. In its reconciliation schedule, GME should:

A) Show a $19,000 positive adjustment to net income under the indirect method for the increase in accounts payable.

B) Show a $19,000 positive adjustment to net income under the indirect method for the decrease in accounts payable.

C) Show a $19,000 negative adjustment to net income under the indirect method for the increase in accounts payable.

D) Show a $19,000 negative adjustment to net income under the indirect method for the decrease in accounts payable.

Difficulty: 3 Hard

Topic: Effect of operating changes-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

116) Each year, White Mountain Enterprises (WME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2021 income statement, WME reported $58,000 for insurance expense. WME paid $72,000 in insurance premiums during 2021. In its reconciliation schedule, WME should:

A) Show a $14,000 positive adjustment to net income under the indirect method for the increase in prepaid insurance.

B) Show a $14,000 negative adjustment to net income under the indirect method for the decrease in prepaid insurance.

C) Show a $14,000 negative adjustment to net income under the indirect method for the increase in prepaid insurance.

D) Show a $14,000 positive adjustment to net income under the indirect method for the decrease in prepaid insurance.

Difficulty: 3 Hard

Topic: Effect of operating changes-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

117) Each year, Blue Mountain Enterprises (BME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2021 income statement, BME reported $695,000 for service revenue from membership fees. BME received $681,000 cash in advance from members during 2021. In its reconciliation schedule, BME should:

A) Show a $14,000 negative adjustment to net income under the indirect method for the increase in deferred revenue.

B) Show a $14,000 negative adjustment to net income under the indirect method for the decrease in deferred revenue.

C) Show a $14,000 positive adjustment to net income under the indirect method for the increase in deferred revenue.

D) Show a $14,000 positive adjustment to net income under the indirect method for the decrease in deferred revenue.

Difficulty: 3 Hard

Topic: Effect of operating changes-Indirect

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

118) Each year, Ash Mountain Enterprises (AME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2021 income statement, AME reported $11,000 of interest expense on its outstanding bonds. During the year, AME paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, AME should:

A) Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond premium.

B) Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond premium.

C) Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond discount.

D) Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond discount.

Difficulty: 3 Hard

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

119) If bond interest expense is $800,000, bond interest payable increased by $8,000 and bond discount decreased by $2,000, cash paid for bond interest is:

A) $790,000.

B) $784,000.

C) $806,000.

D) $910,000.

Difficulty: 3 Hard

Topic: Reconstruct investing or financing entry; Direct method–Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

120) On June 4, White Corporation issued $400 million of bonds for $386 million. During the same year, $1 million of the bond discount was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report:

A) A financing activity of $400 million.

B) An addition to net income of $1 million.

C) An investing activity of $386 million.

D) A deduction from net income of $1 million.

Difficulty: 3 Hard

Topic: Reconstruct investing or financing entry; Noncash operating items-Depreciation etc

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

121) If bond interest expense is $300,000, bond interest payable decreased by $4,000 and the premium on bonds payable decreased by $1,000, cash paid for bond interest is:

A) $295,000.

B) $300,000.

C) $303,000.

D) $305,000.

Difficulty: 3 Hard

Topic: Reconstruct investing or financing entry; Direct method–Cash paid for expenses

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

122) Jim Sox Company owns debt securities classified as available for sale which were acquired in 2019 at face value of $17 million. During 2021, the fair value of those securities increased by $220,000. What effect did this increase have on Sox's 2021 statement of cash flows?

A) Cash flows from operating activities increased.

B) Cash flows from investing activities increased.

C) Cash flows from financing activities increased.

D) No effect.

Difficulty: 2 Medium

Topic: Reconstruct investing or financing entry; Identify as Operating-Investing-Financing

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

123) Ilene South Company owns 40% of the outstanding common stock of Ilene Wright Company. During the year, South received a $150 million cash dividend from Wright. What effect does this dividend have on South's statement of cash flows for the year?

A) Cash flows from operating activities increased.

B) Cash flows from investing activities increased.

C) Cash flows from financing activities increased.

D) No effect.

Difficulty: 2 Medium

Topic: Spreadsheet preparation; Identify operating transactions

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement / Keyboard Navigation

124) Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

A) $12,750.

B) $13,800.

C) $12,900.

D) $13,200.

Difficulty: 2 Medium

Topic: Reconstruct investing or financing entry

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

125) A firm reported ($ in millions) net cash inflows (outflows) as follows: operating $75, investing ($200), and financing $350. The beginning cash balance was $250. What was the ending cash balance?

