accounting 212 ch 11 smartbook

Kleister Company issues bonds for $100 million and repays a long-term notes payable of $10 million. The company also sells its own shares for $12 million and pays cash dividends of $5 million. Cash inflows from financing activities will be: a.) $110 mil b.) $112 mil c.) $17 mil d.) $15 mil

$112 mil Reason: $100 mil + $12 mil

Neue Inc. reports sales revenue of $200,000; in addition, its accounts receivable balance decreased by $15,000. Neue's cash flows from sales were: a.) $215,000 b.) $200,000 c.) $185,000

$215,000

During the current period, Schmidt Corp. sold equipment for $1,000, purchased new equipment for $10,000, paid an accounts payable balance of $2,500, and sold an investment costing $2,000 for $2,800. Net cash from investing activities is (indicate the amount and whether it is a net inflow or outflow) a.) $6,200 net outflow b.) $6,200 net inflow c.) $8,700 net outflow d.) $7,000 net outflow

$6,200 net outflow Reason: 1,000 - 10,000 + 2,800

Roberts Inc. sells common stock for $10 million and pays dividends of $1 million. Net cash inflows from financing activities will be: a.) $9 million b.) $11 million c.) $10 million d.) $1 million

$9 million

Which of the following provides an indication of a higher quality of net income? a.) Operating cash flows that are highly correlated with net income b.) Investing cash flows that are highly correlated with net income c.) Financing cash flows that are highly correlated with net income

Operating cash flows that are highly correlated with net income

Which of the following are cash outflows from financing activities? (Select all that apply.) a.) Pay dividends b.) Issue common stock c.) Repay borrowing from bank d.) Receive interest e.) Purchase of supplies

Pay dividends Repay borrowing from bank

Which of the following are common financing activities? (Select all that apply.) a.) Receiving dividends from an investment in another company b.) Payment of cash dividends c.) Purchasing treasury stock d.) Issuing common stock

Payment of cash dividends Purchasing treasury stock Issuing common stock

Which of the following would result in a cash inflow from investing activities? a.) Sale of inventory in excess of cost. b.) Sale of a machine for cash. c.) Sale of the company's common stock for cash.

Sale of a machine for cash.

When reporting cash flows from operating activities using the indirect method, an increase in accounts payable is ______ net income because payments to suppliers are ______ than new purchases. a.) deducted from, more b.) added to, less c.) deducted from, less d.) added to, more

added to, less

When reporting cash flows from operating activities using the indirect method, an increase in accounts payable is ______ net income because payments to suppliers are ______ than new purchases. a.) deducted from, more b.) added to, more c.) deducted from, less d.) added to, less

added to, less

When cash flows from operating activities are reported using the indirect method, a(n) ______ in accounts payable will be subtracted from net income.

decrease

Under the indirect method of preparing the statement of cash flows, depreciation expense is added back to net income because it: (Select all that apply.) a.) increases the cash balance. b.) did not require an outflow of cash. c.) provides an inflow of cash. d.) was subtracted in calculating net income.

did not require an outflow of cash. was subtracted in calculating net income.

Using the _______ method of reporting cash flows from operating activities, we show cash received from customers and cash paid to employees.

direct

Select the items that would be subtracted from net income in order to prepare the operating activities section of a statement of cash flows using the indirect method. (Select all that apply.) a.) loss on sale of land b.) increase in current liability c.) depreciation expense d.) gain on sale of land e.) decrease in current liability

gain on sale of land decrease in current liability

The ______ method of reporting cash flows from operating activities begins with net income.

indirect

The two acceptable methods for U.S. GAAP for reporting cash flows from operating activities are the _______ method and the method _______.

indirect, direct

The statement of cash flows provides summary information about cash ______ and cash ______ during the year.

inflow, outflow

The purchase and sale of long-term assets and current investments are classified as: a.) financing activities b.) investing activities c.) operating activities

investing activities

An increase in accounts receivable indicates that the company collected ______ cash than the amount of ______. a.) less; sales revenue b.) more; sales revenue

less, sales revenue

Cash receipts and cash payments for transactions relating to revenue and expense activities are classified on the statement of cash flows as: a.) financing activities b.) investing activities c.) operating activities

operating activities

The statement of cash flows classifies items as a.) operating and nonoperating. b.) recurring and nonrecurring. c.) current and noncurrent. d.) operating, investing, and financing.

operating, investing, and financing.

