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The ending and beginning balances of Farmer Corporation's balance sheet accounts for the most recent year are listed below: The ending and beginning balances of Farmer Corporation's balance sheet accounts for the most recent year are listed below: The company's net income (loss) for the year was $0 and its cash dividends were $4,000. It did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. Required: Compute the change in each balance sheet account in the below table. Indicate whether the change in each balance will be recorded in the operating, investing, or financing activities section of the statement of cash flows. For items recorded in the operating activities section, also indicate whether the change will be added to or subtracted from net income. For all other items, indicate whether the change will be added as a cash inflow or subtracted as a cash outflow. The first entry has been filled in as an example. The company's net income (loss) for the year was $0 and its cash dividends were $4,000. It did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. Required: Compute the change in each balance sheet account in the below table. Indicate whether the change in each balance will be recorded in the operating, investing, or financing activities section of the statement of cash flows. For items recorded in the operating activities section, also indicate whether the change will be added to or subtracted from net income. For all other items, indicate whether the change will be added as a cash inflow or subtracted as a cash outflow. The first entry has been filled in as an example.

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Thunder Corporation's balance sheet and income statement appear below: Thunder Corporation's balance sheet and income statement appear below: The company did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $24. Required: Prepare a statement of cash flows in good form using the indirect method. Thunder Corporation's balance sheet and income statement appear below: The company did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $24. Required: Prepare a statement of cash flows in good form using the indirect method. The company did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $24. Required: Prepare a statement of cash flows in good form using the indirect method.

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When computing the net cash provided by operating activities under the indirect method on the statement of cash flows, a decrease in common stock would be subtracted from net income.

A) True
B) False

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When a company pays cash to repurchase its own common stock, this is reported as a cash outflow in the financing activities section of the statement of cash flows.

A) True
B) False

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Stone Retail Corporation's most recent comparative Balance Sheet is as follows: Stone Retail Corporation's most recent comparative Balance Sheet is as follows: Stone's net income was $46,000. No equipment was sold or purchased. Cash dividends of $40,000 were declared and paid. Stone uses the indirect method to prepare its statement of cash flows. What is Stone's net cash provided (used) by operating activities? A) ($18,000) B) ($33,000) C) $69,000 D) $84,000 Stone's net income was $46,000. No equipment was sold or purchased. Cash dividends of $40,000 were declared and paid. Stone uses the indirect method to prepare its statement of cash flows. What is Stone's net cash provided (used) by operating activities?


A) ($18,000)
B) ($33,000)
C) $69,000
D) $84,000

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

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The data given below are from the accounting records of the Kuhn Corporation: The data given below are from the accounting records of the Kuhn Corporation: Based on this information, the net cash provided by operating activities using the indirect method would be: A) $55,000 B) $58,000 C) $50,000 D) $60,000 Based on this information, the net cash provided by operating activities using the indirect method would be:


A) $55,000
B) $58,000
C) $50,000
D) $60,000

E) All of the above
F) B) and C)

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Which of the following would be considered a cash inflow in the financing activities section of the statement of cash flows?


A) Issuing bonds payable.
B) Receiving cash from customers.
C) Sale of equipment.
D) Collection of a loan made to another company.

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

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Megan Corporation's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below: Megan Corporation's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below: The company paid a cash dividend of $36,000 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The free cash flow for the year was: A) $123,000 B) $87,000 C) $142,000 D) $269,000 The company paid a cash dividend of $36,000 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The free cash flow for the year was:


A) $123,000
B) $87,000
C) $142,000
D) $269,000

E) A) and C)
F) None of the above

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Randal Corporation recorded the following activity for the year just ended: Randal Corporation recorded the following activity for the year just ended: The net cash provided by (used in) investing activities for the year was: A) $100,000 B) ($100,000) C) ($400,000) D) $400,000 The net cash provided by (used in) investing activities for the year was:


A) $100,000
B) ($100,000)
C) ($400,000)
D) $400,000

E) None of the above
F) A) and B)

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Suggett Corporation's net cash provided by operating activities was $34; its income taxes were $12; its capital expenditures were $24; and its cash dividends were $7. The company's free cash flow was:


A) ($19)
B) $77
C) $3
D) $15

E) None of the above
F) B) and C)

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Paying wages and salaries to employees is classified as a cash outflow in the operating activities section of the statement of cash flows.

