chap 16

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are: End Beginning Cash $50,000 $60,000 Accounts receivable 102,000 108,000 Inventories 88,000 93,000 Prepaid expenses 8,500 6,500 Accounts payable (merchandise creditors) 95,000 89,000

324,000

Operating expenses other than depreciation for the year were $300,000. Accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be

330,000

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

b. An increase in inventory

Which of the following should be shown on a statement of cash flows under the financing activity section?

b. Payment of cash dividends on common stock

On the statement of cash flows, the cash flows from operating activities section would include

b. cash payments for salaries.

If the free cash flow changed from $60,000 to $80,000, the change

b. indicates a favorable trend.

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

c. A loss on the sale of land

Which of the following should be shown on a statement of cash flows under the financing activity section?

c. Payment of cash dividends on common stock

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

increase in inventory

If the free cash flow changed from $60,000 to $80,000, the change

indicates a favorable trend

Income tax was $200,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the cash flow statement using the direct method is

190000

The net income reported on the income statement for the current year was $255,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

261,000

The net income reported on the income statement for the current year was $255,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $4,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

261000

Dora Inc. reported the following on the company's cash flow statement for 2016:

290000

Operating expenses other than depreciation for the year were $300,000. Accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be

330000

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

44,000

Sanchez Inc. reported the following on the company's cash flow statement for 2017: Net cash flow from operating activities $500,000 Net cash flow used for investing activities (200,000) Net cash flow from financing activities 150,000 Thirty percent of the cash flow used for investing activities was used to replace existing capacity. What is the free cash flow

440,000

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

44000

Sanchez Inc. reported the following on the company's cash flow statement for 2017:

440000

The following selected account balances appeared on the financial statements of Sanchez Company: Accounts Receivable, Jan. 1 $13,000 Accounts Receivable, Dec. 31 9,000 Accounts Payable, Jan 1 4,000 Accounts Payable, Dec. 31 7,000 Merchandise Inventory, Jan 1 10,000 Merchandise Inventory, Dec 31 15,000 Sales 62,000 Cost of Goods Sold 31,000 Sanchez Company uses the direct method to calculate net cash flow from operating activities. Cash received from customers is

66,000

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

a. A decrease in inventory

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

a. A loss on the sale of land

When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained earnings due to net loss would require an entry involving a

c. credit to Operating Activities—Net Loss.

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry involving a

c. debit to Operating Activities—Net Income.

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

d. a separate section that appears at the bottom of the statement.

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a

d. cash inflow in the investing activities section.

Which of the following is used in calculating cash received from customers using the direct method?

decrease in accounts receivable

Which of the following statements are true regarding free cash flow?

none