Financial Accounting Chapter 11

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows? Multiple select question. purchase of supplies Interest paid on bonds retirement of common stock purchase of a building payment on account payable

purchase of supplies Interest paid on bonds payment on account payable

Kleister Company issues bonds for $100 million and repays a long-term notes payable of $10 million. The company also sells its own shares for $12 million and pays cash dividends of $5 million. Cash inflows from financing activities will be: Multiple choice question. $110 mill $15 mill $17 mill $112 mill

$112 mill

Which of the following accounts results in adjustments to net income under the indirect method of preparing the statement of cash flows if their balances change during the year? Accounts payable Inventory Accounts receivable Notes receivable Bonds payable

Accounts payable Inventory Accounts receivable

Which of the following are cash inflows from financing activities? Multiple select question. Collection from customers Borrowing from bank Interest received Sale of land Issuance of common stock to investors

Borrowing from bank Issuance of common stock to investors

Joann is preparing a statement of cash flows as part of a homework assignment. She hopes to find a check figure that will help her assess the accuracy of her results. What should Joann do to quickly find a check figure? Multiple choice question. Calculate the change in the beginning and ending balance of cash Send an e-mail inquiry to her professor Wait until the problem is reviewed in class

Calculate the change in the beginning and ending balance of cash

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows? Multiple select question. Collection of interest Borrowing from bank Collection from customers Payment of utilities Sale of a building

Collection of interest Collection from customers

Which of the following statements best describes the reason depreciation expense is added to net income when preparing the statement of cash flows? Multiple choice question. Depreciation expense originally reduced net income, but it actually represents a cash inflow for the company. Depreciation expense originally reduced net income, but it is a noncash expense. Depreciation expense originally reduced net income, but it is not classified as an operating activity. Depreciation expense is not included in net income, so its cash effect must be accounted for separately.

Depreciation expense originally reduced net income, but it is a noncash expense.

Which of the following are cash inflows from financing activities? Multiple select question. Purchasing treasury stock Collecting from customers Receiving dividends Issuing stock to investors for cash Issuance of bonds

Issuing stock to investors for cash Issuance of bonds

Adjustments to net income in calculating operating cash flows include: Multiple select question. Noncash items Nonoperating items Changes in current assets and current liabilities Changes in noncurrent assets and noncurrent liabilities

Noncash items Nonoperating items Changes in current assets and current liabilities

Which of the following are cash outflows from financing activities? Multiple select question. Purchase of supplies Issue common stock Pay dividends Repay borrowing from bank Receive interest

Pay dividends Repay borrowing from bank

Which of the following are common financing activities? Multiple select question. Receiving dividends from an investment in another company Payment of cash dividends Issuing common stock Purchasing treasury stock

Payment of cash dividends Issuing common stock Purchasing treasury stock

Which of the following are classified as cash outflows from investing activities? Multiple select question. Purchase of land Sale of equipment Purchase of an investment Sale of land Payment of accounts payable balance

Purchase of land Purchase of an investment

Which of the following are classified as cash inflows from investing activities? Multiple select question. Sale of equipment Purchase of an investment Sale of land Issuance of common stock

Sale of equipment Sale of land

Which of the following cash transactions are classified as cash inflows from investing activities? Multiple select question. Sale of merchandise inventory Borrowing from bank Sale of investments Sale of equipment Sale of building

Sale of investments Sale of equipment Sale of building

True or false: Amortization of intangible assets is treated the same way as depreciation of tangible assets on the statement of cash flows using the indirect method.

True

Using the indirect method to report cash flows from operating activities, decrease in the inventory account will be ______ net income to arrive at net cash flow provided by operating activities. Multiple choice question. subtracted from added back to

added back to

When preparing a statement of cash flows using the indirect format, amortization expense must be: Multiple choice question. added back to net income ignored subtracted from net income subtracted from investing activities added to investing activities

added back to net income

When preparing the statement of cash flows using the indirect method, depreciation expense is ______ ______ net income. Multiple choice question. added to subtracted from

added to

Grant's income statement reveals a loss from the sale of land. In preparing the operating activities section of the statement of cash flows using the indirect format, the loss should be Multiple choice question. ignored. subtracted from net income. added to net income.

added to net income.

Which of the following represents the final step in preparing a statement of cash flows in the correct order? Multiple choice question. determine the net cash flows from investing activities combine operating, investing, and financing activities calculate the net cash flows from operating activities determine the net cash flows from financing activities

combine operating, investing, and financing activities

One of the purposes of adjusting net income for changes to certain balance sheet accounts is to Multiple choice question. convert items included in net income to cash. derive the correct ending balance of cash.

convert items included in net income to cash.