A) $875.

B) $25.

C) $475.

D) $125.

Difficulty: 2 Medium

Topic: Reconcile change in cash balance

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement / Keyboard Navigation

126) Like U.S. GAAP, International Financial Reporting Standards (IFRS) also require a statement of cash flows. Consistent with U.S. GAAP, cash flows are classified as operating, investing, or financing activities. However, with regard to interest and dividend inflows and outflows, the international standard for cash flow statements:

A) Allows companies to report cash outflows from interest payments as either operating or investing cash flows.

B) Allows companies to report cash inflows from interest and dividends as either operating or investing cash flows.

C) Allows companies to report dividends paid as either investing or operating cash flows.

D) Designates cash outflows for interest payments and cash inflows from interest and dividends received as operating cash flows.

Difficulty: 2 Medium

Topic: IFRS‒Statement of cash flow

Learning Objective: 21-09 Discuss the primary differences between U.S. GAAP and IFRS with respect to the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking; Diversity

AICPA/Accessibility: FN Measurement; BB Global / Keyboard Navigation

127) Interest payments and interest received must be reported as operating cash flows using:

A) U.S. GAAP.

B) IFRS.

C) Both U.S. GAAP and IFRS.

D) Neither U.S. GAAP nor IFRS.

Difficulty: 2 Medium

Topic: IFRS‒Statement of cash flow

Learning Objective: 21-09 Discuss the primary differences between U.S. GAAP and IFRS with respect to the statement of cash flows.

Bloom's: Remember

AACSB: Reflective Thinking; Diversity

AICPA/Accessibility: FN Measurement; BB Global / Keyboard Navigation

128) Companies may report interest received and dividends received as investing activities using:

A) U.S. GAAP.

B) IFRS.

C) Both U.S. GAAP and IFRS.

D) Neither U.S. GAAP nor IFRS.

Difficulty: 2 Medium

Topic: IFRS‒Statement of cash flow

Learning Objective: 21-09 Discuss the primary differences between U.S. GAAP and IFRS with respect to the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking; Diversity

AICPA/Accessibility: FN Measurement; BB Global / Keyboard Navigation

129) Selected information from Large Corporation's accounting records and financial statements for 2021 is as follows ($ in millions):

Large prepares its financial statements in accordance with IFRS. In its statement of cash flows, Large most likely reports net cash outflows from investing activities of:

A) $18 million.

B) $28 million.

C) $38 million.

D) $68 million.

Difficulty: 3 Hard

Topic: IFRS‒Statement of cash flow

Learning Objective: 21-09 Discuss the primary differences between U.S. GAAP and IFRS with respect to the statement of cash flows.

Bloom's: Apply

AACSB: Knowledge Application; Diversity

AICPA/Accessibility: FN Measurement; BB Global / Keyboard Navigation

130) Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-05 Identify transactions that are classified as investing activities.; 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

131) Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the letter of the reporting classification in the space provided by each transaction.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-05 Identify transactions that are classified as investing activities.; 21-06 Identify transactions that are classified as financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

132) Listed below are several transactions that typically produce either an increase or a decrease in cash. Indicate by letter whether the cash effect of each transaction is reported on a statement of cash flows as an operating (O), investing (I), or financing (F) activity.

Transactions

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

133) Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

Difficulty: 3 Hard

Topic: Cash—Cash equivalents—Restricted cash; Identify financing transactions; Noncash investing and financing activities

Learning Objective: 21-02 Define cash equivalents.; 21-03 Determine cash flows from operating activities by the direct method.; 21-06 Identify transactions that are classified as financing activities.; 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

134) Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing; Noncash investing and financing activities

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-05 Identify transactions that are classified as investing activities.; 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

135) Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

Difficulty: 2 Medium

Topic: Identify as Operating-Investing-Financing; Effect of operating changes―Indirect

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-04 Determine cash flows from operating activities by the indirect method.; 21-05 Identify transactions that are classified as investing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

136) Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

Difficulty: 1 Easy

Topic: Identify as Operating-Investing-Financing; Noncash investing and financing activities

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-06 Identify transactions that are classified as financing activities.; 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

Use the information below to answer the following question(s).

In its 2021 Annual Report to Shareholders, Henchman & Co. provided the following Statement of Cash Flows:

137) What method (direct or indirect) does Henchman & Co. use to present its Statement of Cash Flows? Explain how you can determine which method is used.

