Intermediate Acct Ch 21

Which of the following is correct regarding depreciation expense? Multiple choice question. It is a noncash expense that does not require the use of cash. It should be classified as an investing activity if the amount is material. It requires the outflow of cash that should be presented in the operating section of the statement of cash flows.

It is a noncash expense that does not require the use of cash.

Under which method(s) will a reconciliation of net income to cash from operating activities be presented? (Select all that apply.) Multiple choice question. The direct method only Both the direct and the indirect method The indirect method only

Both the direct and the indirect method

Under which method of preparing a statement of cash flows will a reconciliation between net income and cash from operating activities be shown on a separate schedule? Multiple choice question. Both the direct and the indirect method The indirect method only The direct method only

The direct method only

Steiner Corp. purchases a new machine for $120,000. The company makes a $20,000 downpayment and signs a promissory note for the difference. This transaction consists of (Select all that apply.) Multiple select question. a cash outflow from financing activity. a noncash investing and financing activity. a cash outflow from investing activity.

a noncash investing and financing activity. a cash outflow from investing activity.

Depreciation represents a noncash expense because it is merely an ___________ of a ___________ cash expenditure.

allocation; previous

Select all that apply Glueck Corp. reports sales revenue of $200,000. During the year, the company's accounts receivable balance decreased by $14,000. Additional information reveals that during the year accounts totaling $7,000 were written off and bad debt expense of $10,000 recognized. A journal entry prepared to determine cash collected from customers would include credits to (Select all that apply.) Multiple select question. allowance for doubtful accounts for $3,000. sales revenue for $200,000. accounts receivable for $14,000. cash for $207,000. bad debt expense for $10,000.

allowance for doubtful accounts for $3,000. sales revenue for $200,000. accounts receivable for $14,000.

Kester Corp.'s land account increased by $140,000. No specific information regarding this increase is available. In its statement of cash flows, Kester should report Multiple choice question. cash inflows from investing activities of $140,000. cash inflows from operating activities of $140,000. cash outflows from investing activities of $140,000.

cash outflows from investing activities of $140,000.

Kester Corp.'s land account increased by $140,000. No specific information regarding this increase is available. In its statement of cash flows, Kester should report Multiple choice question. cash inflows from operating activities of $140,000. cash inflows from investing activities of $140,000. cash outflows from investing activities of $140,000.

cash outflows from investing activities of $140,000.

Jasper's income statement reports revenue from investments that lack significant influence of $10,000, and its balance sheet reports that dividends receivable decreased by $1,500. How much will Jasper report as cash received from investments? Multiple choice question. $1,500 $11,500 $8,500 $10,000

$11,500 (10000 + 1500)

Fault Company's records indicate that, during the current year, land costing $150,000 was sold. A loss of $25,000 was recognized on the sale. Cash inflows associated with this sale were Multiple choice question. $175,000. $125,000. $150,000.

$125,000

Aggie Company reports investment revenue of $14,000 in its income statement relating to a 5% investment in another company's common stock. During the current year, dividends receivable increased by $1,000. Thus, cash collected from investments will be Multiple choice question. $13,000. $14,000. $15,000. $1,000.

$13.000

Munster Company reports the following net cash in its statement of cash flows: net inflow from operating activities: $200; net outflow from investing activities: $300; net outflow from financing activities: $50. The ending balance in cash is $20; the beginning balance must have been Multiple choice question. $190. $170. $150. $210.

$20+300+50-200 = $170

Glueck Corp. reports sales revenue of $200,000. During the year, the company's accounts receivable balance decreased by $14,000. Cash collected from customers is Multiple choice question. $14,000. $214,000. $200,000. $186,000.

$214,000-$200,000 + $14,000

Marten Company's records indicate that, during the current year, land costing $50,000 was sold. A gain of $45,000 was recognized on the sale. Cash inflows associated with this sale were Multiple choice question. $45,000. $50,000. $95,000.

$95,000-book value of $50,000 plus gain of $45,000

Sales revenue for the year was $100,000; accounts receivable had a beginning balance of $10,000 and an ending balance of $18,000. Cash collected from customers was Multiple choice question. $108,000. Reason: revenue less increase in A/R $100,000. Reason: revenue less increase in A/R $8,000. Reason: revenue less increase in A/R $92,000. Reason: revenue less increase in A/R

100,000 - 8000 = $92,000

Which of the following concepts governs recognition of revenue and expense? Multiple choice question. Conservatism Accrual accounting Matching principle

Accrual accounting

Inflows and outflows of cash resulting from the external funding of a business are cash flows from activities. (Enter one word per blank)

Blank 1: financing or finance

The objective in preparing the statement of cash flows is to identify all transactions and events that represent ________________ , ______________ and _______________activities and to classify and list them in the proper format.

