Accounting exam #7

Cycle Path, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements Which of the following would be shown in the Operating Activities section related to wages? wages payable - yr 1 = 13,500 and yr 2 = 12,000 wages expense - yr 2 = 98,000

$1,500 would be subtracted from net income 12,000 - 13,500 = - 1,500 you would subtract from net income because its a receivable so you want it to go up but it decreased

Cycle Path, Inc. uses the INDIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to wages? wages payable - yr 2 = 13,500, yr 3 = 12,000 wages expense- yr 3 = 98,000

$1,500 would be subtracted from net income 12,000 - 13,500 = 1,500

ABC Company uses the INDIRECT method to prepare its statement of cash flows. Present below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to insurance? prepaid insurance - yr 2 = 4,600, yr 3 = 2,800 insurance expense - yr 3 = 13,200

$1,800 would be added to net income 4,600 - 2,800 = 1,800 you add to net income because it decreased

City Perk, Inc. uses the INDIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to sales/accounts receivable? accts receveible - yr 2 = 56,000, yr 3 = 89,000 sales revnue = 860,000

$33,000 would be subtracted from net income 89,000 - 56,000 = 33,000

City Perk, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to sales/accounts receivable? Accounts receivable - yr 1 = 56,000 and yr 2 = 89,000 sales revenue - yr 2 = 860,000

$33,000 would be subtracted from net income 89,000 - 56,000 = 33,000 you would subtract because when you gain receivables or payables you subtract

Calculate the missing amount from the Statement of Cash Flows Cash from Operating Activities: $-8,000 Cash from Investing Activities: 0 Cash from Financing Activities: 7,000 Net Change in Cash:

-1,000

Pita Pan, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Calculate the amount related to prepaids that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount. prepaid insurance - yr 2 = 3,000, yr 3 = 5,000

-2,000 5,000 - 3,000 = 2,000 negative since prepaid have increased and they have not done the work yet

Cycle Path, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Calculate the amount related to wages that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount. wages payable yr 1 = 13,500 and yr 2 = 10,000

-3,500 it is a negative since we paid them off

Pita Pan, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. calculate the amount related to prepaids that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount. prepaid insurance - yr 1 = 3,000 and yr 2 = 8,000

-5,000 since we paid for it it will be subtracted

When using the DIRECT vs INDIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements

-direct is Cash paid for interest of $ you find this by subtracting the sum of yr 2 and 3 by the other yr 3 -indirect is $ would be subtracted from net income you find this by subracting yr 2 from yr 3

indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity. 1. Paid a $100 dividend to its shareholders. 2. Repaid a $5,000 loan to the bank (creditor) 3. Paid $500 to its employees.

1. financing 2.financing 3. operating

Place the following items in the order that they would appear on a statement of cash flows.

1. operating 2. investing 3. financing 4. net change in cash

Sweet Dairy Air, Inc., reported Prepaid Advertising at the beginning of the year of $10,000 and $12,000 at the end. Sweet Dairy Air, Inc.,reported Advertising Expense for the year ended of $100,000. Cash Paid for Advertising on the Statement of Cash Flows equals _____

102,000 12,000 - 10,000 = 2,000 you add 2,000 to the 100,000 because its a prepaid so they already paid cash

Sweet Dairy Air, Inc., reported Prepaid Advertising at the beginning of the year of $10,000 and $13,000 at the end. Sweet Dairy Air, Inc.,reported Advertising Expense for the year ended of $100,000. Cash Paid for Advertising on the Statement of Cash Flows equals ___

103,000 13,000 - 10,000 = 3,000 100,00 + 3,000 = 103,000

During the year, Sportacus, Inc., performed and billed its customers $200,000 for services on account. Its Accounts Receivable balance was $38,000 at the end of the year and $30,000 at the beginning of the year. Cash Collected from Customers on the Statement of Cash Flows for the year ended will equal ______.

192,000 30,000 - 38,000 = -8,000 200,000 - 8,000 = 192,000

During the year 20X2, Sea World Cruises, Inc., reported Service Revenues of $200,000. Its Deferred Revenue at year end 20X2 was $48,000 and and at year end 20X1 was $50,000. What is the Cash Collected from Customers on the Statement of Cash Flows for the year?

