MGMT 210 CH 12
Net cash provided by operating activities was $12,000. Net cash provided by investing activities was $2,000. Net cash used in financing activities was $7,000. The cash balance at the beginning of the year was $4,000. The cash balance at the end of the year is: Multiple choice question. $21,000 $11,000 $7,000 $25,000
$11,000 Reason: $12,000+2,000-7,000=$7,000. $7,000+4,000=$11,000.
Accounts receivable had a debit balance of $4,000 at the beginning of the period, and a debit balance of $3,000 at the end of the period. Credit sales for the period totaled $22,000. Using this information, cash receipts for the period totaled: Multiple choice question. $21,000 $22,000 $26,000 $23,000
$23,000 .Reason: $22,000 plus $1,000 decrease in accounts receivable.
The equipment account had a $36,000 balance at the beginning of the year, and a $30,000 balance at the end of the year. The accumulated depreciation account had a balance of $22,000 at the beginning of the year, and a $17,000 balance at the end of the year. The income statement reported depreciation expense of $4,000 for the year. Equipment costing $10,000 was sold for its book value. Cash received from the sale to be reported in the Investing Activities section is $.
Blank 1: 1000
Beginning accounts receivable were $20,000 and ending accounts receivable were $25,000. If sales were $150,000, cash receipts equal $.
Blank 1: 145000
The net cash amount provided by operating activities is identical under both the ___ and ____ methods.
Blank 1: direct Blank 2: indirect
A(n) ___ , also called a worksheet, can help organize the information needed to prepare a statement of cash flows.
Blank 1: spreadsheet
A gain from the sale of a building would be (added/subtracted) to (from) net income when computing cash flows from operations, using the indirect method.
Blank 1: subtracted
Which of the following is not one of the five important steps to preparing a statement of cash flows? Multiple choice question. Compute and report the net cash provided or used by financing activities Compute the net cash flow by combining net cash provided or used by operating, investing, and financing activities and prove the change Compute the net income Compute and report the net cash provided or used by investing activities Compute and report the net cash provided or used by operating activities
Compute the net income
Which of the following items would be subtracted from net income when reporting cash flows from operating activities, using the indirect method? (Check all that apply.) Multiple select question. Decrease in taxes payable Increase in unearned fees Increase in accounts payable Decrease in wages payable
Decrease in taxes payable Decrease in wages payable
________ activities include those transactions and events that affect long-term liabilities and equity, such as obtaining cash from issuing debt and distributing cash to owners. Multiple choice question. Noncash Operating Financing Investing
Financing
Which of the following items would not be a correct adjustment to net income to arrive at cash flows from operating activities, using the indirect method? Multiple choice question. Add decrease in inventory Add decrease in accounts receivable Subtract increase in taxes payable Subtract decrease in accounts payable
Subtract increase in taxes payable
True or false: A spreadsheet can help a company prepare a statement of cash flows. True false question. True False
True
Information on the statement of cash flows helps users answer all of the following questions except: Multiple choice question. Why was there a change in the cash balance? Why did the company invest in long-term assets? How does a company obtain its cash? Where does a company spend its cash?
Why did the company invest in long-term assets?
The Coffee Cup Company had a credit balance of $500 in interest payable at the beginning of the period, and a credit balance of $600 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as: Multiple choice question. a decrease of $100 which will be subtracted from net income a decrease of $100 which will be added to net income an increase of $100 which will be added to net income an increase of $100 which will be subtracted from net income
an increase of $100 which will be added to net income
Red Co.'s beginning Common Stock balance was $110,000 and their ending Common Stock balance was $125,000. This will be reported as _____ in the statement of cash flows. Multiple choice question. a decrease of $15,000 in the financing activities section a decrease of $15,000 in the investing activities section an increase of $15,000 in the financing activities section an increase of $15,000 in the investing activities section
an increase of $15,000 in the financing activities section
The statement of cash flows explains the difference between beginning and ending balances of cash and cash equivalents. A cash equivalent must exhibit all of the following criteria, except: Multiple choice question. be close to maturity. be held at a local institution. be readily convertible to a known amount of cash.
be held at a local institution.