Blank 1: operating Blank 2: investing Blank 3: financing

Which of the following transactions/events commonly give rise to cash outflows of business entities? (Select all that apply.) Multiple select question. Common stock is exchanged for a piece of land. Fire insurance is purchased. Employees are paid. Patent amortization is accrued periodically.

Fire insurance is purchased. Employees are paid.

Which of the following statements regarding income statement and related cash amounts is correct? Multiple choice question. Income statement amounts typically exceed related cash amounts. Income statement amounts and the related cash amounts typically are the same. Cash amounts typically exceed the related income statement amounts. Income statement amounts and cash amounts typically are not the same.

Income statement amounts and cash amounts typically are not the same. Need help? Review these concept resources.

Steiner Corp. purchases a new machine for $120,000. The company makes a $20,000 downpayment and signs a promissory note for the difference. Which of the following statements is correct regarding this transaction and the classification in a statement of cash flows? Multiple choice question. Investing cash outflow is $20,000. Investing cash outflow is $120,000. Financing cash outflow is $100,000.

Investing cash outflow is $20,000.

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

Purchase of a machine for cash.

Milky Company reports sales revenue of $200, an increase in deferred revenue of $2, and an increase in accounts receivable of $1. Cash collected from customers is: Multiple choice question. $199 $203 $201 $200

Reason: $(200+2-1) = $201

Sales revenue for the year was $100,000; accounts receivable had a beginning balance of $10,000 and an ending balance of $18,000. Cash collected from customers was Multiple choice question. $92,000. $100,000. $108,000. $8,000.

Reason: $92,000 revenue less increase in A/R

Milky Company reports sales revenue of $200, an increase in deferred revenue of $2, and an increase in accounts receivable of $1. Using a journal entry to determine cash collected from customers, accounts receivable should be Blank______ and deferred revenue Blank______.

Receivables increased (Debited) & Deferred revenue increase (Credit)

Which of the following is critically important with respect to the ultimate potential of a firm to provide cash flows to investors and creditors? Multiple choice question. The firm's ability to generate positive net income. The firm's ability to generate cash flows for itself. The firm's ability to obtain additional financing.

The firm's ability to generate cash flows for itself.

Kunzen Company shows salaries expense of $15,000 in its income statement. During the current year, the balance of its salaries payable account increased by $2,000. If the company uses the indirect method of presenting the operating activities section of the statement of cash flows, the change of $2,000 should be Multiple choice question. ignored. added to net income. subtracted from net income.

added to net income

Gerta Company shows salaries expense of $30,000 in its income statement. During the current year, the balance of its salaries payable account increased by $4,000. If the company uses the indirect method of presenting the operating activities section of the statement of cash flows, the change of $4,000 should be Multiple choice question. subtracted from net income. ignored. added to net income.

added to net income.

Under the indirect method of deriving net cash flows from operating activities, decreases in assets relating to operating activities must be Multiple choice question. added to net income. ignored. subtracted from net income.

added to net income.

Under the indirect method of deriving net cash flows from operating activities, increases in liabilities relating to operating activities must be Multiple choice question. added to net income. ignored. subtracted from net income.

added to net income.

When preparing the statement of cash flows using the indirect method, depreciation expense and losses are Multiple choice question. ignored. added to net income. subtracted from net income.

added to net income.

When preparing the statement of cash flows using the indirect method, depreciation expense and losses are Multiple choice question. subtracted from net income. added to net income. ignored.

added to net income.

Depreciation represents a noncash expense because it is merely an Blank______ of a Blank______ cash expenditure. Multiple choice question. allocation; previous allocation; noncash allocation; current year valuation; previous

allocation; previous

Select all that apply Glueck Corp. reports sales revenue of $200,000. During the year, the company's accounts receivable balance decreased by $14,000. Additional information reveals that during the year accounts totaling $7,000 were written off and bad debt expense of $10,000 was recognized. A journal entry prepared to determine cash collected from customers would include debits to (Select all that apply.) Multiple select question. allowance for uncollectible accounts $7,000. accounts receivable for $14,000. bad debt expense for $10,000. cash for $207,000.

bad debt expense for $10,000. cash for $207,000.