198,000 48,000 - 50,000 = -2,000 200,000 - 2,000 = 198000

During the year, Sportacus, Inc., performed and billed its customers $200,000 for services on account. Its Accounts Receivable balance was $16,000 at the end of the year and $30,000 at the beginning of the year. Cash Collected from Customers on the Statement of Cash Flows for the year ended will equal ______.

214000 30,000 - 16,000 = 14,000 200,000 + 14,000 = 214000

Calculate Microhard's Cash from Operating Activities on the Statement of Cash Flows for the year ended December 31, 20X3. sales revenue = 133,000 cogs = 83,000 selling expense = 23,000 depreciation expense = 12,000 current assets - yr 2 = 30,000, yr 3 = 34,000 current liabilities - yr 2 = 10,000, yr 3 = 12,000

25,000 Cash from Operating Activities = Net Income - Increase in Current Assets + Increase in Current Liabilities 133,000 - 83,000 - 23,000 - 4,000 + 2,000 = 25,000

During the year 20X2, Sea World Cruises, Inc., reported Service Revenues of $300,000. Its Deferred Revenue at year end 20X2 was $40,000 and and at year end 20X1 was $50,000. What is the Cash Collected from Customers on the Statement of Cash Flows for the year?

290,000 40,000 - 50,000 = -10,000 300,000 - 10,000 = 290,000

During the year 20X2, Sea World Cruises, Inc., reported Service Revenues of $300,000. Its Deferred Revenue at year end 20X2 was $44,000 and and at year end 20X1 was $50,000. What is the Cash Collected from Customers on the Statement of Cash Flows for the year?

294,000 44,000 - 50,000 = -6,000 300,000 - 6,000 = 294,000

Using the information found in the financial statements for the month ended May 31 and the Accounts Receivable T-account, determine its May 31 balance found on the balance sheet. Assume all sales are on account. Balance Sheet at April 30: Accounts Receivable = $2,000 Statement of Cash Flows: Cash Collected from Customers on the Statement of Cash Flows = $6,000 Income Statement: Sales = $7,000 Balance Sheet at May 31: Accounts Receivable = ______?

3,000 7,000 - 6,000 + 2,000 = 3,000

Cycle Path, Inc. uses the indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Calculate the amount related to wages that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount. wages payable - yr 1 = 13,500 and yr 2 = 17,000

3,500 17,000 - 13,500 = 3,500 you add it because its a payable and payables and receivables

Sure Lock Loan, Inc. uses the INDIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Calculate the amount related to interest that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount. interest payable - yr 2 = 4,800, yr 3 = 38,000 interest expense - yr 3 = 8,200

38,000 - 4,800 = 33,200 33,200

During the year, A Salt & Buttery, Inc., had revenue of $77,000 of which $8,000 was collected from customers. It also had expenses of $31,000 of which $3,000 was paid. The owners were paid $20,000 in dividends. Net income for the year equals $______.

46000 77000-31000 = 46000

Calculate the missing amount from the Statement of Cash Flows Cash from Operating Activities: Cash from Investing Activities: -5,000 Cash from Financing Activities: 4,000 Net Change in Cash: 7,000

8,000 x - 5,000 + 4,000 = 7,000

City Perk, Inc. uses the Indirect method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Calculate the amount related to receivables that will be added to or subtracted from Net Income in preparing the Cash from Operating Activities using the indirect method. If subtracted from Net Income, enter as a negative amount. accounts receivable yr 1 = 38,000 yr 2 = 30,000

8,000 it is positive because if a receivable goes down then the person paid and we gained money

Calculate the missing amount from the Statement of Cash Flows Cash from Operating Activites ? Cash from Investing Activities (5000) Cash from Financing Activities 4000 net change in cash 7000

8000

City Perk, Inc. uses the INDIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to sales/accounts receivable? Accounts receivable - yr 2 = 56,000, yr 3 = 89,000 sales revenue - yr 3 = 860,000

89,000 - 56,000 = 33,000 $33,000 would be subtracted from net income it would be subtracted because the accounts receivable is increasing meaning its not paid yet

Fly-by-Night, Inc.'s Income Statement for the year ended December 31 reported Ticket Revenue of $900,000 and its Balance Sheet reported Deferred Revenue of $53,000 at yearend and $40,000 at the end of the prior year. Cash Collected from Customers for the year ended equals ______.

