ACCT 301 MC questions

Alex Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2021, Alex Company reports the following activity: Sales on account$2100000Cash sales1110000Decrease in accounts receivable915000Increase in accounts payable108000Increase in inventory72000Cost of goods sold1575000 What is the amount of cash payments to suppliers reported by Alex Company for the year ended December 31, 2021?

$1575000 - $108000 + $72000 = $1539000.

Spruce Pine Co. provided the following information on selected transactions during 2017: Repayment of bond principal$450,000Proceeds from issuing common stock760,000Purchases of inventory940,000Proceeds from the sale of treasury stock120,000Purchase of 10% interest in stock of Hindi Corp.220,000Dividends paid to common & preferred stockholders80,000Proceeds from issuing preferred stock150,000Proceeds from sale of land380,000 The net cash provided (used) by investing activities during 2017 is

$160,000. Proceeds from sale of land, $380,000 less Purchase of 10% interest in stock of Hindi Corp., $220,000 = $160,000.

Alex Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2021, Alex Company reports the following activity: Sales on account$2100000Cash sales1110000Decrease in accounts receivable915000Increase in accounts payable108000Increase in inventory72000Cost of good sold1575000 What is the amount of cash collections from customers reported by Alex Company for the year ended December 31, 2021?

$2100000 + $1110000 + $915000 = $4125000.

Selected information from Dinkel Company's 2021 accounting records is as follows: Proceeds from issuance of common stock$ 800000 Proceeds from issuance of bonds2400000 Cash dividends on common stock paid290000 Cash dividends on preferred stock paid120000 Purchases of treasury stock240000 Sale of stock to officers and employees not included above200000 Dinkel's statement of cash flows for the year ended December 31, 2021, would show net cash provided (used) by financing activities of

$2750000.

Abbott Co. is preparing its Statement of Cash Flows for the year. Abbott's cash disbursements during the year included the following: Payment of interest on bonds payable$500,000Payment of dividends to stockholders$300,000Payment to acquire 1,000 shares of Marks Co. common stock$100,000 What should Abbott report as total cash outflows for financing activities in its Statement of Cash Flows?

$300,000 Dividends paid to shareholders are a financing activity. The payment of interest on bonds is an operating activity, and payments to acquire shares of Marks Co. stock are investing activities.

Lindsay Corporation had net income for 2021 of $3000000. Additional information is as follows: Depreciation of plant assets$1200000Amortization of intangibles240000Increase in accounts receivable420000Increase in accounts payable540000 Lindsay's net cash provided by operating activities for 2021 was

$3000000 + $1200000 + $240000 - $420000 + $540000 = $4560000.

During 2021, Greta Company earned net income of $262000 which included depreciation expense of $39000. In addition, the company experienced the following changes in the account balances listed below: Decreases Accounts receivable$ 6000 Prepaid expenses 16500 Accrued liabilities 12000 increases Accounts payable$22500 Inventory18000 Based upon this information what amount will be shown for net cash provided by operating activities for 2021?

$316000. $262000 + $39000 + $22500 - $18000 + $6000 + $16500 - $12000 = $316000.

In preparing Titan Inc.'s statement of cash flows for the year ended December 31, 2021, the following amounts were available: Collect note receivable$615000Issue bonds payable639000Purchase treasury stock300000 What amount should be reported on Titan Inc.'s statement of cash flows for financing activities?

$339000

Donnegan Company reported operating expenses of $375000 for 2021. The following data were extracted from the company's financial records: 12/31/2012/31/21Prepaid Expenses$ 60000$69000Accrued Expenses210000255000 On a statement of cash flows for 2021, using the direct method, cash payments for operating expenses should be

$339000.

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual based selling and administrative expenses to the cash basis?

Deducted From, Added To

Dee's inventory and accounts payable balances at December 31, Year 2, increased over their December 31, Year 1, balances. Should these increases be added to or deducted from cash payments to suppliers to arrive at Year 2 cost of goods sold?

Deducted from, Added to

When preparing a statement of cash flows, an increase in accounts payable during a period would require which of the following adjustments in determining cash flows from operating activities?

Increase, Decrease

Which method adjusts net income for items that affected reported net income but did not affect cash?

Indirect.

Which method adjusts net income to net cash flows from operating activities?

Indirect.

If a plant asset is sold for cash and a loss results, which sections are affected in the statement of cash flows under the indirect method?

Operating and investing.

