Accounting Multiple Choice Chapter 11

Which of the following methods for preparing the statement of cash flows is acceptable under U.S. GAAP? -The direct method. -The indirect method. -Both the direct and the indirect method are acceptable. -The accrual accounting method.

Both the direct and the indirect method are acceptable.

The issuance of a note payable is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Financing activity.

The issuance of common stock is classified in the statement of cash flows as a(n) -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Financing activity.

The issuance of notes payable is classified in the statement of cash flows as a(n) -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Financing activity.

The payment of cash dividends is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Financing activity.

The repayment of a note payable is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Financing activity.

The balance of cash at the beginning of the year was $120,000, and at the end of the year was $140,000. Assuming operating cash flows equal $90,000 and investing cash flows equal $(40,000), calculate financing cash flows for the year. -$50,000. -$(30,000). -$10,000. -$(70,000).

$(30,000).

Assuming Net Income for the year is $98,000, what is the net operating cash flows given the following information: Depreciation Expense $6,000 Increase in Prepaid Rent $4,000 Decrease in Accounts Receivable $3,000 Increase in Inventory $5,000 Increase in Accounts Payable $2,000 -$98,000. -$104,000. -$96,000. -$100,000.

$100,000

The net cash flows from operating, investing, and financing activities will equal: -Net income minus dividends for the year. -The ending balance of cash this year. -The change in cash reported in the balance sheet from this year versus last year. -The change in stockholders' equity for the year.

The change in cash reported in the balance sheet from this year versus last year.

Using the information below, calculate net cash flows from financing activities. Net income$120,000 Receive cash from issuing stock 80,000 Pay cash for equipment 90,000 Increase in accounts receivable 10,000 Depreciation expense$30,000 Increase in accounts payable 5,000 Receive cash from sale of land 75,000 Pay cash dividends 20,000 -$60,000. -$(15,000). -$100,000. -$80,000.

$60,000.

Using the information below, calculate net cash flows from investing activities. Net income $120,000 Receive cash from issuing stock 80,000 Pay cash for equipment 90,000 Increase in accounts receivable 10,000 Depreciation expense $30,000 Increase in accounts payable 5,000 Receive cash from sale of land 75,000 Pay cash dividends 20,000 -$(165,000). -$15,000. -$60,000. -$(15,000).

-$(15,000).

The indirect and direct methods -Are used by companies about equally in actual practice. -Affect the presentations of operating, investing, and financing activities. -Arrive at different amounts for net cash flows from operating activities. -Are two allowable methods to present operating activities in the statement of cash flows.

Are two allowable methods to present operating activities in the statement of cash flows.

In preparing a statement of cash flows under the indirect method, an increase in accounts payable would be reported or included as a(n): -Addition to net income in the operating activities section. -Deduction from net income in the operating activities section. -Investing activity. -Financing activity.

Addition to net income in the operating activities section.

Which of the following is a noncash transaction? -Purchase of long-term assets by issuing debt. -Purchase of long-term assets by issuing stock. -Conversion of bonds payable into common stock. -All of these are noncash transactions.

All of these are noncash transactions.

Which of the following is an example of a cash inflow from investing activities? -Receipt of interest. -Payment of cash dividends. -Cash received from the sale of equipment. -Receipt of cash dividends.

Cash received from the sale of equipment.

We can identify operating activities from income statement information and changes in: -Current asset and current liability accounts. -Long-term asset accounts. -Long-term liability accounts. -Stockholders' equity accounts.

Current asset and current liability accounts.

In preparing a statement of cash flows under the indirect method, an increase in accounts receivable would be reported or included as a(n): -Addition to net income in the operating activities section. -Deduction from net income in the operating activities section. -Investing activity. -Financing activity.

Deduction from net income in the operating activities section.

Depreciation expense is added to net income in the statement of cash flows under the indirect method because: -Cash was received. -Cash was paid. -Depreciation expense reduced net income, but is a noncash item. -Depreciation is tax deductible.

Depreciation expense reduced net income, but is a noncash item.

The purchase of a long-term asset is classified in the statement of cash flows as a(n) -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Investing activity.

The purchase of an intangible asset is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Investing activity.

The sale of an intangible asset for cash is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Investing activity.

We can identify investing activities from additional information and changes in: -Current asset and current liability accounts. -Long-term asset accounts. -Long-term liability accounts. -Stockholders' equity accounts.

Long-term asset accounts.

We can identify financing activities from additional information and changes in: -Current asset and current liability accounts. -Long-term asset accounts. -Long-term liability and stockholders' equity accounts. -Stockholders' equity accounts only.

Long-term liability and stockholders' equity accounts.

Which of the following best describes the indirect method of preparing the operating activities section of the statement of cash flows? -Net income reconciled from accrual basis to cash basis. -A list of cash inflows and cash outflows from transactions involving the purchase and sale of long-term assets and current investments. -A list of cash inflows and cash outflows from transactions related to revenue and expense activities. -A list of cash inflows and cash outflows from transactions with lenders and stockholders.

Net income reconciled from accrual basis to cash basis.

The purchase of long-term assets by issuing common stock is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Noncash activity.

Which of the following is the correct sequence of presenting the activities in the statement of cash flows? -Investing activities, financing activities, operating activities. -Operating activities, investing activities, financing activities. -Operating activities, financing activities, investing activities. -Financing activities, investing activities, operating activities.

Operating activities, investing activities, financing activities.

The payment of semi-annual interest on outstanding bonds payable is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Operating activity

The purchase of inventory for cash is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Operating activity.

The sale of inventory to a customer for cash is classified in the statement of cash flows as a(n): -Operating activity. -Investing activity. -Financing activity. -Noncash activity.

Operating activity.

Which of the following is an example of a cash outflow from a financing activity? -Payment of interest. -Purchase of an intangible asset. -Payment of cash dividends. -Purchase of land.

Payment of cash dividends.

Which of the following is an example of a cash outflow from financing activities? -Payment of interest. -Payment of cash dividends. -Purchase of equipment. -Purchase of an investment.

Payment of cash dividends.

Which of the following is an example of a cash outflow from an investing activity? -Payment of interest. -Purchase of a building. -Payment of cash dividends. -Purchase of treasury stock.

Purchase of a building.

Which of the following is an example of a noncash activity? -Cash received from the sale of land for more than its cost. -Purchase of land by issuing common stock to the seller. -Cash received from the sale of land for less than its cost. -Purchase of land using cash proceeds from issuance of common stock.

Purchase of land by issuing common stock to the seller.

Which of the following is an example of a cash inflow from a financing activity? -Receipt of cash from the issuance of common stock. -Receipt of cash from the sale of equipment. -Receipt of cash from the collection of a note receivable. -Receipt of cash from the sale of inventory.

Receipt of cash from the issuance of common stock.

Which of the following is an example of a cash inflow from an investing activity? -Receipt of cash from the issuance of common stock. -Receipt of cash from the sale of equipment. -Receipt of cash from the issuance of a note payable. -Receipt of cash from the sale of inventory.

Receipt of cash from the sale of equipment.