Accounting Chapter 11 Videos:

Identify investing activities from the items given below. Select all that apply: -Collection of notes receivable -Sale of property -Issuance of bonds -Purchase of equipment -Receipt of interest -Receipt of dividends

-Collection of notes receivable -Sale of property -Purchase of equipment feedback: Collection of notes receivable, sale of property, and purchase of equipment are examples of investing activities. Issuance of bonds payable is an example of a financing activity. Receipt of interest and dividends are classified under the operating activities section of the statement of cash flows.

Identify financing activities from the items given below. Select all that apply: -Receipt of dividends -Lending with notes receivable -Issuance of notes payable -Collection of accounts receivable -Repayment of bonds -Payment of dividends

-Issuance of notes payable -Repayment of bonds -Payment of dividends feedback: Issuance of notes payable, repayment of bonds, and payment of dividends are examples of financing activities. Lending with notes receivable is an investing activity and collection of accounts receivable is an operating activity.

Wi-Fi, Inc., reported a net income of $50,000 for the current year. The beginning and ending balances for Retained Earnings for the year are $100,000 and $130,000 respectively. How much did Wi-Fi pay as dividends for the year? A. $20,000 B. $50,000 C. $30,000 D. $10,000

A. $20,000 feedback: Because net income is $50,000 and retained earnings increased by only $30,000, the company must have paid dividends of $20,000 during the year. The balance of Retained Earnings increases with net income and decreases with dividends.

Which of the following is subtracted from net income in creating the statement of cash flows? A. Decrease in a current liability B. Loss on sale of assets C. Decrease in a current asset D. Depreciation expense

A. Decrease in a current liability feedback: A decrease in a current liability is subtracted from net income. We need to adjust for an item that decreases operating cash flows.

We report cash proceeds from the sale of land in the investing activities section of the statement of cash flows. A. True B. False

A. True feedback: Correct. We report cash proceeds from the sale of land in the investing activities section of the statement of cash flows. Note that land is a long-term asset.

Net income includes both cash and noncash components. A. True B. False

A. True feedback: Net income includes both cash and noncash components. The income statement reports net income on an accrual basis.

The total net cash flows from operating activities are identical under both the indirect and direct methods. A. True B. False

A. True feedback: The total net cash flows from operating activities are identical under both methods. Note that the two methods differ only in presentation formats.

We determine the net cash flows from investing activities by analyzing changes in _____ accounts from the balance sheet. A. long-term asset B. current asset and current liability C. stockholders' equity D. long-term liability

A. long-term asset feedback: We determine the net cash flows from investing activities by analyzing changes in long-term asset accounts from the balance sheet.

The indirect method and the direct method affect only the ______ section of the statement of cash flows. A. operating activities B. financing activities C. investing activities D. noncash activities

A. operating activities feedback: Correct. The indirect method and the direct method differ only in the presentation format for preparing the operating activities section of the statement of cash flows.

Depreciation expense is __________________ net income to calculate operating cash flows.

Added To feedback: Depreciation expense is added to net income to calculate operating cash flows.

A company reported a loss on the sale of a parcel of land. This loss is ___________ net income to calculate operating cash flows.

Added To feedback: The loss on sale of land is added to net income to calculate operating cash flows.

Both dividends paid and dividends declared during the year are reported in the statement of cash flows. A. True B. False

B. False feedback: Only the dividends actually paid in cash during the year are reported in the statement of cash flows. Note that the statement of cash flows reflects only actual cash flows.

The statement of cash flows reports business activities on an accrual basis. A. True B. False

B. False feedback: The statement of cash flows reports activities on a cash basis—revenues when we receive cash, and expenses when we pay cash Think about the purpose of creating the statement of cash flows.

We determine the net cash flows from _____, by analyzing changes in long-term asset accounts from the balance sheet. A. financing activities B. investing activities C. noncash activities D. operating activities

B. Investing activities feedback: Correct. We determine the net cash flows from investing activities by analyzing changes in long-term asset accounts from the balance sheet.

Which of the following is an example of a noncash activity? A. Purchase of investments with cash B. Reacquisition of a company's own stock from the market C. Purchase of long-term assets by issuing debt D. Sale of an intangible asset

C. Purchase of long-term assets by issuing debt feedback: Purchase of long-term assets by issuing debt is an example of a noncash activity Look for a transaction that does not increase or decrease cash.

We can find a firm's _____ activities by examining changes in long-term liabilities and stockholders' equity accounts from the balance sheet. A. operating B. investing C. financing

C. financing feedback: We can find a firm's financing activities by examining changes in long-term liabilities and stockholders' equity accounts from the balance sheet. Try identifying the use of long-term liabilities and stockholders' equity accounts.

Net cash flows from operating activities uses information from all of the following sources, except _____. A. income statement B. current assets section of the balance sheet C. stockholders' equity section of the balance sheet D. current liabilities section of the balance sheet

C. stockholders' equity section of the balance sheet feedback: Think of a section in the balance sheet where you will find information relating to operating activities. Net cash flows from operating activities uses information from the income statement and changes in current assets (other than cash) and current liabilities from the balance sheet.

A company sold its shares in another company for $50,000. It had purchased these shares a few years back for $70,000. The $50,000 cash inflow is reported in the_____________ section of the statement of cash flows.

Investing feedback: Note that this is the cash inflow from the sale of a long-term asset.

Decreases in taxes payable are ________________ net income to calculate operating cash flows.

Subtracted From feedback: Decreases in taxes payable are subtracted from net income to calculate operating cash flows.

An increase in inventory is_____________ net income to calculate operating cash flows.

Subtracted From feedback: Think about the treatment for an increase in a current asset.