Which of the following transactions should be classified as investing activities on an entity's statement of cash flows?

Sale of property, plant, and equipment

Under the direct method of preparing the statement of cash flows, cash receipts from customers is equal to:

Sales revenues - Increase in accounts receivable.

A company's accounts receivable decreased from the beginning to the end of the year. In the company's statement of cash flows (operating activities shown using direct approach), the cash collected from customers would be

Sales revenues plus the decrease in accounts receivable from the beginning to the end of the year.

How should significant noncash transactions be reported in the statement of cash flows?

These noncash transactions are not to be incorporated in the statement of cash flows. They may be summarized in a separate schedule at the bottom of the statement or appear in a separate supplementary schedule to the financials.

Acquiring land and a building by issuing common stock would be reported as:

a noncash investing and financing activity.

Ranger Co. provided the following information on selected transactions during 2017: Repayment of bond principal$450,000Proceeds from issuing common stock760,000Purchases of inventory940,000Proceeds from the sale of treasury stock120,000Purchase of 10% interest in stock of Hanoi Corp.320,000Dividends paid to common & preferred stockholders100,000Proceeds from issuing preferred stock150,000Proceeds from sale of land280,000 The net cash provided (used) by financing activities during 2017 is

$480,000. Proceeds from issuing common stock, $760,000 + Proceeds from the sale of treasury stock, $120,000 - Dividends paid to common & preferred stockholders, $100,000 + Proceeds from issuing preferred stock, $150,000 - Repayment of bond principal, $450,000 = $480,000

Jarvis, Inc. reported net income of $59000 for the year ended December 31, 2021 Included in net income were depreciation expense of $8400 and a gain on sale of equipment of $1700. Each of the following accounts increased during 2021: Accounts receivable$2200Inventory$4500Prepaid rent$6800Available-for-sale securities$1000Accounts payable$5000 What is the amount of cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2021?

$57200. $59000 + $8400 - $1700 - $2200 - $4500 - $6800 + $5000 = $57200.

During 2021, Orton Company earned net income of $494000 which included depreciation expense of $78000. In addition, the company experienced the following changes in the account balances listed below: Increases Accounts payable$45000 $12000Inventory Decreases Accounts receivable36000 Accrued liabilities24000 Prepaid insurance33000 Based upon this information what amount will be shown for net cash provided by operating activities for 2021?

$602000 $494000 + $78000 + $45000 - $36000 + $12000 - $24000 + $33000 = $602000.

In preparing Titan Inc.'s statement of cash flows for the year ended December 31, 2021, the following amounts were available: Collect note receivable$615000Issue bonds payable639000Purchase treasury stock300000 What amount should be reported on Titan Inc.'s statement of cash flows for investing activities?

$615000

The following information was taken from the 2021 financial statements of Jenny Gardner Corporation: Inventory, January 1, 2021$ 180000Inventory, December 31, 2021240000Accounts payable, January 1, 2021150000Accounts payable, December 31, 2021240000Sales revenue1200000Cost of goods sold800000 If the direct method is used in the 2021 statement of cash flows, what amount should Jenny Gardner report as cash payments to suppliers?

$800000 + ($240000 - $180000) - ($240000 - $150000) = $770000

The following information on selected cash transactions for 2021 has been provided by Mancuso Company: Proceeds from sale of land$315000 Proceeds from long-term borrowings600000 Purchases of plant assets216000 Purchases of inventories1020000 Proceeds from sale of Mancuso common stock360000 What is the cash provided (used) by investing activities for the year ended December 31, 2021, as a result of the above information?

$99000. 315000-216000

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows (using indirect approach for operating activities) as a(n)

Addition to net income.

Rory Co.'s prepaid insurance was $50,000 at December 31, 20X5 and $25,000 at December 31, 20X4. Insurance expense was $20,000 for 20X5 and $15,000 for 20X4.What amount of cash disbursements for insurance should be reported in Rory's 2005 net cash flows from operating activities presented on a direct basis?

Beg. prepaid insurance + insurance payments − insurance expense = end. prepaid insurance $45,000

Which of the following activities would be classified as an investing activity?

Cash paid to purchase land to be held for future use.

All of the following would be classified as financing cash flows except:

interest paid on long-term debt.

Under the direct method, cash payments to suppliers equals cost of goods sold:

plus an increase in inventory and minus an increase in accounts payable.

All of the following would be considered investing activities except:

receipt of cash dividends from investments.