Chapter 16 Quiz

On the statement of cash flows, the Cash Flows from (used for) Operating Activities section would include a.cash received from customers b.cash received from the issuance of capital stock c.cash paid for the acquisition of investments d.cash received from the sale of investments

a. cash received from customers

The order of presentation of activities on the statement of cash flows is a.financing, investing, and operating b.operating, investing, and financing c.operating, financing, and investing d.financing, operating, and investing

b. operating, investing, and financing

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

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

Question Content Area 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

Which of the following would not be found in a schedule of noncash investing and financing activities reported at the bottom of a statement of cash flows? a.purchase of treasury stock for cash b.bonds payable exchanged for capital stock c.equipment acquired in exchange for a note payable d.capital stock issued to acquire fixed assets

a. purchase of treasury stock for cash

Accounts receivable from sales transactions were $48,117 at the beginning of the year and $68,598 at the end of the year. Net income reported on the income statement for the year was $121,038. 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.$121,038 b.$20,481 c.$100,557 d.$141,519

c. $100,557 Net Cash Flows from Operating Activities = Net Income - Increase in Accounts Receivable = $121,038 - ($68,598 - $48,117) = $100,557

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 equipment b.dividends declared and paid c.depreciation expense d.an increase in inventory

c. depreciation expense

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

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

The following information is available from the current period financial statements: Net income$109,046 Depreciation expense31,454 Increase in accounts receivable16,547 Decrease in accounts payable22,260 The net cash flows from operating activities using the indirect method is a.$179,307 b.$61,045 c.$83,305 d.$101,693

d. $101,693 109046 + 31454 - 16547 - 22260 = 101693

The cost of merchandise sold during the year was $45,881. Merchandise inventories were $12,343 and $8,958 at the beginning and end of the year, respectively. Accounts payable were $7,268 and $4,941 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash paid for merchandise during the year is a.$45,881 b.$7,268 c.$40,169 d.$44,823

d. $44,823 $45,881 - ($12,343 - $8,958) + ($7,268 - $4,941) = $45,881 - $3,385 + $2,327 = $44,823