Select the items that would be added to net income in order to prepare the operating activities section of a statement of cash flows - indirect method. Multiple select question. gain on sale of land decrease in current asset depreciation expense loss on sale of land increase in current asset

decrease in current asset depreciation expense loss on sale of land

Select the items that would be subtracted from net income in order to prepare the operating activities section of a statement of cash flows - indirect method. Multiple select question. loss on sale of land increase in current liability depreciation expense decrease in current liability gain on sale of land

decrease in current liability gain on sale of land

Cash flows from ___ activities include both inflows and outflows of cash from the external funding of a business.

financial

Cash inflows and outflows involving stockholders and creditors are classified on the statement of cash flows as ___ activities.

financing

Issuing stock to owners is classified as a(n) ____ activity.

financing

Repayments of formal, long-term debt contracts are classified as ______ activities. Multiple choice question. financing investing operating

financing

The statement of cash flows provides information about the cash inflows and cash outflows of an entity. For financing activities, a cash ___ occurs when cash is borrowed from a creditor, and a cash ____ occurs when a loan is repaid.

inflow, outflow

The statement of cash flows provides summary information about cash ___ and cash ____ during the year.

inflows and outflows

The purchase and sale of long-term assets and current investments are classified as Multiple choice question. financing activities. operating activities. investing activities.

investing activities.

The three classifications on the statement of cash flows are cash flows from (Select all that apply.) Multiple select question. investing activities. discontinued activities. financing activities. business activities. operating activities.

investing activities. financing activities. operating activities.

An increase in accounts receivable indicates that the company collected _____ cash than the amount of ______. Multiple choice question. less; sales revenue more; sales revenue

less; sales revenue

In preparing the operating activities section of a statement of cash flows using the indirect method, net income should be adjusted for Multiple select question. loss from sale of asset. depreciation expense. gain from sale of asset. payment of a noncurrent liability. issuance of bonds for cash.

loss from sale of asset. depreciation expense. gain from sale of asset.

Which of the following nonoperating items require adjustments to net income under the indirect method? Multiple select question. losses from sale of long-term assets prepaid expenses stock dividends distributed during the year accrued expenses gains from sale of long-term assets

losses from sale of long-term assets gains from sale of long-term assets

Noncash items, nonoperating items, and changes in current assets and liabilities are necessary adjustments to ____ ____ to prepare the operating section for the indirect format of the statement of cash flows.

net income

Depreciation expense is added back to net income when preparing the cash flow from operating activities section because depreciation represents a(n) ______ reduction to net income. Multiple choice question. noncash decrease negative cash increase

noncash

Transactions reported on the statement of cash flows that do not increase or decrease cash, but that result in significant investing and financing activities are referred to as ____ activities.

noncash

Gains and losses on the sale of long-term assets represent common ____ items needing adjustment under the indirect method.

nonoperating

Cash receipts and cash payments for transactions relating to revenue and expense activities are classified on the statement of cash flows as Multiple choice question. operating activities investing activities financing activities

operating activities

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows? Multiple select question. issuance of bonds payment on account purchase of supplies on account purchase of building Payment of salaries

payment on account Payment of salaries

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows? Multiple select question. purchase of supplies Interest paid on bonds purchase of a building retirement of common stock payment on account payable

purchase of supplies Interest paid on bonds payment on account payable

Kleister Company issues bonds for $100 million and repays a long-term notes payable of $10 million. The company also sells its own common shares for $12 million and pays cash dividends of $5 million. Which of the following are cash outflows from financing activities? Multiple select question. repayment of notes payable sale of Kleister Company common shares issuance of bonds payment of cash dividends

repayment of notes payable payment of cash dividends

Noncash investing and financing activities are either: (Select all that apply.) Multiple select question. reported as investing and financing activities on the statement of cash flows reported directly after the statement of cash flows reported in the notes to the financial statements

reported directly after the statement of cash flows reported in the notes to the financial statements

The financial statement that provides information about cash receipts and cash disbursements for the period is the Multiple choice question. income statement. balance sheet. statement of cash flows. statement of retained earnings.

statement of cash flows.

In a statement of cash flows, the sum of cash inflows and outflows is equal to Multiple choice question. cash flows from operating activities. the change in the cash balance. net income plus depreciation and amortization.

the change in the cash balance.

Which of the following are common financing activities? Multiple select question. Borrowing money Receiving dividends from an investment in another company Payment of cash dividends Issuing common stock

Borrowing money Payment of cash dividends Issuing common stock

___ activities include cash receipts and cash payments for transactions relating to revenue and expense activities.

Operating

Which of the following are common financing activities? Multiple select question. Payment of cash dividends Receiving dividends from an investment in another company Purchasing treasury stock Issuing common stock

Payment of cash dividends Purchasing treasury stock Issuing common stock

Which of the following would result in a cash outflow from investing activities? Multiple choice question. Purchase of the company's common stock for cash. Purchase of a machine for cash. Purchase of inventory for cash.

