Chapter 11 - Accounting
Serenity, Inc.'s Receivable increased by $44,000 and its Accounts Payable increased by $29,000. What is the net effect on cash from operations under the indirect method?
-15,000 (-44,000 +29,000 = -15,000)
Vandalay Industries' Accounts Receivable decreased by $27,000 and its Accounts Payable decreased by $17,000. What is the net effect on cash from operations under the indirect method?
10,000 (27,000 - 17,000 = 10,000)
If $11,000 was generated from operations, $5,000 was used for investing activities and $6,000 was generated from financing activities, the cash balance must have increased by:
12,000 (11,000 - 5,000 + 6,000)
Dragonstone Corp. had net income of $32,000. Accounts Receivable increased by $3,000; accounts payable decreased by $4,000. Depreciation expense for the year was $1,400. Additional transactions include: the purchase of land in exchange for stock $55,000; the sale of treasury stock $3,500; issued bonds $3,000; acquired a building by issuing a note $79,000. Using the indirect method, the net increase (decrease) in cash for the year is:
32,900 (32,000 - 3,000 -4,000 +1,400 +3,500 +3,000)
Illeo Company's Accounts Receivable decreased by 23,000 and its accounts payable increased by 12,000. What is the net effect on cash from operations under the indirect method?
35,000 (23,000 + 12,000 =35,000)
Charmed, Inc. had net income of $53,000. Accounts Receivable increased by $28,000; inventory decreased by $18,000; accounts payable increased by $4,000 and salaries payable decreased by $1,200. The amount of cash flow from operating activities under the indirect method is:
45,800 (53,000 - 28,000 + 18,000 +4,000 -1,200)
Records for Salty's Seafood show net income of $35,000; depreciation expense of $11,000; and cash dividends paid of $4,000. The cash flow from operating activities on the cash flow statement using the indirect method is:
46,000 (35,000 +11,000)
Wolfe, Inc. reported net income of $53,000; depreciation expenses of $11,000; a gain on a land sale of $3,000; and a decrease in Accounts Receivable of $3,500. Under the indirect method, net Cash Flows from operations is:
64,500 (53,000 + 11,000 - 3,000 +3,500)
Dali Designs purchased a new studio for $75,000. Dali paid $29,000 as a cash down-payment and signed a long-term mortgage payable for the remainder. How would this transaction be reflected on the Statement of Cash Flows under the indirect method?
A 29,000 outflow of cash in the investing section
Pietro's Pizza purchased a new wood-burning pizza oven for $37,000. Pietro put $7,500 cash down and signed a long-term note for the balance. How would this transaction be reflected on the Statement of Cash Flows under the indirect method?
A 7,500 outflow of cash in the investing section
In the indirect method of Cash Flows, which of the following would be added to net income?
A decrease in Supplies
Under the indirect method of cash flow, which of the following adjustments would NOT be made to net income when computing cash from operating activities?
Add a decrease in Accounts Payable
Which of the following is NOT a part of investing activities?
Borrowing money
Which of the following is NOT a part of financing activities?
Buying land
Cash receipts from the sale of long-term assets, such as equipment and vehicles, are:
added to investing activities
Lannister, Inc. sold an asset with a book value of $54,000 for $90,000 cash. Which of the following is a TRUE statement?
Gain on sale equals $36,000 and Cash inflow equals $90,000
The Cash balance has decreased during the year. How would this affect the Statement of Cash Flows operations section under the indirect method?
It does not affect the cash flow from operations
The Prepaid Rent balance has decreased during the year. How would this affect the Statement of Cash Flows operations section under the indirect method?
It would be added back to net income
Evergreen, Inc. sold as asset with a book value of $58,000 for $31,000 cash. Which of the following is a TRUE statement?
Loss on sale equals 27,000 and Cash inflow equals 31,000
Which of the following activities is computed differently using the two methods of formatting a Statement of Cash Flows?
Operating activities
Which os the following is NOT a part of operating activities?
Paying dividends
The ____ is the financial statement associated with the operating, investing and financing activities of a corporation.