The __________ helps measure a company's ability to meet its obligations, pay dividends, expand operations, and obtain financing. It is computed by taking cash flow from operations divided by average total assets. Multiple choice question. cash flow on total assets operating cash flow to sales cash coverage of growth
cash flow on total assets
The three-step analysis to determine cash provided or used by investing activities includes: Multiple select question. explaining the changes using T-accounts and reconstructed entries identifying changes in cash accounts identifying changes in investing-related accounts reporting the cash flow effects
explaining the changes using T-accounts and reconstructed entries identifying changes in investing-related accounts reporting the cash flow effects
The three-step analysis to determine cash provided or used by financing activities includes: Multiple select question. identifying changes in financing-related accounts reporting the cash flow effects identifying changes in cash accounts explaining the changes using T-accounts and reconstructed entries
identifying changes in financing-related accounts reporting the cash flow effects explaining the changes using T-accounts and reconstructed entries
When analyzing the noncash accounts to assist in preparing the statement of cash flows, the changes in liabilities, equity and noncash asset accounts are analyzed along with the Multiple choice question. balance sheet accounts income statement accounts statement of retained earnings previous year's statement of cash flows
income statement accounts
The _______ method of reporting the statement of cash flows reports net income and then adjusts it for items necessary to obtain net cash provided or used by operating activities. Multiple choice question. reconciling direct indirect FASB
indirect
A(n) _______ occurs when the receipts in a category exceed the payments. Multiple choice question. net cash outflow net cash inflow net cash payment net cash receipt
net cash inflow
In addition to analyzing the cash account, a second approach to preparing the statement of cash flows is to explain changes in cash by analyzing changes in Multiple select question. noncash asset accounts equity accounts liability accounts noncash accounts
noncash asset accounts equity accounts liability accounts
A(n) _____________ activity includes those transactions and events that determine net income, including the purchase of merchandise, the sale of goods and services to customers, and expenditures to operate the business. Multiple choice question. financing investing noncash operating
operating
A net cash ______ occurs when the payments in a category exceed the receipts. Multiple choice question. receipt inflow outflow payment
outflow
A company's cash receipts and cash payments are recorded in the cash account in its general ledger. Which of the following can be determined by analyzing the cash account? (Check all that apply.) Multiple select question. Cash receipts from customers Cash payments on notes Cash payments for equipment Payment for land by issuing a note
Cash receipts from customers Cash payments on notes Cash payments for equipment
Which of the following items could be "other cash receipts"? (Check all that apply.) Multiple select question. Cash received from rent Cash received from interest Cash received from dividends Cash paid for dividends
Cash received from rent Cash received from interest Cash received from dividends
Which of the following items would not be adjusted to net income when computing cash flows from operating activities, using the indirect method? Multiple choice question. Gain on sale of building Depreciation expense Cash received from sale of building
Cash received from sale of building
Which of the following would not be reported under financing activities on the statement of cash flows? Multiple choice question. Cash paid to purchase treasury stock Cash received from sales of plant assets Cash received from issuing bonds Cash contributions by owners
Cash received from sales of plant assets
Cash flows from financing activities identifies cash receipts and cash payments related to which of the following types of accounts? (Check all that apply.) Multiple select question. Interest Payable Common Stock Bonds Payable Notes Receivable
Common Stock Bonds Payable
Which of the following items would be adjusted to net income when computing cash flows from operating activities, using the indirect method? (Check all that apply.) Multiple select question. Gain on sale of building Increase in market value of stock Loss on sale of investment Depreciation expense
Gain on sale of building Loss on sale of investment Depreciation expense
Accountants can use a three-step process to determine cash provided (or used) by investing activities. Which of the following steps is not part of this process? Multiple choice question. Report their cash flow effects. Explain these changes using T-accounts. Identify changes in investing-related accounts. Identify adjustments to net income.
Identify adjustments to net income.