Purchase of a machine for cash.

Which of the following are cash outflows from financing activities? Multiple select question. Payment of income taxes Purchase of equipment Repayment of note payable Issuance of common stock Payment of dividends

Repayment of note payable Payment of dividends

Which of the following would result in a cash inflow from investing activities? Multiple choice question. Sale of the company's common stock for cash. Sale of a machine for cash. Sale of inventory in excess of cost.

Sale of a machine for cash.

Which is a significant noncash activity? Multiple choice question. Collecting on customer accounts. Repurchasing common stock. Receiving proceeds from sale of stock. Signing a note payable in exchange for land.

Signing a note payable in exchange for land.

Which of the following represents the first step in preparing a statement of cash flows in the correct order? Multiple choice question. determine the net cash flows from financing activities combine operating, investing, and financing activities calculate the net cash flows from operating activities determine the net cash flows from investing activities

calculate the net cash flows from operating activities

The two types of adjustments to net income for the indirect method are adjustments for Multiple select question. changes in owners' equity accounts during the period that affected cash. changes in operating assets and liabilities during the period that affected cash and were not in net income. components of net income that do not affect cash. changes in liabilities and owners' equity accounts during the period that affected cash.

changes in operating assets and liabilities during the period that affected cash and were not in net income. components of net income that do not affect cash.

When using the indirect method to prepare the operating activities section of the statement of cash flows, the first amount listed is ____ ____.

net income

Neue Inc. reports sales revenue of $200,000; in addition, its accounts receivable balance decreased by $15,000. Neue's cash flows from sales were: Multiple choice question. $215,000 $185,000 $200,000

$215,000

Which of the following are significant noncash activities? (Select all that apply.) Multiple select question. Issuing common stock for cash. Selling land. Acquiring land by issuing common stock. Acquiring equipment by issuing a long-term note.

Acquiring land by issuing common stock. Acquiring equipment by issuing a long-term note.

Which of the following are nonoperating items that require adjustments under the indirect method? Multiple select question. Amortization expense Losses on the sale of long-term assets Depreciation expense Gains on the sale of long-term assets

Losses on the sale of long-term assets Gains on the sale of long-term assets

Which of the following are cash outflows from investing activities? Multiple select question. Purchase of inventory Repurchase of common stock Purchase of land Purchase of investment Payment on account payable

Purchase of land Purchase of investment

When cash from operating activities is presented using the indirect method, net income must be adjusted for increases and decreases in balance sheet accounts that relate to Multiple choice question. all current assets and liabilities. all long-term assets and liabilities. changes in equity. amounts presented in the income statement.

amounts presented in the income statement.

Cash transactions involving the purchase and sale of long-term assets and current investments are classified on the statement of cash flows as ____ activities.

investing

Under the indirect method of preparing the statement of cash flows, depreciation expense is added back to net income because it Multiple select question. was subtracted in deriving net income. increases the cash balance. provides an inflow of cash. did not require an outflow of cash.

was subtracted in deriving net income. did not require an outflow of cash.

Using the indirect method to report cash flows from operating activities, an increase in the inventory account will be ______ net income to arrive at net cash flow provided by operating activities. Multiple choice question. subtracted from added back to

subtracted from

Which of the following are common noncash items requiring adjustment to net income under the indirect method? salaries expense insurance expense depreciation expense prepaid expense amortization expense

amortization expense depreciation expense

The starting point for preparing the operating activities section using the indirect method is: Multiple choice question. current liabilities net income ending cash balance current assets

net income

Cash flows from ____ activities are both outflows and inflows of cash related to the acquisition and disposal of long-term assets.

investing

Depreciation expense and amortization expense represent ____ items requiring adjustments to net income under the indirect method.

noncash

Which of the following would be reported as a cash outflow from financing activities? Multiple choice question. Borrowing on a line of credit Paying interest on a long-term notes payable Sale of common stock Purchase of treasury shares

Purchase of treasury shares

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows? Multiple select question. Interest received on notes receivable Sale of building Collection from customers Borrowing from bank Issuance of common stock

Interest received on notes receivable Collection from customers

In order to determine cash flows from financing activities, we need to examine changes to Multiple choice question. long-term liability and stockholders' equity accounts current assets and current liability accounts long-term asset accounts

long-term liability and stockholders' equity accounts

Changes to current assets and current liabilities require adjustment of net income under the indirect method because these changes increase or decrease cash flows related to debt and stockholders' equity these changes increase or decrease cash flows related to long-term assets related cash may be higher or lower than the accrued amount included in net income

related cash may be higher or lower than the accrued amount included in net income

The statement of cash flows classifies items as Multiple choice question. operating, investing, and financing. current and noncurrent. operating and nonoperating. recurring and nonrecurring.

operating, investing, and financing.