Chapter 16

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Financing activities include a. acquiring investments b. issuing debt c. acquiring long-lived assets d. lending money

b. issuing debt

Nadal Corporation's accumulated depreciation—furniture account increased by $17,720, while $3,800 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $5,200 from the sale of land. Reconcile a net income of $343,700 to net cash flows from operating activities.

$370,420

Which of the following would not be classified as an operating activity? a. interest expense b. selling expenses c. payment of dividends d. income taxes

c. payment of dividends

Which of the following is not one of the four basic financial statements? a. income statement b. balance sheet c. statement of changes in financial position d. statement of cash flows

c. statement of changes in financial position

Cash paid to purchase long-term investments would be reported on the statement of cash flows in a. the Cash Flows from (used for) Financing Activities section b. the Cash Flows from (used for) Operating Activities section c. a separate section of noncash investing and financing activities d. the Cash Flows from (used for) Investing Activities section

d. the Cash Flows from (used for) Investing Activities section

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports a. net cash flows from investing activities b. the net increase or decrease in cash c. net cash flows from financing activities d. cash at the end of the period

d. cash at the end of the period

Which of the following can be found on the statement of cash flows? a. total assets b. changes in retained earnings c. total changes in stockholders' equity d. cash flows from operating activities

d. cash flows from operating activities

The statement of cash flows is not useful for a. determining a company's ability to pay its debts b. planning future investing and financing activities c. determining a company's ability to pay dividends d. computing the net worth of a company

d. computing the net worth of a company

Cash paid for preferred stock dividends should be shown on the statement of cash flows under a. noncash investing and financing activities b. operating activities c. investing activities d. financing activities

d. financing activities

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would a. decrease by $7,000 b. decrease by $27,000 c. increase by $55,000 d. increase by $48,000

d. increase by $48,000

Cash flow per share is a. required to be reported on the balance sheet b. required to be reported on the statement of cash flows c. required to be reported on the income statement d. not required to be reported on any statement

d. not required to be reported on any statement

Cash paid for equipment would be reported on the statement of cash flows in a. a separate section of noncash investing and financing activities b. the Cash Flows from (used for) Financing Activities section c. the Cash Flows from (used for) Operating Activities section d. the Cash Flows from (used for) Investing Activities section

d. the Cash Flows from (used for) Investing Activities section

Eastlund Corporation's accumulated depreciation—equipment account increased by $6,320, while $2,450 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $13,510 from the sale of investments. Reconcile a net income of $126,300 to net cash flows from operating activities.

$121,560

A corporation uses the indirect method of preparing the statement of cash flows. A fixed asset has been sold for $25,000, representing a gain of $4,500. The value of this transaction appearing in the operating activities section of the statement of cash flows is a. $(4,500) b. $29,500 c. $25,000 d. $4,500

a. $(4,500)

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports a. cash at the end of the period b. net cash flows from financing activities c. the net increase or decrease in cash d. net cash flows from investing activities

a. cash at the end of the period

On the statement of cash flows prepared using the indirect method, a $7,500 gain on the sale of fixed assets would be a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities b. added to net income in converting the net income reported on the income statement to cash flows from operating activities c. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends d. added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the investing activities section of the statement of cash flows is a. $55,000 b. $66,000 c. $11,000 d. $44,000

b. $66,000

Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method would be a. $105,000 b. $92,000 c. $169,000 d. $118,000

b. $92,000

Which of the following would not be on the statement of cash flows? a. cash flows from financing activities b. cash flows from contingent activities c. cash flows from investing activities d. cash flows from operating activities

b. cash flows from contingent activities

On the statement of cash flows, the operating activities section would include a. cash paid for cash dividends b. cash paid for interest on short-term notes payable c. cash paid for the purchase of investments d. cash received from the issuance of common stock

b. cash paid for interest on short-term notes payable

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash? a. payment of cash dividends b. discarding an asset that had been fully depreciated c. purchase of treasury stock d. purchase of noncurrent assets

b. discarding an asset that had been fully depreciated

If accounts payable have increased during a period, a. expenses on an accrual basis are the same as expenses on a cash basis b. expenses on an accrual basis are greater than expenses on a cash basis c. revenues on an accrual basis are less than revenues on a cash basis d. expenses on an accrual basis are less than expenses on a cash basis

b. expenses on an accrual basis are greater than expenses on a cash basis

Firefly Inc. sold land for $225,000 cash. The land had been purchased 5 years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land? a. $275,000 b. $500,000 c. $225,000 d. $50,000

c. $225,000

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash paid for dividends during the year is a. $50,000 b. $55,000 c. $40,000 d. $35,000

c. $40,000

Which of the following would not be on the statement of cash flows? a. cash flows from operating activities b. cash flows from investing activities c. cash flows from contingent activities d. cash flows from financing activities

c. cash flows from contingent activities

A corporation uses the indirect method of preparing the statement of cash flows. A fixed asset has been sold for $25,000, representing a gain of $4,500. The value of this transaction appearing in the operating activities section of the statement of cash flows is a. $4,500 b. $29,500 c. $25,000 d. $(4,500)

d. $(4,500)