Difficulty: 1 Easy

Topic: Distinguish direct and indirect methods

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

138) What was the net change in cash and cash equivalents experienced by Henchman & Co. during 2021? Was it positive or negative?

Difficulty: 1 Easy

Topic: Reconcile change in cash balance

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

139) Which type of activity (operating, investing, financing) was most responsible for the cash flow experienced by Henchman & Co. during 2021?

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Evaluate

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

140) (a.) What is the most significant change in operating cash outflow activity

in 2021 relative to 2020?

(b.) What balance sheet accounts would likely have changed during 2021

in relation to the cash flow change that you identify in (a)?

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Evaluate

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

141) What was most responsible for the negative cash flow from financing activities during 2020? What amount was paid?

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Evaluate

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

142) What was most responsible for the positive cash flow from financing activities during 2021? What amount was received?

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Evaluate

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

143) Determine the amount of cash paid to suppliers for each of the four independent situations below.

Difficulty: 2 Medium

Topic: Direct method—Cash paid to suppliers

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

144) Prepare the summary entries necessary to determine the amount of cash received from customers for each of the four independent situations below.

Difficulty: 1 Easy

Topic: Direct method—Cash received; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

145) Prepare the summary entries necessary to determine the amount of cash paid to suppliers for each of the four independent situations below.

Difficulty: 2 Medium

Topic: Direct method—Cash paid to suppliers; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

146) Partial balance sheets and additional information are listed below for Monaco Company.

Additional information for 2021:

Net income was $270,000.

Depreciation expense was $30,000.

Sales totaled $800,000.

Cost of goods sold totaled $305,000.

Required:

Prepare the summary entry for the amount of cash paid to merchandise suppliers during 2021.

Difficulty: 3 Hard

Topic: Direct method—Cash paid to suppliers; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

147) Partial balance sheets and additional information are listed below for Ensign Company.

Ensign Company

Partial Balance Sheets

as of December 31

Additional information for 2021:

Net income was $170,000.

Depreciation expense was $30,000.

Sales totaled $400,000.

Cost of goods sold totaled $145,000.

Required:

Prepare the summary entry for the amount of cash paid to merchandise suppliers during 2021.

Difficulty: 3 Hard

Topic: Direct method—Cash paid to suppliers; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

148) Partial balance sheets and additional information are listed below for Funk Company.

Funk Company

Partial Balance Sheets

as of December 31

Additional information for 2021:

Net income was $170,000.

Depreciation expense was $30,000.

Sales totaled $800,000.

Cost of goods sold totaled $325,000.

Required:

Prepare the summary entry for the amount of cash received from customers during 2021.

Difficulty: 2 Medium

Topic: Direct method—Cash received; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

149) Partial balance sheets and additional information are listed below for Julius Company.

Julius Company

Partial Balance Sheets

as of December 31

Additional information for 2021:

Net income was $70,000.

Depreciation expense was $30,000.

Sales totaled $600,000.

Cost of goods sold totaled $325,000.

Required:

Prepare the summary entry for the amount of cash received from customers during 2021.

Difficulty: 2 Medium

Topic: Direct method—Cash received; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

Use the information below to answer the following question(s).

In its 2021 Annual Report to Shareholders, Kinney Inc. reported the following Consolidated Statement of Cash Flows:

For the years ended December 31,

150) Assuming the decrease in accrued expenses during fiscal year 2021 included a $20,000 reduction due to taxes, compute the income tax expense for Kinney in that year.

Difficulty: 3 Hard

Topic: Direct method—Cash paid for expenses; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

151) Kinney reported cost of goods sold of $168,114,150 in its fiscal 2021 income statement. Compute Kinney's net inventory purchases during the year.

Difficulty: 3 Hard

Topic: Direct method—Cash paid to suppliers; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

152) Assuming the decrease in accrued expenses during fiscal year 2021 included a $14,000 reduction due to interest on debt, compute the interest expense (net) for Kinney in that year.

Difficulty: 3 Hard

Topic: Direct method—Cash paid for expenses; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

153) Kinney reported cost of goods sold of $168,114,150 in its fiscal 2021 income statement Assuming that Kinney uses accounts payable strictly for inventory purchases and that all such purchases are on credit, how much cash did Kinney pay during the year for inventories:

(a) To inventory suppliers?

(b) To employees?