Kleister Company issues bonds for $100 million and repays a long-term notes payable of $10 million. The company also sells its own common shares for $12 million and pays cash dividends of $5 million. Which of the following are cash outflows from financing activities? (Select all that apply.) a.) issuance of bonds b.) payment of cash dividends c.) repayment of notes payable d.) sale of Kleister Company common shares

payment of cash dividends repayment of notes payable

Which of the following are cash outflows from investing activities? (Select all that apply.) a.) repayment of long-term debt b.) payment of income taxes c.) purchase of land d.) cash acquisition of another company e.) purchase of long-term investments

purchase of land cash acquisition of another company purchase of long-term investments

Changes to current assets and current liabilities require adjustment of net income under the indirect method because a.) related cash may be higher or lower than the accrued amount included in net income. b.) these changes increase or decrease cash flows related to debt and stockholders' equity. c.) these changes increase or decrease cash flows related to long-term assets.

related cash may be higher or lower than the accrued amount included in net income

The basic purpose of the statement of cash flows is to: a.) report the accrual-based activities during the year b.) report the activities that changed the cash balance during the year c.) show that the company was profitable d.) report every increase and decrease in non-cash accounts during the year

report the activities that changed the cash balance during the year

Which of the following are classified as cash inflows from investing activities? (Select all that apply.) a.) Purchase of an investment b.) Issuance of common stock c.) Sale of land d.) Sale of equipment e.) Sale of subsidiary

sale of land sale of equipment sale of subsidiary

In a statement of cash flows, the sum of cash inflows and outflows is equal to: a.) net income plus depreciation and amortization. b.) cash flows from operating activities. c.) the change in the cash balance.

the change in the cash balance

Western Inc.'s income statement showed net income of $60,000 and depreciation expense of $10,000. Accounts receivable decreased $3,000, Inventory increased $4,000, Supplies increased $1,000, and Accounts payable increased $3,000. Western's net cash flows from operating activities was ______. a.) $65,000 b.) $51,000 c.) $73,000 d.) $79,000 e.) $71,000

$71,000 Net cash flow from operating activities = $60,000 + 10,000 + 3,000 - 4,000 - 1,000 + 3,000

Which of the following are cash inflows from financing activities? (Select all that apply.) a.) Sale of land b.) Interest received c.) Borrowing from bank d.) Collection from customers e.) Issuance of common stock to investors

Borrowing from bank Issuance of common stock to investors

Cash received by the company during the period

Cash inflow

Cash paid by the company during the period

Cash outflow

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows? (Select all that apply.) a.) Borrowing from bank b.) Sale of building c.) Collection from customers d.) Issuance of common stock e.) Interest received on notes receivable

Collection from customers Interest received on notes receivable

Which of the following methods for reporting cash flows from operating activities begins with net income and works backward to calculate net cash flow from operating activities? a.) Indirect method b.) Direct method c.) Accrual method d.) Matching method

Indirect method

When preparing the statement of cash flows using the indirect method, depreciation expense is ______ net income. a.) added to b.) subtracted from

added to

Select the items that would be added to net income in order to prepare the operating activities section of a statement of cash flows using the indirect method. (Select all that apply.) a.) gain on sale of land b.) increase in current assets c.) decrease in current assets d.) depreciation expense e.) loss on sale of land

decrease in current asset depreciation expense loss on sale of land

When the indirect method is used to report cash flows from operating activities, a decrease in accrued liabilities, such as salaries payable, is subtracted from net income to include the effects of transactions that ______ cash, but ______ net income.

decrease, do not affect

Cash flows from ________ activities include both inflows and outflows of cash from the external funding of a business.

financing

Cash inflows and outflows involving stockholders and creditors are classified on the statement of cash flows as _______ activities

financing

A(n) ______ in accrued liabilities, such as interest payable, will be added to net income when determining net cash flow from operating activities using the indirect method.

increase

_______ activities include cash receipts and cash payments for transactions relating to revenue and expense activities.

operating

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows? (Select all that apply.) a.) payment of salaries b.) issuance of bonds c.) payment on account d.) purchase of building e.) purchase of supplies on account

payment of salaries payment on account

The financial statement that provides information about cash receipts and cash disbursements for the period is the: a.) statement of retained earnings. b.) statement of cash flows. c.) balance sheet. d.) income statement.

statement of cash flows

Using the indirect method to report cash flows from operating activities, an increase in the prepaid rent account will be ______ net income to arrive at net cash flow provided by operating activities. a.) subtracted from b.) added back to

subtracted from