Glueck Corp. reports sales revenue of $200,000. During the year, the company's accounts receivable balance decreased by $14,000. Additional information reveals that during the year accounts totaling $7,000 were written off and bad debt expense of $10,000 was recognized. A journal entry prepared to determine cash collected from customers would include debits to (Select all that apply.) Multiple select question. cash for $207,000. accounts receivable for $14,000. bad debt expense for $10,000. allowance for uncollectible accounts $7,000.

cash for $207,000. bad debt expense for $10,000.

Michal Corp.'s land account decreased by $250,000. No specific information regarding this decrease is available. In its statement of cash flows, Michael should report Multiple choice question. cash outflows from operating activities of $250,000. cash inflows from operating activities of $250,000. cash outflows from investing activities of $250,000. cash inflows from investing activities of $250,000.

cash inflows from investing activities of $250,000.

Amounts reported in the income statement usually are __________ the cash effects of the items reported. different from greater than less than identical to

different from

Margaret is analyzing the current year income statement and the comparative balance sheet in order to prepare the statement of cash flows. She should expect the operating cash flows to be Blank______ the amounts reported in the income statement. Multiple choice question. greater than smaller than different from the same as

different than

Financing activities are inflows and outflows of cash resulting from the Multiple choice question. internal financing of a business. external financing of a business.

external financing of a business.

Norbert Company reports the following net cash flows in its statement of cash flows: net inflow from operating activities: $200; net outflow from investing activities: $220; net inflow from financing activities: $130. The current year beginning balance of cash was $80. During the current year, cash must have Multiple choice question. increased by $110. decreased by $190. increased by $190. decreased by $110.

increased by $110.

An important advantage of using a spreadsheet to analyze transactions that may need to be reported in the statement of cash flows is to Multiple choice question. make sure that no reportable activity is overlooked. simplify the statement of cash flows. make sure that the statement of cash flows balances.

make sure that no reportable activity is overlooked.

In addition to the primary activities, what other required information must be presented in a statement of cash flows? (Select all that apply.) Multiple select question. -noncash investing and financing activities -a reconciliation of operating income to operation cash flows -a reconciliation of the net increase or decrease in cash with the change in the cash balance -a reconciliation of operating income to net income

noncash investing and financing activities a reconciliation of the net increase or decrease in cash with the change in the cash balance

In a statement of cash flows—direct method, depreciation expense should Multiple choice question. be classified as an operating activity. not be reported. be classified as an investing activity. be disclosed as a noncash transaction.

not be reported.

The objective in preparing the statement of cash flows is to identify all transactions and events that represent Multiple choice question. increases and decreases in working capital accounts. operating, investing, and financing activities and report them in the proper statement format. useful information to help managers project future cash needs and cash reserves.

operating, investing, and financing activities and report them in the proper statement format.

Net income (or loss) is the result of netting together the recognized __________ and the _________incurred during the current reporting period.

recognized Revenue & expenses incurred

Glueck Corp. reports sales revenue of $200,000. During the year, the company's accounts receivable balance decreased by $14,000. Additional information reveals that during the year accounts totaling $7,000 were written off and bad debt expense of $10,000 recognized. A journal entry prepared to determine cash collected from customers would include credits to (Select all that apply.)

sales revenue for $200,000. allowance for doubtful accounts for $3,000. accounts receivable for $14,000.

If a journal entry is used to derive the amount of cash collected from customers, Multiple choice question. sales revenue and the change in A/R must be recognized. sales revenue, the change in A/R, and the change in the allowance account need be recognized. sales revenue, bad debt accruals, and changes in A/R and the allowance account need to be recognized.

sales revenue, bad debt accruals, and changes in A/R and the allowance account need to be recognized.

An important tool that can be used to ensure that no reportable activities are inadvertently overlooked is a: Multiple choice question. t-account chart of accounts spreadsheet general ledger

spreadsheet

Under the indirect method of deriving net cash flows from operating activities, decreases in liabilities relating to operating activities must be Multiple choice question. ignored. added to net income. subtracted from net income.

subtracted from net income.

Under the indirect method of deriving net cash flows from operating activities, increases in assets relating to operating activities must be Multiple choice question. added to net income. subtracted from net income. ignored

subtracted from net income.

Select all that apply Under the indirect method of preparing the statement of cash flows, depreciation expense and losses are added back to net income because they (Select all that apply.) Multiple select question. increase the cash balance. were subtracted in deriving net income. do not require an outflow of cash. provide an inflow of cash.

were subtracted in deriving net income. do not require an outflow of cash.