A) True
B) False

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Spackel Corporation recorded the following events last year: Spackel Corporation recorded the following events last year: On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) financing activities on the statement of cash flows would be: A) ($8,000) B) ($14,000) C) $104,000 D) $1,286,000 On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) financing activities on the statement of cash flows would be:


A) ($8,000)
B) ($14,000)
C) $104,000
D) $1,286,000

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

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Free cash flow is net cash provided by operating activities less capital expenditures.

A) True
B) False

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Norbury Corporation's net income last year was $34,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Norbury Corporation's net income last year was $34,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Based solely on this information, the net cash provided by operating activities under the indirect method on the statement of cash flows would be: A) $52,000 B) $66,000 C) $53,000 D) $16,000 Based solely on this information, the net cash provided by operating activities under the indirect method on the statement of cash flows would be:


A) $52,000
B) $66,000
C) $53,000
D) $16,000

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

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An increase in the Inventory account of a company from $10,000 at the beginning of the year to $15,000 at the end of the year would be shown on the company's statement of cash flows prepared under the indirect method as:


A) an addition to net income of $5,000 in order to arrive at net cash provided by operating activities.
B) a deduction from net income of $5,000 in order to arrive at net cash provided by operating activities.
C) an addition to net income of $15,000 in order to arrive at net cash provided by operating activities.
D) a deduction from net income of $10,000 in order to arrive at net cash provided by operating activities.

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

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Degeare Corporation's balance sheet and income statement appear below: Degeare Corporation's balance sheet and income statement appear below: Cash dividends were $10. The company sold equipment for $18 that was originally purchased for $10 and that had accumulated depreciation of $5. The net cash provided by (used in) operating activities for the year was: A) $73 B) $76 C) $43 D) $63 Degeare Corporation's balance sheet and income statement appear below: Cash dividends were $10. The company sold equipment for $18 that was originally purchased for $10 and that had accumulated depreciation of $5. The net cash provided by (used in) operating activities for the year was: A) $73 B) $76 C) $43 D) $63 Cash dividends were $10. The company sold equipment for $18 that was originally purchased for $10 and that had accumulated depreciation of $5. The net cash provided by (used in) operating activities for the year was:


A) $73
B) $76
C) $43
D) $63

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

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Paying interest to lenders is classified as an operating activity on the statement of cash flows.

A) True
B) False

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Financial statements of Rukavina Corporation follow: Financial statements of Rukavina Corporation follow: Cash dividends were $8. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was: A) $26 B) $15 C) ($26) D) ($15) Financial statements of Rukavina Corporation follow: Cash dividends were $8. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was: A) $26 B) $15 C) ($26) D) ($15) Cash dividends were $8. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:


A) $26
B) $15
C) ($26)
D) ($15)

E) C) and D)
F) None of the above

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Swinger Corporation's comparative balance sheet appears below: Swinger Corporation's comparative balance sheet appears below: The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $10,000. The net cash provided by operating activities is: A) $32,000 B) $36,000 C) $34,000 D) $28,000 The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $10,000. The net cash provided by operating activities is:


A) $32,000
B) $36,000
C) $34,000
D) $28,000

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

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Tani Corporation's most recent balance sheet appears below: Tani Corporation's most recent balance sheet appears below: The company's net income for the year was $18 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $4. The net cash provided by (used in) investing activities for the year was: A) ($45) B) $45 C) ($3) D) $3 The company's net income for the year was $18 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $4. The net cash provided by (used in) investing activities for the year was:


A) ($45)
B) $45
C) ($3)
D) $3

E) None of the above
F) A) and B)

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