913,000 53,000 - 40,000 = 13,000 13,000 + 900,000 = 913,000 YOU ALWAYS DO THE BEGINNING OF THE YEAR (PRIORS YEAREND) MINUS END OF THE YEAR (YEAREND) aka. most recent minus least

Sweet Dairy Air, Inc., reported Prepaid Advertising at the beginning of the year of $10,000 and $7,000 at the end. Sweet Dairy Air, Inc.,reported Advertising Expense for the year ended of $100,000. Cash Paid for Advertising on the Statement of Cash Flows equals _

97,000 10,000 - 7,000 = 3,000 100,000 - 3,000 = 97,000 you minus the 3,000 since you have paid 3,000 of the prepaids it no longer is in your advertising expense

Sweet Dairy Air, Inc., reported Prepaid Advertising at the beginning of the year of $10,000 and $7,000 at the end. Sweet Dairy Air, Inc.,reported Advertising Expense for the year ended of $100,000. Cash Paid for Advertising on the Statement of Cash Flows equals ______.

97,000 7,000 - 10,000 = -3,000 100,000 - 3,000 = 97,000

ABC Company uses the DIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to sales/accounts receivable? sales revenue - yr 3 = 860,000 accounts receivable- yr 2 = 56,000, yr 3 = 89,000

Cash collected from customers of $827,000 89,000 - 56,000 = 33,000 860,000 - 33,000 = 827,000

Calculate Microhard's Cash from Operating Activities on the Statement of Cash Flows for the year ended December 31, 20X3. sales revenue = 124,000 cost of goods sold = 86,000 selling expense = 23,000 depreciation exp = 12,000 current assets - yr 2 = 30,000, yr 3 = 44,000 current liabilities - yr 2 = 10,000, yr 3 = 14,000

Cash from Operating Activities = Net Income (+ Depreciation Expense) - Increase in Current Assets + Increase in Current Liabilities 124,000 - 86,000 - 23,000 = 15,000 44,000 - 30,000 = 14,000 14,000 - 10,000 = 4,000 15,000 - 14,000 + 4,000 = 5,000

ABC Company uses the Direct method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to insurance? prepaid insurance - yr 1 = 4,600 and yr 2 = 2,800 insurance expense = 13,200

Cash paid for insurance of $11,400 2,800 - 4,600 = - 1,800 13,200 - 1,800 = 11,400 you minus because since its a prepaid you would want it to increase

ABC Company uses the DIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to interest? interest payable - year 2 = 8,900, yr 3 = 12,000 interest expense - yr 3 = 19,000

Cash paid for interest of $15,900 since its a payable 8,900 - 12,000 = -3,100 and you subtract 3,100 from 19,000 since you've paid off those payables and no longer are charging them as a expense

Johnson Corporation Company uses the DIRECT method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to wages? wages payable - yr 2 = 13,500, yr 3= 12,000 wages expense - yr 3 = 98,000

Cash paid for wages of $99,500 13,500 - 12,000 = 1,500 98,000 + 1,500 = 99,500 with payables if year 3 is less than year yr 2 than you add since you've paid the payables

Which of these would be reported as cash flows from investing activities? (Select all that apply.)

Cash paid to build a new corporate headquarters Cash paid to buy equipment

ABC Company uses the direct method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to wages? wages payable - yr 1 = 12,000 and yr 2 = 9,500 wages expense - yr 2 = 110,000

Cash paid to employees of $112,500 12,000 - 9,500 = 2,500 2,500 + 110,000 = 112,500 You add them because since a payable goes down it is a increase to expenses

ABC Company uses the direct method to prepare its statement of cash flows. Presented below are selected items from its financial statements. Which of the following would be shown in the Operating Activities section related to wages? wages payable - yr 2= 12,000 , yr 3 = 9,500 wages expense - yr 3 = 110,000

Cash paid to employees of $112,500 9500 - 12000 = -2500 you add 2500 to the expense since the payable went down 2,500 + 110,000 = 112,500

Which of the following would be presented on a statement of cash flows using the indirect method?

Cash proceeds from sale of land Gain on sale of land

Faux Sure, Inc., earned $400,000 during its 4th year of business. Its Accounts Receivable balances were $10,000 at the end of year 3 and $15,000 at the end of year 4. Match the amounts that will be reported on each of the 4th year financial statements listed below.

