Acc chapter 11 msu kirn

If cash received from the sale of equipment is $60,000, cash paid to purchase equipment is $50,000, cash received from the sale of investments is $45,000, gain on the sale of equipment is $90,000, net income is $100,000, the accounts receivable account balance is $5,000, and the investment account balance is $20,000, the net cash provided by investing activities is

a.$100,000. b.$145,000. c.$55,000. d.$35,000. Answer C

If cash received from issuing notes payable is $60,000, cash paid for dividends is $150,000, cash received from issuing common stock is $45,000, cash received from selling equipment is $90,000, gain on the sale of equipment is $40,000, net income is $100,000, the accounts receivable account balance is $5,000, and the investment account balance is $20,000, the net cash provided by/used in financing activities is

a.$160,000 provided by investing activities. b.$45,000 provided by investing activities. c.$160,000 used in investing activities. d.$45,000 used in investing activities Answer D

If cash paid for dividends is $50,000, capital expenditures are $250,000, cash received from selling equipment is $90,000, net income is $100,000, sales are $500,000, the decrease in accounts receivable is $50,000, the investment account balance is $20,000, and the net cash flow from operating activities is $500,000, the cash collected from customers is

a.$500,000. b.$450,000. c.$550,000. d.$700,000. Answer C

If net income is $100,000, the change in accounts receivable is a $5,000 decrease, and the change in accounts payable is a $7,000 decrease, what is the net cash provided by operating activities?

a.$98,000 b.$112,000 c.$88,000 d.$102,000 Answer A

How is cash paid to suppliers calculated using the direct method to prepare the cash flows from operating activities section?

a.(Depreciation Expense + Increases in Inventory or - Decreases in Inventory) + (Decreases in Accounts Payable or - Increases in Accounts Payable) b.(+ Decreases in Inventory or - Increases in Inventory) + (Decreases in Accounts Payable or - Increases in Accounts Payable) c.(Cash Paid for Interest + Increases in Inventory or - Decreases in Inventory) + (Decreases in Accounts Payable or - Increases in Accounts Payable) d.(+ Increases in Inventory or - Decreases in Inventory) + (Decreases in Accounts Payable or - Increases in Accounts Payable) Answer D

If cash received from issuing notes payable is $160,000, cash paid for dividends is $50,000, capital expenditures are $45,000, average amount of debt maturing over the next 5 years is $155,000, gain on the sale of equipment is $40,000, net income is $100,000, the accounts receivable account balance is $5,000, the investment account balance is $20,000, the net cash flow from operating activities is $250,000, and the free cash flow is $90,000, the cash flow adequacy is

a.90%. b.177% c.58%. d.172% Answer C

Step 1 in analyzing investing activities is

a.Analyze the account using all available information to make sure the account activity has been completely explained. b.Record the cash flows as inflows or outflows of cash in the investing activities section. c.Analyze the cash account. d.Recreate the journal entries to describe the activities that took place during the period. Answer D

Occasionally, investing and financing activities take place without affecting cash. Which of the following statements about noncash investing and financing activities is NOT true?

a.Any significant noncash investing and financing activities are required to be reported in a supplementary schedule. b.These transactions provide useful information about a company's overall investing and financing activities. c.The disclosure treatment of information about significant noncash investing and financing activities is consistent with the matching principle. d.Because these activities do not involve cash, they are not reported on the statement of cash flows. answer C

By highlighting the differences between cash flows and net income, financial statement users may be able to more easily see attempts at earnings management. What is one way that managers try to manage earnings?

a.By manipulating the accrual accounting process b.By using the indirect method for reporting the changes in cash inflows and outflows c.By reporting all of the noncash financing and investing activities in a separate statement d.By using the cash basis of accounting Answer A

The cash flow effects of changes in long-term liabilities and equity are reported as financing cash flows. Which of the following activities is NOT used to compute the net cash flow from financing activities?

a.Cash received from issuing common stock b.Cash received from issuing a note payable c.Cash received from the sale of investments d.Cash paid to retire principal on a note payable Answer C

Which of the following would you expect to see in the cash flows from operating activities section that has been prepared using the direct method?

a.Depreciation expense b.Bad debt expense c.Cash paid for interest d.Net income Answer C

One of the most important insights gained from an analysis of the statement of cash flows is how long it will take to recover the cash outflow associated with long-term uses of cash. Which of the following is NOT a long-term use of cash?

a.Investment in equipment b.Investment in land c.Purchasing inventory for resale d.Investment in buildings Answer C

Under the indirect method, which of the following is a correct adjustment needed in the operating activities section of the statement of cash flows?

a.Noncash expenses are added to net income. b.Losses are subtracted from net income. c.Increases in current assets are added to net income. d.All of these choices are correct. answer A

Which of the following is the third step in constructing a spreadsheet?

a.Prepare the statement of cash flows. b.Analyze each change in the balance sheet accounts in terms of debits and credits. c.Prepare a trial balance. d.Construct five columns. Answer A

In addition to being interested in the information in the accrual-basis financial statements, most financial statement users also want to know about the amount and timing of cash flow. Which of the following financial statements provides information about the company's cash receipts and cash payments?

a.Statement of retained earnings b.Balance sheet c.Statement of cash flows d.Income statement answer C

When determining cash flows from investing activities, which of the following types of balance sheet accounts would be analyzed?

a.Stockholders' equity b.Current assets and current liabilities c.Long-term liabilities d.Fixed assets Answer D

The financing activities section of the statement of cash flow identifies cash inflows that produce either long-term debt or equity. Which of the following financing activities produces equity?

a.The sale of 10% bonds b.The sale of common stock c.The receipt of dividends d.The sale of inventory Answer B

Cash flows from financing activities do NOT include

a.cash outflows for repaying the principal amount borrowed on notes. b.cash inflows from the issuance of company stock. c.cash outflows for the payment of dividends. d.cash inflows from the sale of long-term investments answer D

Many financial statement users question the usefulness of reported income because it

a.is based on judgments and estimates involved in accrual accounting. b.cannot ensure an increase in revenues year after year. c.cannot help control costs. d.cannot ensure future profitability. answer A

Step 3 in preparing a statement of cash flows is compute the

a.net cash flow from financing activities. b.net cash flow from increases in common stock. c.change in cash for the period. d.net cash flow from operating activities answer A

Financial statement users will rely on summary cash flow measures to help them make assessments of trends in cash inflows and cash outflows. Free cash flow equals

a.net cash flow from investing activities less capital expenditures less cash paid for dividends. b.net cash flow from operating activities less capital expenditures less cash paid for dividends. c.net cash flow from financing activities less capital expenditures less cash paid for interest. d.net cash flow from operating activities less capital expenditures less cash paid for interest. Answer B

Decreases in cash result from all of the following EXCEPT

a.payment of dividends. b.decreases in accounts receivable. c.a decrease in common stock. d.decreases in liabilities answer B

Using a spreadsheet to construct the statement of cash flows

a.provides a means for preparing the trial balance. b.provides a means of systematically analyzing the changes in the balance sheet amounts and income statement information to prepare the statement. c.makes the preparation of the statement more difficult. d.provides a means to skip most steps in preparing the statement of cash flows Answer B