Difficulty: 3 Hard

Topic: Direct method—Cash paid for expenses; Direct method—Cash paid to suppliers; Spreadsheet preparation

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

154) Determine the amount of cash received from customers for each of the two independent situations below.

Difficulty: 1 Easy

Topic: Direct method—Cash received

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

155) Following are the income statement and some additional information for Carolina Consulting Company.

Carolina Consulting Company

Income Statement

For the Year Ended December 31, 2021

All sales were on credit and accounts receivable decreased by $900 in 2021 compared to 2020. Merchandise purchases were on credit with a decrease in accounts payable of $700 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash.

Required:

Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-03 Determine cash flows from operating activities by the direct method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

156) Partial balance sheets and additional information are listed below for Sowell Company.

Sowell Company

Partial Balance Sheets

as of December 31

Additional information for 2021:

Net income was $88,000.

Depreciation expense was $19,000.

Required:

Prepare the operating activities section of the statement of cash flows for 2021 using the indirect method.

Difficulty: 2 Medium

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

157) Partial balance sheets and additional information are listed below for Rickey Company.

Rickey Company

Partial Balance Sheets

as of December 31

Additional information for 2021:

Net income was $160,000.

Depreciation expense was $20,000.

Required:

Prepare the operating activities section of the statement of cash flows for 2021 using the indirect method.

Difficulty: 2 Medium

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

158) The accounting records of Eastlake Industries provided the data below.

Required:

Prepare a reconciliation of net income to net cash flows from operating activities.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

159) The accounting records of Westlake Industries provided the data below.

Required:

Prepare a reconciliation of net income to net cash flows from operating activities.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

160) Following are the income statement and some additional information for Parson Corporation for 2021.

Parson Consulting Company

Income Statement

For the Year Ended December 31, 2021

All sales were on credit and accounts receivable increased by $600 in 2021 compared to 2020. Merchandise purchases were on credit with an increase in accounts payable of $400 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash.

Required:

Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Difficulty: 2 Medium

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

161) The accounting records of Harrison Company provided the data below.

Required:

Prepare a reconciliation of net income to net cash flows from operating activities.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

162) The accounting records of Unlucky Company provided the data below.

Required:

Prepare a reconciliation of net income to net cash flows from operating activities.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

163) Partial balance sheets for Yarborough Company and additional information are found below.

Yarborough Company

Partial Balance Sheets

as of December 31

Additional information for 2021:

Required:

Prepare the investing activities section of the statement of cash flows for 2021.

Difficulty: 2 Medium

Topic: Prepare part or all of the Statement

Learning Objective: 21-05 Identify transactions that are classified as investing activities.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

164) In preparation for developing its statement of cash flows for the year just ended, D-Rose Distributors collected the following information:

Required:

1. Prepare the investing activities section of D-Rose's statement of cash flows.

2. Prepare the financing activities section of D-Rose's statement of cash flows.

Difficulty: 2 Medium

Topic: Prepare part or all of the Statement; Calculate net financing cash flow; Calculate net investing cash flow

Learning Objective: 21-05 Identify transactions that are classified as investing activities.; 21-06 Identify transactions that are classified as financing activities.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

165) In preparation for developing its statement of cash flows for the year ended December 31, 2021, Millennium Solutions, Inc. collected the following information:

Required:

1. Prepare the investing activities section of Millennium's statement of cash flows for 2021.

2. Prepare the financing activities section of Millennium's statement of cash flows for 2021.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement; Calculate net investing cash flow; Calculate net financing cash flow

Learning Objective: 21-05 Identify transactions that are classified as investing activities.; 21-06 Identify transactions that are classified as financing activities.; Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Analyze

AACSB: Analytical Thinking

AICPA/Accessibility: FN Measurement

166) Partial balance sheets for ABC Company and additional information are provided below.

ABC Company

Partial Balance Sheets

as of December 31

Required:

Prepare the financing activities section of the statement of cash flows for 2021.

Difficulty: 2 Medium

Topic: Calculate net financing cash flow; Prepare part or all of the Statement

Learning Objective: 21-06 Identify transactions that are classified as financing activities.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

167) The Murdock Corporation reported the following balance sheet data for 2021 and 2020:

Additional information for 2021:

(1.) Sold available-for-sale debt securities costing $69,500 for $74,000.

(2.) Equipment costing $20,000 with a book value of $5,000 was sold for $6,000.

(3.) Issued 6% bonds payable at face value, $200,000.

(4.) Purchased new equipment for $145,000 cash.

(5.) Paid cash dividends of $20,000.