The information needed to prepare a statement of cash flows could come from which of the following sources? (Check all that apply.) Multiple select question. Statement of retained earnings Income statement Comparative balance sheets Cash account
Income statement Comparative balance sheets Cash account
Which of the following items would be added to net income when reporting cash flows from operating activities, using the indirect method? (Check all that apply.) Multiple select question. Decrease in wages payable Decrease in taxes payable Increase in unearned fees Increase in accounts payable
Increase in unearned fees Increase in accounts payable
A company reported total assets at the end of 2017 of $95,000; including cash of $35,000, accounts receivable of $20,000, and inventory of $40,000. It reported total assets at the end of 2018 of $110,000; including cash of $44,000; accounts receivable of $29,000, and inventory of $37,000. Compute the net increase or decrease in cash in 2018. Multiple choice question. Decrease of $15,000 Decrease of $9,000 Increase of $15,000 Increase of $9,000
Increase of $9,000 Reason: $44,000 current period balance minus $35,000 prior period balance= $9,000 increase.
To compute cash flows from financing activities, accountants normally analyze changes in all of the following accounts except: Multiple choice question. Common Stock Interest Payable Retained Earnings Notes Payable Bonds Payable
Interest Payable
_______ activities include those transactions and events that affect long-term assets, such as lending and collecting money for notes receivable and cash receipts from sale of long-term plant assets.
Investing
It is important to analyze the sources and uses of cash because (select all that apply): Multiple select question. Investors use this information to decide if they will purchase their stock. Customers use this information to decide whether to purchase from the company. Taxing authorities use this information to assess tax on the company. Creditors use this information to assist them in deciding whether to loan funds to them.
Investors use this information to decide if they will purchase their stock. Creditors use this information to assist them in deciding whether to loan funds to them.
Which of the following items are classified as noncash investing and financing activities? (Check all that apply.) Multiple select question. Issuance of common stock in exchange for land Retirement of debt by issuing stock Purchase of a building with a note Repayment of a note with cash
Issuance of common stock in exchange for land Retirement of debt by issuing stock Purchase of a building with a note
Which of the following statements about the statement of cash flows are correct? (Check all that apply.) Multiple select question. It is a detailed disclosure of cash flows. In certain circumstances, it can replace the statement of retained earnings. The purpose is to report cash receipts and cash payments during a period.
It is a detailed disclosure of cash flows. The purpose is to report cash receipts and cash payments during a period.
Both the direct and indirect methods of operating activities report which of the following items? Multiple choice question. Net cash inflows (outflows) Net income Cash payments for interest Increase in accounts receivable
Net cash inflows (outflows)
Which of the following would be included in the operating section when preparing the statement of cash flows using the indirect method? Multiple choice question. Cash payments for interest Net income Cash payments for rent Cash receipts from customers
Net income
The presentation of the _____ section is shown differently depending on if the statement of cash flows is reported using the direct or indirect method. Multiple choice question. Noncash Operating Financing Investing
Operating
A company's cash receipts and cash payments are recorded in the cash account in its general ledger. Identify which of the following could not be determined by analyzing the cash account? Multiple choice question. Cash payments for equipment Cash payments on notes Payment for land by issuing a note Cash receipts from customers
Payment for land by issuing a note
Identify which of the following items is not a noncash investing and financing activity that must be reported in a note to the statement of cash flows. (Check all that apply.) Multiple select question. Repayment of a note with cash Purchase of a plant asset with cash Retirement of debt by issuing stock Purchase of a plant asset by issuing debt
Repayment of a note with cash Purchase of a plant asset with cash
Which of the following items would be correct adjustments to net income to arrive at cash flows from operating activities, using the indirect method? (Correct all that apply.) Multiple select question. Subtract increase in wages payable Add increase in accounts receivable Subtract increase in inventory Add increase in accounts payable
Subtract increase in inventory Add increase in accounts payable
True or false: The direct method of reporting operating cash flows begins with revenue and adjusts for changes in related balance sheet accounts. True false question. True False
True
Which of the following questions could not be answered from the statement of cash flows? Multiple choice question. Where does a company spend its cash? What are the earnings-per-share of common stock? Does the company have the resources to pursue opportunities? Can the company pay its debts?
What are the earnings-per-share of common stock?
Dividends paid during a period totaled $5,000. This will be reported on the statement of cash flows as: Multiple choice question. a decrease in the investing activities section an increase in the financing activities section a decrease in the operating activities section a decrease in the financing activities section
a decrease in the financing activities section
The format of a statement of cash flows includes reporting cash flows from three activities including: Multiple select question. operating financing cash investing equivalent
operating financing investing
The information needed to prepare a statement of cash flows could come from which of the following sources? (Check all that apply.) Multiple select question. Cash account Income statement Statement of retained earnings Comparative balance sheets
Cash account Income statement Comparative balance sheets
Which of the following transactions would not be classified as an operating activity on the statement of cash flows? Multiple choice question. Cash dividends paid to shareholders Payments for goods and services Collections on credit sales Cash paid to salaries and wages
Cash dividends paid to shareholders
Which of the following items would be reported under financing activities on the statement of cash flows? Multiple select question. Cash dividends paid to shareholders Cash paid to repay cash loans Cash paid for interest on long-term debt Cash received from issuing notes payable
Cash dividends paid to shareholders Cash paid to repay cash loans Cash received from issuing notes payable
Which of the following transactions would be reported under cash flows from operating activities? Select all that apply. Multiple select question. Cash received from sale of investments Cash paid to lenders for interest Cash received from sales Cash paid for salaries and wages Cash paid for equipment
Cash paid to lenders for interest Cash received from sales Cash paid for salaries and wages
Which of the following transactions would be reported under investing activities in the statement of cash flows? (Check all that apply.) Multiple select question. Cash paid to purchase investments in securities Cash paid for interest on long-term notes Cash paid to purchase plant assets Cash distributions to shareholders
Cash paid to purchase investments in securities Cash paid to purchase plant assets
Emerald Jewelery Store had a credit balance in interest payable of $200 at the beginning of the period, and a credit balance of $50 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as: Multiple choice question. a decrease of $150 which will be added to net income an increase of $150 which will be added to net income an increase of $150 which will be subtracted from net income a decrease of $150 which will be subtracted from net income
a decrease of $150 which will be subtracted from net income Reason: The decrease in interest payable of $150 will be subtracted from net income to determine the net cash provided by operating activities.
Accounts receivable had a debit balance of $10,000 at the beginning of the period, and a debit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as: Multiple choice question. a decrease of $4,000 which will be subtracted from net income a decrease of $4,000 which will be added to net income an increase of $4,000 which will be added to net income an increase of $4,000 which will be subtracted from net income
a decrease of $4,000 which will be added to net income
Sunshine Company had a credit balance of $4,000 in accounts payable at the beginning of the period, and a credit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as: Multiple choice question. a decrease of $2,000 which will be added to net income an increase of $2,000 which will be subtracted from net income an increase of $2,000 which will be added to net income a decrease of $2,000 which will be subtracted from net income
an increase of $2,000 which will be added to net income
The formula to compute cash flow on total assets takes cash flow from operations divided by: Multiple choice question. average total assets average total current assets total assets total cash
average total assets
The formula used to compute the cash received from customers under the direct method is: Multiple choice question. sales minus decrease in accounts receivable OR plus increase in accounts receivable sales plus decrease in accounts receivable OR minus increase in accounts receivable sales plus increase in accounts receivable OR minus increase in accounts receivable sales plus decrease in accounts receivable OR minus decrease in accounts receivable
sales plus decrease in accounts receivable OR minus increase in accounts receivable
The information needed to prepare a statement of cash flows could come from all of the following sources, except the: Multiple choice question. income statement. comparative balance sheets. statement of retained earnings. cash account.
statement of retained earnings.
Current liabilities _____ operations, including short-term notes payable and dividends payable are categorized as financing activities. Multiple choice question. recognized in related to from unrelated to
unrelated to
MRC Company reports the following information for 2018: total assets of $65,000 and total cash provided from operations of $20,000; For 2017: total assets of $75,000 and cash provided from operations of $5,000. Cash flow on total assets for 2018 is (round to the nearest tenth): Multiple choice question. 28.6% 16.9% 37.3%
28.6% Reason: $20,000/[(65,000+75,000)/2]=.2857 or 28.57% = 28.6% rounded to the nearest tenth.
Net cash used in operating activities was $10,000. Net cash provided by investing activities was $2,000. Net cash provided by financing activities was $5,000. The cash balance at the end of the year was $12,000. The cash balance at the beginning of the year was $.
