acc chapter 12 questions

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

b. payment for interest on short-term notes payable

When using the indirect method to prepare the operating activities section of the statement of cash flows, how is a decrease in accounts payable handled? A. It is subtracted from net income in the cash flows from operating activities section. B. It is subtracted from current assets in the cash flows from financing activities section. C. It is added to net income in the cash flows from operating activities section. D. It is added to inventory purchases in the cash flows from investing activities section.

A. It is subtracted from net income in the cash flows from operating activities section.

On August 1, Year 1, Deacon Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Tarheel Bank. Deacon accrues interest expense on December 31, Year 1, its calendar year-end. What is the cash flow from financing activities that will be reported during the year ending December 31, Year 1? A. $0 B. $80,000 inflow C. $83,000 inflow D. ($87,200) outflow

B. $80,000 inflow

Under the indirect method, which of the following items would be added to net income to determine the cash flow from operating activities? A. Gain on the sale of equipment B. Depreciation expense C. Increase in interest receivable D. Decrease in accounts payable

B. Depreciation expense

The financial statements of Gregg Co. reported wages expense of $160,000 during Year 2, wages payable of $16,000 at the beginning of Year 2, and wages payable of $22,000 at the end of Year 2. What amount of cash was paid for wages during Year 2? A. $176,000 B. $160,000 C. $154,000 D. $144,000

C. $154,000

Which of the following items would be classified as a cash flow from investing activities? 1) Issue common stock for cash 2) Payment on principal of note payable 3) Payment of dividends 4) Sale of equipment for cash A. 1 and 4 B. 3 only C. 4 only D. 1, 2, 3, and 4

C. 4 only

Deacon Corporation's balance sheet reports equipment that originally cost $65,000. The accumulated depreciation for the equipment is $25,000. Warren sells the equipment for $37,000. What would the effect be on its Income Statement (Gain/Loss) and Statement of Cash Flows (+/- in Cash Flow Operating, Investing or Financing)? A. Income Statement Gain of $37,000; Cash Flow Investing Activities + $37,000 B. Income Statement Gain of $3,000; Cash Flow Operating Activities − $3,000 C. Income Statement Loss of $3,000; Cash Flow Operating Activities − $3,000 D. Income Statement Loss of $3,000; Cash Flow Investing Activities + $37,000

D. Income Statement Loss of $3,000; Cash Flow Investing Activities + $37,000

How would the issuance of a $120,000 mortgage note payable in exchange for a building be reported on the statement of cash flows? A. Financing activity B. Investing activity C. Financing activity D. Noncash financing and investing activity E. Investing and Financing Activities

D. Noncash financing and investing activity

Firefly Inc. sold land for $225,000 cash. The land had been purchased five 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. $225,000 b. $275,000 c. $50,000 d. $500,000

a. $225,000

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Cash dividends declared for the year $40,000 Cash dividends payable at the beginning of the year $17,000 Cash dividends payable at the end of the year $13,000 The amount of cash paid for dividends was: a. $44,000. b. $40,000. c. $57,000. d. $53,000. e. $36,000.

a. $44,000.

Net income for the year was $45,500. Accounts receivable increased $5,500, and accounts payable increased by $11,200. Under the indirect method, the cash flow from operations is a. $51,200 b. $45,500 c. $62,200 d. $28,800

a. $51,200 RATIONALE: Cash flows from operations = Net income - Increase in accounts receivable + Increase in accounts payable = $45,500 - $5,500 + $11,200 = $51,200​

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities: Net income $182,000 Gain on the sale of equipment 12,300 Proceeds from the sale of equipment 92,300 Depreciation expense - equipment 50,000 Payment of bonds at maturity 100,000 Purchase of land 200,000 Issuance of common stock 300,000 Increase in merchandise inventory 35,400 Decrease in accounts receivable 28,800 Increase in accounts payable 23,700 Payment of cash dividends 32,000 a. ($107,700). b. $107,700. c. ($200,000). d. ($139,700). e. ($207,700).

a. ($107,700).

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

a. operating activities

Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is a. $120,000 b. $129,000 c. $151,000 d. $111,000

b. $129,000 RATIONALE: Cash flows from operations = Net income + Decrease in accounts receivable = $120,000 + ($40,000 - $31,000) = $129,000​

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 for the payment of dividends during the year is a. $50,000 b. $40,000 c. $55,000 d. $35,000

b. $40,000 RATIONALE: Cash payment of dividends = Dividends payable at the beginning of the year + Dividends declared during the year - Dividends payable at the end of the year = $10,000 + $45,000 - $15,000 = $40,000​

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is a. added to net income b. deducted from net income c. ignored because it does not affect cash d. reported supplementally as a noncash investing and financing activity

b. deducted from net income

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income $86,900 Depreciation expense 13,600 Gain on sale of land 6,700 Increase in merchandise inventory 3,650 Increase in accounts payable 7,750 a. $17,100. b. $31,600. c. $97,900. d. $38,300. e. $16,200.

c. $97,900.

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

On the statement of cash flows, the cash flows from financing activities section would include all of the following except a. receipts from the sale of bonds payable b. payments for dividends c. payments for purchase of treasury stock d. payments of interest on bonds payabled.

d. payments of interest on bonds payabled.

On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include a. receipts from the sale of investments b. amortization of premium on bonds payable c. payments for cash dividends d. receipts from the issuance of capital stock

b. amortization of premium on bonds payable