(6.) Net income was $50,000.

Required:

Prepare a statement of cash flows for 2021 in good form using the indirect method for cash flows from operating activities.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

168) The following are comparative balance sheets and an income statement for Wentworth Company.

Wentworth Company

Balance Sheets

as of December 31

Wentworth Company

Income Statement

For the Year Ended December 31, 2021

Cash dividends of $45,000 were paid in 2021.

Required:

Prepare a statement of cash flows for 2021 using the direct method.

Difficulty: 3 Hard

Topic: Prepare part or all of the Statement

Learning Objective: 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Apply

AACSB: Knowledge Application

AICPA/Accessibility: FN Measurement

169) The statement of cash flows has been a required financial statement since 1988, but is the reporting of cash flows a relatively new concept? Explain.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Evaluate

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

170) Why is the statement of cash flows required as part of the set of external financial statements?

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Communication

AICPA/Accessibility: FN Research

171) Do "cash flows from operating activities" report all the elements of the income statement on a cash basis? Explain.

Difficulty: 2 Medium

Topic: General—Cash flow and disclosure items

Learning Objective: 21-01 Explain the usefulness of the statement of cash flows.

Bloom's: Understand

AACSB: Communication; Reflective Thinking

AICPA/Accessibility: FN Measurement

172) Do the statement of cash flows and its related disclosure note report only transactions that cause an increase or decrease in cash? Explain.

Difficulty: 2 Medium

Topic: Noncash investing and financing activities

Learning Objective: 21-07 Identify transactions that represent noncash investing and financing activities.

Bloom's: Understand

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

173) Why are "cash equivalents" included as part of cash in the statement of cash flows?

Difficulty: 2 Medium

Topic: Cash—Cash equivalents—Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Understand

AACSB: Communication; Reflective Thinking

AICPA/Accessibility: FN Measurement

174) What are the general guidelines for an investment to be considered a cash equivalent?

Difficulty: 2 Medium

Topic: Cash—Cash equivalents—Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Remember

AACSB: Communication; Reflective Thinking

AICPA/Accessibility: FN Measurement

175) Transactions that involve merely purchases or sales of cash equivalents generally are not reported on a statement of cash flows. Describe an exception to this generalization. What is the essential characteristic of the transaction that qualifies as an exception?

Difficulty: 3 Hard

Topic: Cash—Cash equivalents—Restricted cash

Learning Objective: 21-02 Define cash equivalents.

Bloom's: Understand

AACSB: Communication; Reflective Thinking

AICPA/Accessibility: FN Measurement

176) Is depreciation a source of cash? Explain.

Difficulty: 1 Easy

Topic: Noncash operating items‒Depreciation etc.

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Understand

AACSB: Communication; Reflective Thinking

AICPA/Accessibility: FN Measurement

Use the information below to answer the following question(s).

In its 2021 Annual Report to Shareholders, Sisters Corporation included the following information on cash flows from operations:

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in $ thousands)

177) Explain why Sisters Corporation subtracts equity income from its net income in its measurement of cash flows.

Difficulty: 3 Hard

Topic: Noncash operating items‒Depreciation etc.; Spreadsheet preparation

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.; 21-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.

Bloom's: Understand

AACSB: Communication; Reflective Thinking

AICPA/Accessibility: FN Measurement

178) Did accounts receivable increase or decrease during 2021? Explain.

Difficulty: 2 Medium

Topic: Effect of operating changes―Indirect

Learning Objective: 21-04 Determine cash flows from operating activities by the indirect method.

Bloom's: Analyze

AACSB: Analytical Thinking; Communication

AICPA/Accessibility: FN Measurement

179) What activities are included in the statement of cash flows under the section titled "Cash flows from investing activities"?

Difficulty: 2 Medium

Topic: Identify investing transactions

Learning Objective: 21-05 Identify transactions that are classified as investing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

180) What activities are included in the statement of cash flows under the section titled "Cash flows from financing activities"?

Difficulty: 2 Medium

Topic: Identify financing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Remember

AACSB: Reflective Thinking

AICPA/Accessibility: FN Measurement

181) The sale of stock and the sale of bonds are reported as financing activities. Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activities? Explain.

Difficulty: 2 Medium

Topic: Identify financing transactions

Learning Objective: 21-06 Identify transactions that are classified as financing activities.

Bloom's: Remember

AACSB: Reflective Thinking; Communication

AICPA/Accessibility: FN Measurement