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Exam 12: Statement of Cash Flows

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Question 1

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Cash flows from investing activities include cash:

A) inflows and outflows reflecting revenues and expenses.
B) outflows from the sale of long-term investments.
C) inflows from the sale of long-term investments.
D) inflows from the sale of a company's own stock to its stockholders.

E) A) and D)
F) B) and C)

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Question 2

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When a company uses the direct method to determine the cash flows from operating activities,cash flows from operating activities will:

A) be identical to the amount reported using the indirect method.
B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method.
C) always be larger than the amount reported using the indirect method.
D) be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect method.

E) C) and D)
F) B) and D)

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Question 3

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Use the information above to answer the following question.What is the amount of inventory purchases?

Which of the following would be included in cash flows from operating activities?

In general,the cash flow from operating activities is considered by many to be the most important component of the statement of cash flows.

Cash flows from financing activities:

The net cash flow from operating activities is an inflow of $37,042,the net cash flow from investing activities is an outflow of $16,831,and the net cash flow from financing activities is an outflow of $26,397.If the beginning cash account balance is $11,283,what is the ending cash account balance?

Condensed financial data of Monopoly Corporation appear below: Additional information: A cash dividend was declared and paid in full during the year. Instructions: Solve for the missing numbers and summarize your answers in the table below.Be sure to indicate in parentheses ( )if the missing number is negative (that is,a cash outflow).

Which of the following would be included in cash flows from investing activities?

When the indirect method is used,if accounts receivable increases during the accounting period,the change in accounts receivable is:

A company purchases a $300,000 building,paying $200,000 in cash and signing a $100,000 promissory note.What will be reported on the statement of cash flows as a result of this transaction?

A company purchased money market funds with cash during the current year.Choose the statement that is true:

When using the spreadsheet approach for preparing a Statement of Cash Flows using the indirect method,one half of the spreadsheet reflects changes in balance sheet accounts and the other half is used to demonstrate their effect on cash flows.

Match the letter with the correct item below to indicate how each revenue or expense account on the income statement is adjusted when using the direct method to determine net cash flow from operating activities. A - Add item to revenue or expense S - Subtract item from revenue or expense N - No adjustment necessary _______ increase in accrued expenses _______ decrease in accounts receivable _______ decrease in unearned income _______ increase in prepaid expenses _______ decrease in accounts payable _______ increase in long-term notes payable _______ decrease in prepaid insurance _______ increase in inventory _______ increase in interest payable _______ increase in accumulated depreciation

Identify whether each of the following list of items is an operating activity cash flow (O),an investing activity cash flow (I),a financing activity cash flow (F),or none of these (None). _______ Sale of equipment. _______ Cash collected from customers. _______ Payments to suppliers. _______ Stock repurchases. _______ Repayment of bond principal. _______ Payment of income tax. _______ Purchases of bonds from other companies. _______ Purchases of equipment financed with a note. _______ Interest and dividends received. _______ Payment of dividends.

Use the information above to answer the following question.What is the amount of cash paid for inventory?

When the indirect method is used,if prepaid expenses decrease during the accounting period,the change in prepaid expenses is:

Divergence between net income and cash flow may be due to any of the following except

A company reported that its bonds with a face value of $50,000 and a carrying value of $53,000 are retired for $56,000 cash.The amount to be reported under cash flows from financing activities is:

All of the following might be used to evaluate cash flow performance,except: