ch 16

Which of the following increases cash? a. borrowing money by issuing a 6-month note b. depreciation expense c. acquisition of treasury stock d. the declaration of a cash dividend

a. borrowing money by issuing a 6-month note

On the statement of cash flows, the financing activities section would include all of the following except a. cash paid for the interest on bonds payable b. cash paid for dividends c. cash received from the sale of bonds payable d. cash paid for the purchase of treasury stock

a. cash paid for the interest on bonds payable

Which of the following would not be classified as an operating activity? a. selling expenses b. payment of dividends c. income taxes d. interest expense

b. payment of dividends

A corporation uses the indirect method of preparing the statement of cash flows. A fixed asset has been sold for $25,000, representing a gain of $4,500. The value of this transaction appearing in the operating activities section of the statement of cash flows is a. $4,500 b. $29,500 c. $(4,500) d. $25,000

c. $(4,500)

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as an increase of a. $54,000 from investing activities b. $54,000 from investing activities and an addition to net income of $9,000 c. $63,000 from investing activities and a deduction from net income of $9,000 d. $9,000 from investing activities

c. $63,000 from investing activities and a deduction from net income of $9,000

The statement of cash flows is not useful for

computing the net worth of a company

Under the indirect method of cash flow, depreciation expense is deducted from the net income.

false

Cash flows from (used for) _____ activities are the cash flows received from or used for transactions that affect the debt and equity of the company.

financing

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

financing activities

Cash received from the issuance of a mortgage note payable would be classified as a(n)

financing activity

Which of the following should be deducted from net income in computing the net cash flows from operating activities using the indirect method? a. dividends declared and paid b. depreciation expense c. gain on sale of land d. a loss on the sale of equipment

gain on sale of land

Cash flows from (used for) _____ activities are the cash flows received from or used for transactions that affect investments in the noncurrent assets of the company.

investing

Cash flows from (used for) _____ activities are the cash flows from transactions that affect the net income of a company.

operating

In the statement of cash flows prepared by the indirect method, the sum of net cash flows used for operating activities, investing activities, and financing activities is equal to _____.

the net increase or decrease of cash

A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the statement of cash flows in

a separate section of noncash investing and financing activities at the bottom of the statement

Preferred stock issued in exchange for land would be reported on the statement of cash flows in

a separate section of noncash investing and financing activities, usually at the bottom of the statement

A corporation uses the indirect method of preparing the statement of cash flows. A fixed asset has been sold for $22,952, representing a gain of $3,295. The value of this transaction appearing in the operating activities section of the statement of cash flows is a. $(3,295) b. $19,657 c. $22,952 d. $26,247

a. $(3,295)

Which of the following types of transactions would be reported as a cash flows from (used for) investing activity on the statement of cash flows? a. purchase of noncurrent assets b. purchase of treasury stock c. issuance of capital stock d. issuance of bonds payable

a. purchase of noncurrent assets

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the investing activities section of the statement of cash flows is a. $11,000 b. $66,000 c. $44,000 d. $55,000

b. $66,000

Land costing $72,700 was sold for $99,800 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $72,700 b. $99,800 c. $27,100 d. $172,500

b. $99,800

Which of the following should be shown on a statement of cash flows under the financing activities section? a. the purchase of a long-term investment in the common stock of another company b. the issuance of a long-term note to acquire land c. the proceeds from the sale of a building d. the payment of cash to retire a long-term note

d. the payment of cash to retire a long-term note

Under the indirect method, increases in noncash current operating assets are _____.

deducted from net income

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be

deducted from net income in converting the net income reported on the income statement to net cash flows from operating activities