Financial accounting Chapter 11

Norbert Company reports the following net cash in its statement of cash flows: net inflow from operating activities; $200; net outflow from investing activities: $220; net inflow from financing activities: $130. The current year beginning balance of cash was $80. The cash balance at the end of the year will be

$190

Sales on account are $200,000. Cash sales during the period are $50,000. Beginning accounts receivable is $20,000, and ending accounts receivable is $30,000. What is the total cash collected from customers during the period?

$240,000

Salary expense is $50,000 for the period. The beginning balance in salaries payable is $5,000, and the ending balance is $3,000. What is the amount of salaries paid during the period?

$52,000

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

$6,200 net outflow.

Which of the following is the best measure of a company's profitability?

Accrual-based net income

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?

Collection on account and interest received on notes receivable.

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows?

Payment of salaries and payment on account.

Which of the following are cash outflows from investing activities?

Purchase of available-for-sale securities and purchase of land.

Which of the following are cash outflows from investing activities?

Purchase of building, purchase of land, purchase of long-term investments.

When using the indirect method to prepare the operating activities section of the statement of cash flows, the first amount listed is the

net income.

The two acceptable methods for U.S. GAAP for preparing the statement of cash flows are

the direct method and the indirect method.

Sales of services for cash - Payment on account - Payment of salaries - Collection on account

Cash inflow - Cash outflow - Cash outflow - Cash inflow

Which of the following are cash outflows from financing activities?

Pay dividends, repay borrowing from bank.

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows?

Purchase of supplies, interest paid on bonds, and payment on account.

In preparing the operating activities section of a statement of cash flows using the indirect method, net income should be adjusted for

Depreciation expense, gain from sale of asset, and loss from sale of asset.

Net cash flows from investing activities represents the total inflows plus the total outflows of cash.

False.

In order to provide more complete information, U.S. GAAP allows that any significant noncash investing and financing activities may be reported

In the notes to financial statements and on the face of the statement of cash flows.

The __ method of preparing the statement of cash flows begins with net income.

Indirect

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?

Receipt of interest and collection from customers.

Which of the following are cash ouflows from financing activities?

Repayment of note payable and payment of dividends.

Cash flows from ___ activities are both outflows and inflows of cash caused by the acquisition and disposal of long-term assets.

Investing.

Which of the following are cash inflows from financing activities?

Borrowing from bank and issuance of common stock to investors.

Which of the following statements is correct regarding the information content of the income statement and the balance sheet?

Both provide information that helps forecast a company's ability to generate cash.

Which of the following statements best describes the reason depreciation expense is added to net income when preparing the statement of cas flows?

Depreciation expense originally reduced net income, but it is a noncash expense.

List the steps in preparing a statement of cash flows in the correct order

Determine the change in each balance sheet account, identify the cash flow category/categories to which each account relates, create schedules that summarize the operating, investing, and financing cash flows.

Which of the following describes the acceptable methods that may be used to prepare the statement of cash flows?

Direct method and indirect method.

The statement of cash flows provides information about the cash inflows and cash outflows of an entity. For financing activities, a cash __ occurs when cash is borrowed from a creditor, and a cash __ occurs when a loan is repaid.

Inflow, outflow.

The classifications on the statement of cash flows are cash flows from

Operating activities, financing activities, and investing activities.

Which is a significant noncash activity?

Signing a note payable in exchange for land.

How is the change in retained earnings accounted for in the statement of cash flows?

The change is accounted for by the addition of net income in operating activities and the subtraction of dividends in financing activities.

When cash from operating activities is presented using the indirect method, net income must be adjusted for increases and decreases in balance sheet accounts that relate to

amounts presented in the income statement.

The direct method for preparing the statement of cash flows ignores transactions that have no cash flow effect, such as

Depreciation.

The financial statement that provides information about cash receipts and cash disbursements for the period is the

statement of cash flows.

Under the indirect method of preparing the statement of cash flows, depreciation expense, and losses are added back to net income because they

were subtracted in deriving net income and do not require an outflow of cash.

Net cash flows from investing activities represents the difference between the __ and ___ of cash from investing activities.

inflows; outflows.

Issuing stock to owners is classified as a(n) __ activity

financing.

The payment of dividends and changes in the Dividends payable account are classified as

financing activities.

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

increase.

A decrease in accounts payable will result in a(n) ___ to net cash flow from operating activities.

outflow

Which of the following transactions would be classified as financing activities in the statement of cash flows?

payment of cash dividends and repayment of a long-term loan.