Revenue on the Income Statement 400,000 Cash Collected from Customers on the Statement of Cash Flow 395000

Sea the World Cruises earned $300,000 of the amount collected in advance from customers during its 3rd month of business. It started the month with $20,000 in Deferred Revenue and ended the month with $25,000. Match the amounts that will be reported on each of the first month's financial statements listed below.

Revenue on the Income Statement= 300,000 Cash Collected from Customers on the Statement of Cash Flows= 305,000 Deferred Revenue on the Balance Sheet= 25,000

Using the information found in the financial statements for the month ended May 31, fill in the Deferred Revenue ledger account below. Cash Collected from Customers on the Statement of Cash Flows equals $600 for the month ended May 31. All cash was collected in advance. Service Revenue on the Income Statement equals $700 for the month ended May 31. The amount collected in advance but not yet earned on the Balance Sheet equals $300 at May 31. (a) (b) (c) (d) (e) (f)

a = 0 b = 400 c = 700 d = 600 e = 0 f = 300

indicate whether each activity for Anudu Hair Salon would be classified as an operating, investing, or financing activity Received $40,000 from its owners in exchange for stock. a Purchased a barber's chair and sink for $35,000. b Paid $100 for advertising in the local paper. c

a = financing b = investing c = operating

Indicate whether each activity for Hot Diggity Dogs, Inc., would be classified as an operating, investing, or financing activity. Issued $10,000 of stock. a Purchased $1,000 of inventory. b purchased land for $1,000. c

a = financing b = operating c = investing

Indicate the financial statement where you would expect to find each line item: wages expense; a wages paid to employees; b wages payable; c

a = income statement b = statement of cash flows c = balance sheet

Reports the amount of supplies on hand at the end of the period is on the

balance sheet

which financial statement is deferred revenue on

balance sheet

Which of the following would be presented on a statement of cash flows using the direct method?

cash paid for interest proceeds from sale of land

Indicate the financial statement where you would expect to find each line item: deferred revenue, cash collected from customers, sales revenue

deferred revenue= balance sheet cash collected from customers= statement of cash flows sales revenue= income statement

Received $40,000 from its owners in exchange for stock. is what activity

financing

Borrowing from a bank is a(n) ______.

financing activity

Paying a cash dividend to shareholders is a(n) ______.

financing activity

Reports the amount of supplies used during the period is on the

income statement

Purchased a barber's chair and sink for $35,000. Purchased $100,000 of land. is which activity

investing

Select the financing activities from the list below. (Select all that apply.)

issued a note payable issued stock

Only the _________________ section of the statement of cash flows differs using the direct method rather than the indirect method.

operating

Paid $200 for supplies to be used on customers over the next two months. Paid $100 for advertising in the local paper Received $500 from its customers. these are what activity

operating

Which section(s) of the statement of cash flows differ(s) using the direct method rather than the indirect method.

operating

A use of cash for operating activities is ____

payment of accounts payable

A use of cash for operating activities is ______.

payment of accounts payable

A source of cash for investing activities is _____

proceeds from the sale of equipment

A decrease in a current asset is a ______ of cash and is ______ expenses to arrive at cash paid.

source; subtracted from

An increase in accrued liabilities is a ______ of cash and is ______ expenses to arrive at cash paid.

source; subtracted to

An increase in current liabilities is a ______ of cash and is ______ expenses to arrive at cash paid.

source; subtracted to

The direct method for the preparation of the Statement of Cash Flows ___

starts by converting every number on the income statement to its cash amount

Reports the amount paid for supplies during the period is on the

statement of cash flows

Which financial statement reports how much cash was paid for inventory?

statement of cash flows

An increase in a current asset is a ______ of cash and is ______ expenses to arrive at cash paid.

use; added to

A decrease in current liabilities is a ______ of cash and is ______ expenses to arrive at cash paid.

use; added too

An increase in Accounts Receivable is a ______ of cash and is ______ Revenues to arrive at Cash Collected from Customers

use; subtracted to

The indirect method for the preparation of the Statement of Cash Flows starts ___

with net income and makes adjustments for all the items that are not cash

The indirect method for the preparation of the Statement of Cash Flows starts ______.

with net income and makes adjustments for all the items that are not cash