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Scott, MIT Graduate
Category: Homework
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Experience:  MIT Graduate (Math, Programming, Science, and Music)
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1. The following information is available from the current

Customer Question

1. The following information is available from the current period financial statements:

Net income $140,000
Depreciation expense 28,000
Increase in accounts receivable 16,000
Decrease in accounts payable 21,000


The net cash flow from operating activities using the indirect method is
A) $131,000
B) $163,000
C) $107,000
D) $205,000
2. Cash flows from financing activities, as part of the statement of cash flows, include payments for dividends.
A) True
B) False
3. Preferred stock issued in exchange for land would be reported in the statement of cash flows in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section
4. If cash dividends of $145,000 were declared during the year and the decrease in dividends payable from the beginning to the end of the year was $7,000, the statement of cash flows would report $152,000 in the financing activities section.
A) True
B) False
5. Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends.
A) True
B) False
6. Investing activities include
A) collecting cash on loans made.
B) obtaining cash from creditors.
C) obtaining capital from owners.
D) repaying money previously borrowed.
7. The manner of reporting cash flows from investing and financing activities will be different under the direct method as compared to the indirect method.
A) True
B) False
8. Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?
A) a decrease in inventory
B) a decrease in accounts payable
C) preferred dividends declared and paid
D) a decrease in accounts receivable
9. Income tax was $400,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year. Cash payments for income tax reported on the cash flow statement using the direct method is
A) $400,000
B) $390,000
C) $430,000
D) $440,000
10. Cash paid for equipment would be reported in the statement of cash flows in
A) the cash flows from operating activities section
B) the cash flows from financing activities section
C) the cash flows from investing activities section
D) a separate schedule
11. Which of the following should be shown on a statement of cash flows under the financing activity section?
A) the purchase of a long-term investment in the common stock of another company
B) the payment of cash to retire a long-term note
C) the proceeds from the sale of a building
D) the issuance of a long-term note to acquire land
12. On the statement of cash flows, the cash flows from investing activities section would include
A) receipts from the issuance of capital stock
B) payments for dividends
C) payments for retirement of bonds payable
D) receipts from the sale of investments
13. Net income was $ 52,000 for the year. The accumulated depreciation balance increased by $17,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. The cash flow from operations is $35,000
A) True
B) False
14. A company had net income of $242,000. Depreciation expense is $26,000. During the year, Accounts Receivable and Inventory increased $15,000 and $40,000, respectively. Prepaid Expenses and Accounts Payable decreased $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much cash was provided by operating activities?
A) $207,000.
B) $211,000.
C) $274,000.
D) $295,000.
15. Which of the following is not one of the four basic financial statements?
A) balance sheet
B) statement of cash flows
C) statement of changes in financial position
D) income statement
16. The 2005 edition of Accounting Trends and Techniques reported that 75% of the companies surveyed used the indirect method to report changes in cash flows from operations.
A) True
B) False
17. Free cash flow is cash from operations, less cash for
A) dividends and cash for fixed assets needed to maintain productivity
B) dividends and cash to redeem bonds payable
C) fixed assets needed to maintain productivity
D) dividends, cash for fixed assets needed to maintain productivity, and cash to redeem bonds payable
18. Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section
19. The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

End Beginning
Cash $ 50,000 $ 60,000
Accounts receivable 112,000 108,000
Inventories 105,000 93,000
Prepaid expenses 4,500 6,500
Accounts payable (merchandise creditors) 75,000 89,000
   

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
A) $198,000
B) $324,000
C) $352,000
D) $296,000
20. Land costing $47,000 was sold for $78,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?
A) $78,000
B) $47,000
C) $109,000
D) $31,000
21. Cash paid to acquire treasury stock should be shown on the statement of cash flows from investing activities.
A) True
B) False
22. Accounts receivable arising from sales to customers amounted to $40,000 and $35,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
A) $115,000.
B) $110,000.
C) $105,000.
D) $150,000.
23. The statement of cash flows is not one of the basic financial statements.
A) True
B) False
24. The statement of cash flows is an optional financial statement.
A) True
B) False
25. On the statement of cash flows, a $20,000 gain on the sale of fixed assets would be
A) added to net income in converting the net income reported on the income statement to cash flows from operating activities
B) deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
C) added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
D) deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
Submitted: 5 years ago.
Category: Homework

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