Blank 1: 15000
At the beginning of the period, a company reported $100,000 of common stock, $10 par; and $50,000 paid-in capital in excess of par. At the end of the period, this company reported $110,000 of common stock, $10 par; and $90,000 paid-in capital in excess of par. Cash received from the sale of common stock during the year is $.
Blank 1: 50000
A loss from the sale of an investment would be (added/subtracted) to (from) net income when computing cash flows from operations, using the indirect method.
Blank 1: added
An increase in wages payable would be (added/subtracted) to (from) net income when preparing cash flows from operating activities, using the indirect method.
Blank 1: added
A company repaid a long-term debt during the year. They will report this as an (increase/decrease) in the ______ activities section on the statement of cash flows.
Blank 1: decrease Blank 2: financing or finance
The Breezy Fan reported a decrease to net income in their income taxes payable account on the statement of cash flows using the indirect method. This means that Breezy Fan's income taxes payable account (increased/decreased) for the period.
Blank 1: decreased
Cash flows from operating activities under the ______ method adjusts accrual-based income statement items to a cash basis.
Blank 1: direct
Cash flows provided (used) by operating activities are reported in one of two ways: the _____ method or the _______ method. These two methods apply only to the operating activities section.
Blank 1: direct or indirect Blank 2: indirect or direct
A cash ______ must satisfy two criteria: (1) be readily convertible to a known amount of cash and (2) be sufficiently close to maturity so its market value is unaffected by interest rate changes.
Blank 1: equivalent
At the beginning of 2018, Rex Co. showed a debit balance in the cash account of $20,500. Total debits to this account during the year were $45,000, and total credits during the year were $35,000. The net (increase/decrease) in cash for 2018 equals $.
Blank 1: increase Blank 2: 10000
The TeaCup Company reported an increase to net income in their income taxes payable account on the statement of cash flows using the indirect method. This means that TeaCup's income taxes payable account (increased/decreased) for the period.
Blank 1: increased
Carol Co. prepares a statement of cash flows starting with net income and then adjusting for items necessary to obtain net cash provided or used by operating activities. Carol Co. must be using the (direct/indirect) method of reporting the statement of cash flows.
Blank 1: indirect
A net cash (inflow/outflow) occurs when the receipts in a category exceed the payments.
Blank 1: inflow
Collecting money for notes receivable would be reported on the statement of cash flows as a(n) activity.
Blank 1: investing
In a statement of cash flows, cash received from the sale of a building would be classified under "cash flows from ____ activities."
Blank 1: investing
In a statement of cash flows, cash received from the sale of a building would be classified under "cash flows from ______ activities."
Blank 1: investing
The indirect method of computing and reporting net cash flows from operating activities involves adjusting ____ ____ to obtain the net cash provided or used by operating activities.
Blank 1: net Blank 2: income
The purchase of merchandise, the sale of goods and services to customers, and expenditures to operate the business are all reported on the statement of cash flows under ____ activities.
Blank 1: operating
Lakeview, Inc.'s statement of cash flows reports financing activities with payments that exceed receipts. This means that Lakeview had a net cash (inflow/outflow) from financing activities.
Blank 1: outflow
If all sales are for cash, the amount received from customers will equal the _____ reported on the income statement.
Blank 1: sales
In preparing a cash flows from operating activities using the indirect method, an increase in accounts receivable would be (added/subtracted) to (from) net income.
Blank 1: subtracted
Information about cash flows can influence decision makers in important ways. Which of the following questions could be answered by the statement of cash flows? (Check all that apply.) Multiple select question. Can the company pay its debts? Is the company using its assets efficiently? How does a company spend its cash? Does the company have the resources to pursue opportunities?
Can the company pay its debts? How does a company spend its cash? Does the company have the resources to pursue opportunities?