Firefly Inc. sold land for $225,000 cash. The land had been purchased 5 years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land? a. $50,000 b. $500,000 c. $275,000 d. $225,000

d. $225,000

Which of the following should be added to net income in computing net cash flows from operating activities using the indirect method? a. a decrease in accounts payable b. an increase in inventory c. preferred dividends declared and paid d. a decrease in accounts receivable

d. a decrease in accounts receivable

Which of the following should be added to net income in computing net cash flows from operating activities using the indirect method? a. a gain on the sale of land b. dividends paid on common stock c. a decrease in accounts payable d. an increase in accrued liabilities

d. an increase in accrued liabilities

Which of the following should be added to net income in computing net cash flows from operating activities using the indirect method? a. dividends paid on common stock b. a decrease in accounts payable c. a gain on the sale of land d. an increase in accrued liabilities

d. an increase in accrued liabilities

On the statement of cash flows prepared using the indirect method, a $7,500 gain on the sale of fixed assets would be a. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends b. added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends c. added to net income in converting the net income reported on the income statement to cash flows from operating activities d. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

d. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

If accounts payable have increased during a period, a. expenses on an accrual basis are the same as expenses on a cash basis b. revenues on an accrual basis are less than revenues on a cash basis c. expenses on an accrual basis are less than expenses on a cash basis d. expenses on an accrual basis are greater than expenses on a cash basis

d. expenses on an accrual basis are greater than expenses on a cash basis

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the investing activities section of the statement of cash flows is a. $66,000 b. $11,000 c. $44,000 d. $55,000

a. $66,000

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash? a. discarding an asset that had been fully depreciated b. payment of cash dividends c. purchase of noncurrent assets d. purchase of treasury stock

a. discarding an asset that had been fully depreciated

Changes in current assets and current liabilities are reported on the statement of cash flows, using the indirect method, in the a. operating activities section b. separate section of noncash investing and financing activities c. financing activities section d. investing activities section

a. operating activities section

Financing activities include a. acquiring long-lived assets b. issuing debt c. lending money d. acquiring investments

b. issuing debt

Which of the following types of transactions would be reported as a cash flows from (used for) investing activity on the statement of cash flows? a. issuance of capital stock b. purchase of noncurrent assets c. issuance of bonds payable d. purchase of treasury stock

b. purchase of noncurrent assets

Cash paid to purchase long-term investments would be reported on the statement of cash flows in a. the Cash Flows from (used for) Financing Activities section b. the Cash Flows from (used for) Investing Activities section c. the Cash Flows from (used for) Operating Activities section d. a separate section of noncash investing and financing activities

b. the Cash Flows from (used for) Investing Activities section

Which of the following should be shown on a statement of cash flows under the financing activities section? a. the proceeds from the sale of a building b. the payment of cash to retire a long-term note c. the purchase of a long-term investment in the common stock of another company d. the issuance of a long-term note to acquire land

b. the payment of cash to retire a long-term note

Preferred stock issued in exchange for land would be reported on the statement of cash flows in a. the Cash Flows from (used for) Financing Activities section b. the Cash Flows from (used for) Investing Activities section c. a separate section of noncash investing and financing activities, usually at the bottom of the statement d. the Cash Flows from (used for) Operating Activities section

c. a separate section of noncash investing and financing activities, usually at the bottom of the statement

Preferred stock issued in exchange for land would be reported on the statement of cash flows in a. the Cash Flows from (used for) Investing Activities section b. the Cash Flows from (used for) Operating Activities section c. a separate section of noncash investing and financing activities, usually at the bottom of the statement d. the Cash Flows from (used for) Financing Activities section

c. a separate section of noncash investing and financing activities, usually at the bottom of the statement

Which of the following can be found on the statement of cash flows? a. total changes in stockholders' equity b. changes in retained earnings c. cash flows from operating activities d. total assets

c. cash flows from operating activities

The statement of cash flows is not useful for a. planning future investing and financing activities b. determining a company's ability to pay its debts c. computing the net worth of a company d. determining a company's ability to pay dividends

c. computing the net worth of a company

Cash paid for preferred stock dividends should be shown on the statement of cash flows under a. noncash investing and financing activities b. operating activities c. financing activities d. investing activities

c. financing activities

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would a. decrease by $7,000 b. increase by $55,000 c. increase by $48,000 d. decrease by $27,000

c. increase by $48,000

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows? a. retirement of bond payable b. declaration of stock dividends c. issuance of long-term debt d. acquisition of treasury stock

c. issuance of long-term debt

Cash flow per share is a. required to be reported on the statement of cash flows b. required to be reported on the balance sheet c. not required to be reported on any statement d. required to be reported on the income statement

c. not required to be reported on any statement

Changes in current assets and current liabilities are reported on the statement of cash flows, using the indirect method, in the a. financing activities section b. investing activities section c. operating activities section d. separate section of noncash investing and financing activities

c. operating activities section

Cash paid for equipment would be reported on the statement of cash flows in a. the Cash Flows from (used for) Financing Activities section b. a separate section of noncash investing and financing activities c. the Cash Flows from (used for) Operating Activities section d. the Cash Flows from (used for) Investing Activities section

d. the Cash Flows from (used for) Investing Activities section

Which of the following should be shown on a statement of cash flows under the financing activities section? a. the proceeds from the sale of a building b. the purchase of a long-term investment in the common stock of another company c. the issuance of a long-term note to acquire land d. the payment of cash to retire a long-term note

d. the payment of cash to retire a long-term note


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