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Exam 14: Statement of Cash Flows

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Question 41

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A company had net income of $252,000. 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) $217,000.
B) $224,000.
C) $284,000.
D) $305,000.

E) B) and C)
F) A) and B)

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Question 42

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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

E) A) and C)
F) B) and C)

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Question 43

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The following selected account balances appeared on the financial statements of the Washington Company: The Washington Company uses the direct method to calculate net cash flow from operating activities. Cash paid to suppliers is

Cash flows from investing activities, as part of the statement of cash flows, include receipts from the issuance of bonds payable.

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

Purchasing equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section.

Equipment with an original cost of $60,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

A cash flow per share amount should be reported on the statement of cash flows.

To determine cash payments for operating expenses for the cash flow statement using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.

Free cash flow is cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends.

The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.

Cash flows from investing activities, as part of the statement of cash flows, include payments for the purchase of treasury stock.

Investing activities include

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

Cash flow per share is

Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $20,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is

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: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

In preparing the statement of cash flows, the correct order of reporting cash activities is Financing, Operating, Investing.

Indicate whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method: