ACC unit 12

Adama Company reported a net loss of $6,000 for the year ended December 31, 2014. During the year, accounts receivable increased $15,000, merchandise inventory decreased $12,000, accounts payable decreased by $20,000, and depreciation expense of $12,000 was recorded. During 2014, operating activities provided net cash of $21,000. used net cash of $29,000. used net cash of $17,000. provided net cash of $24,000.

used net cash of $17,000. ($6,000) + ($15,000) + $12,000 +($20,000) + $12,000 = ($17,000)

In Alona Company, net income is $285,000. If accounts receivable increased $140,000 and accounts payable decreased $40,000, net cash provided by operating activities using the indirect method is: $105,000. $185,000. $465,000. $385,000.

$105,000. $285,000 - $140,000 - $40,000 = $105,000

Ale Company reports a $16,000 increase in inventory and a $8,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $150,000. The cash payments made to suppliers were $174,000. $150,000. $158,000. $126,000.

$158,000. $150,000 + $16,000 - $8,000 = $158,000

Jean's Vegetable Market had the following transactions during 2014: 1. Issued $50,000 of par value common stock for cash. 2. Repaid a 6 year note payable in the amount of $22,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $7,000. 5. Sold a long-term investment (cost $3,000) for cash of $6,000. 6. Acquired an investment in IBM stock for cash of $10,000. What is the net cash provided by financing activities? $28,000 $67,000 $0 $21,000

$21,000 $50,000 - $22,000 - $7,000 = $21,000

The net income reported on the income statement for the current year was $245,000. Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and $35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities? $311,000 $339,000 $296,000 $323,000

$339,000 $245,000 + $40,000 + $12,000 + $35,000 - $1,000 + $8,000 = $339,000

The following data are available for Two-off Company. Increase in accounts payable $120,000 Increase in bonds payable (Borrowing Cash) 300,000 Sale of investments 150,000 Issuance of common stock 160,000 Payment of cash dividends 90,000 Net cash provided by financing activities is: $180,000. $420,000. $370,000. $360,000.

$370,000 Explanation: $300,000 + $160,000 - $90,000 = $370,000

Bush Company reported net income of $60,000 for the year. During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is $55,000. $77,000. $48,000. $59,000.

$77,000. $60,000 + $8,000 + $4,000 + $5,000 = $77,000

In Jude Company, land decreased $150,000 because of a cash sale for $150,000, the equipment account increased $60,000 as a result of a cash purchase, and Bonds Payable increased $120,000 from issuance for cash at face value. The net cash provided by investing activities is $90,000. $150,000. $210,000. $270,000.

$90,000. Solution: $150,000 - $60,000 = $90,000

Which of the following will be added to net income to get net cash 1. A decrease in Account Receivable 2. Direct Issuance of common stock to purchase asset 3. Depreciation expense 4. gain on disposal of equipment 1, 3 1, 3, 4 1, 2, 3 2, 3

1, 3 1. When AR decreases, cash receipts are higher than sales revenue earned under accrual basis, thus needed to add back to net income. 2. Direct issuance of common stock to purchase assets is a significant noncash activity and will be reported in a separate schedule than statement of cash flow 3. Depreciation expense is a noncash charge. The company must add it back to net income to arrive at net cash provided by operating activities. 4. Gain on disposal of equipment will be deducted from net income

Jane's Company has other operating expenses of $150,000. There has been a decrease in prepaid expenses of $7,000 during the year, and accrued liabilities are $14,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Jane's cash payments for operating expenses? $157,000 $171,000 $129,000 $143,000

Answer: $157,000 Explanation: $150,000 - $7,000 + $14,000 = $157,000

Which of the following is classified as operating activities? Choose the best answer. 1) Interest received from bond investment 2) Dividends paid to stockholders 3) Interest paid to lenders 4) Dividends received None of them 1, 3, and 4 1, 2, 3, and 4 1 and 4

Answer: 1, 3 and 4 Explanation: Dividends paid to stockholders is cash outflows in financing activities

Dorothy Company reported a net loss of $90,000 for the year ended December 31, 2018. During the year, prepaid rent decreased $20,000, inventory decreased $5,000, land increased $5,000, accounts payable increased $10,000, and depreciation expense of $15,000 was recorded. During 2018, operating activities Provided net cash of 45,000. Provided net cash of 40,000. Used net cash of 45,000. Used net cash of 40,000.

Correct answer: Used net cash of 40,000 Net Loss (90,000) + Prepaid rent 20,000 + Inventory 5,000 + Accounts Payable 10,000 + Depreciation Expense 15,000 = (40,000) Purchasing land is an investing activity.

Which of the following statements is not correct? In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a subtraction from net income Depreciation expense would be added to net income using the indirect method Using the indirect method, if equipment is sold at a gain, the amount of the gain is deducted in the operating activities section An increase in Land would not be an adjustment to net income using the indirect method

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a subtraction from net income

This year, GRZ Company had net income of $1,275,000. Their accounts receivable and accounts payable increased by $287,000 and $182,000, respectively. They sold equipment, with a book value of $175,000, at a loss of $27,000. They issued stock for $850,000, and their inventory decreased by $302,000. Some bondholders converted their bonds into common stock with a market value of $455,000. They paid dividends totaling $75,000. What was GRZ Company's net cash provided by operating activities? $224,000 $1,275,000 $1,472,000 $1,499,000 $1,572,000

Solution: $1,499,000 Explanation: Source: Unit 12, Lesson 3, Reading: Preparing the Statement of Cash Flows Net income $1,275,000 Adjustments to reconcile net income: Loss on disposal of equipment $27,000 Increase in accounts receivable (287,000) Decrease in inventory 302,000 Increase in accounts payable 182,000 224,000 Net cash provided by operating activities $1,499,000

which of the following statements is not correct? - The acquisition of land by issuing common stock is a noncash transaction which is not reported in the body of a statement of cash flows - When equipment is sold for cash, the amount received is reflected as a cash inflow in the investing section - The indirect and direct methods of preparing the statement of cash flows are identical except for the financing activities section - Purchase of a long-term investment in bonds would not be classified as a financing activity

The indirect and direct methods of preparing the statement of cash flows are identical except for the financing activities section