Sheldon Company's balance in prepaid insurance at the beginning and end of the year was $2,500 and $1,000, respectively. This will be reported on the statement of cash flows using the indirect method as: Multiple choice question. a decrease of $1,500 which will be subtracted from net income an increase of $1,500 which will be subtracted from net income a decrease of $1,500 which will be added to net income an increase of $1,500 which will be added to net income
a decrease of $1,500 which will be added to net income
Inventory at the beginning of the period had a debit balance of $9,000, and a debit balance of $7,000 at the end of the period. Using the indirect method, this will be reported in the operating section of the statement of cash flows as: Multiple choice question. a decrease of $2,000 which will be added to net income an increase of $2,000 which will be added to net income an increase of $2,000 which will be subtracted from net income a decrease of $2,000 which will be subtracted from net income
a decrease of $2,000 which will be added to net income
Retained earnings at the beginning and end of the year totaled $25,000 and $75,000, respectively. Net income reported during the period was $70,000. Using this information, dividends paid will be reported as _____ on the statement of cash flows. Multiple choice question. an increase of $20,000 in the financing activities section. an increase of $50,000 in the financing activities section. a decrease of $20,000 in the financing activities section. a decrease of $50,000 in the financing activities section.
a decrease of $20,000 in the financing activities section.
LiveLife Company had a credit balance of $10,000 in accounts payable at the beginning of the period, and a credit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as: Multiple choice question. a decrease of $4,000 which will be added to net income an increase of $4,000 which will be subtracted from net income a decrease of $4,000 which will be subtracted from net income an increase of $4,000 which will be added to net income
a decrease of $4,000 which will be subtracted from net income
The statement of cash flows reports noncash investing and financing transactions in Multiple choice question. a note or separate schedule the investing section the financing section in the operating section
a note or separate schedule
Accounts receivable had a debit balance of $4,000 at the beginning of the period, and a debit balance of $6,000 at the end of the period. Based on this information, the adjustment to net income for the period will be reported as: Multiple choice question. an increase of $2,000 which will be added to net income a decrease of $2,000 which will be added to net income a decrease of $2,000 which will be subtracted from net income an increase of $2,000 which will be subtracted from net income
an increase of $2,000 which will be subtracted from net income
Reid Company's balance in prepaid insurance at the beginning and end of the year was $1,000 and $1,200, respectively. This will be reported on the statement of cash flows using the indirect method as: Multiple choice question. an increase of $200 which will be subtracted from net income a decrease of $200 which will be added to net income a decrease of $200 which will be subtracted from net income an increase of $200 which will be added to net income
an increase of $200 which will be subtracted from net income
Inventory at the beginning of the period had a debit balance of $7,000, and a debit balance of $10,000 at the end of the period. Using the indirect method, this will be reported in the operating section of the statement of cash flows as: Multiple choice question. a decrease of $3,000 which will be subtracted from net income an increase of $3,000 which will be added to net income a decrease of $3,000 which will be added to net income an increase of $3,000 which will be subtracted from net income
an increase of $3,000 which will be subtracted from net income
Starfish Shells had a beginning balance in Notes Payable of $35,000 and an ending balance of $40,000. This will be reported as _____ on the statement of cash flows. Multiple choice question. an increase of $5,000 in the cash flows from investing activities section an increase of $5,000 in the cash flows from financing activities section a decrease of $5,000 in the cash flows from financing activities section a decrease of $5,000 in the cash flows from investing activities section
an increase of $5,000 in the cash flows from financing activities section
Blue Co. sold plant assets costing $15,000 with accumulated depreciation of $10,000 for $7,000. As a result, Blue Co will report _____ on the statement of cash flows in the cash flows from investing activities section. Multiple choice question. an increase of $7,000 in the investing activities section a decrease of $7,000 in the investing activities section a gain of $2,000 in the financing section a loss of $2,000 in the financing section
an increase of $7,000 in the investing activities section
The statement of cash flows does not report the following transactions Multiple choice question. cash inflows cash outflows between cash and cash equivalents
between cash and cash equivalents
Investors assess cash flows before Multiple choice question. lending to a company buying and selling stock reviewing business decisions
buying and selling stock
Investing activities are affected by Multiple choice question. changes in current liabilities. changes in equity accounts. changes in long-term assets. changes in current assets.
changes in long-term assets.
order
compute the net increase or decrease in cash compute and report the net cash provided or used by operating activities compute and report the net cash provided or used by investing activities compute and report the net cash provided or used by financing activities compute the net cash flow by combining net cash provided or used by operating, investing, and financing activities and prove the change