Statement of Cash Flows
Under the indirect method, which of the following is NOT a proper adjustment to net income under operating activities?
Subtracting an increase in interest payable
Changes in all current assets EXCEPT ____ are adjustments to net income in the operating section of an indirect cash flow statement.
cash
The accuracy of the Statement of Cash Flow can be verified by computing the change in the balance of the:
cash and cash equivalent accounts
Operating Cash Flows affect:
current assets and current liabilities
Operating activities are transactions and events associated with selling a product pr providing a service related to the:
revenues and expenses reported on the Income Statement
A statement of Cash Flows would NOT disclose:
stock dividends declared
The cost of purchasing long-term assets, such as buildings and land are:
subtracted from investing activities
Gains on the sale of long-term assets are:
subtracted from operating activities
Lionworks, Inc. sold a machine for $39,000, which represents a gain of $6,000. How would this transaction be reflected on the Statement of Cash Flows under the indirect method?
A subtraction of $6,000 from net income in the operating section and a cash inflow of $39,000 in the investing section
There was a loss on the sale of equipment. How would this affect the Statement of Cash?
It would be added back to net income
The sales tax payable balance has decreased during the year. How would this affect the Statement of Cash Flows operations section under the indirect method?
It would be subtracted from net income
There was a gain on the sale of investment property. How would this affect the Statement of Cash Flows operations section under the indirect method?
It would be subtracted from net income
When preparing the Statement of Cash Flows by the indirect method, if current liabilities increase, the difference is:
added to net income
Losses on the sale of long-term assets are:
added to operating activities
The cash flow statement is the communicating link between the:
cash reported on the Balance Sheet and the accrual based Income Statement
The purpose of the Statement of Cash Flows is to show:
how cash was received and used during the period
If 10,000 was generated from operations (indirect method); 1,000 was used for investing activities; and 8,000 was generated from financing activities, the cash balance:
increased by 17,000 (10,000 - 1,000 +8,000)
Investing Cash Flows affect:
long-term asset accounts
Financing activities affect:
long-term liabilities and equity accounts
The Statement of Cash Flows reports the sources and uses of cash from all of the following EXCEPT:
managerial activites
A company issues common stock to settle a debt, this would be classified as a:
noncash investing and financing activity
A transaction involving the exchange of stock for land would be classified as a:
noncash investing and financing activity
When comparing net cash provided by operations using the direct method versus indirect method, we find that:
there is no difference in the net cash between the two methods
The records of Venezia, Inc. showed a net loss of $30,000; depreciation expense of $24,000; and an increase in supplies on hand of $4,000. The amount of net cash flow from operating activities using the indirect method is:
(10,000) (-30,000 +24,000 -4,000)
Triple S Company's Accounts Receivable increased by $39,000 and their Account Payable decreased by $19,000. What is the net effect on cash from operations under the indirect method?
-$58,000 (-39,000 - 19,000)
Caesario Corporation's records show Accounts Receivable amounted to $205,000 at the beginning of the year and $240,000 at the end of the year. Income reported on the Income Statement for the year was $310,000. The cash flow from operating activities on the cash flow statement using the indirect method is:
275,000 (310,000 - (240,000 -205,000))
Vintage Boutique reported net income of $30,000; depreciation expenses of $19,000; an increase in Accounts Payable of $2,000; and an increase in current notes receivable $3,00. Net Cash Flows from operating activities under the indirect method is:
48,000 (30,000 + 19,000 +2,000 -3,000)
Syrio's Snowboards sold a piece of equipment for $22,000, which represents a loss of $5,500 on the equipment. How would this transaction be reflected on the Statement of Cash Flows under the indirect method?
An addition of $5,500 to net income in the operating section and a cash inflow of $22,000 in the investing section
Which would be subtracted from net income in the operating section of an indirect cash flow statement?
An decrease in inventory
Which would NOT be subtracted from net income in the operating section of an indirect cash flow statement?
An increase in Accounts Payable
Which would be added back to net income in the operating section of an indirect cash flow statement?
An increase in Depreciation Expense
