FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Statement of Cash Flows

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Atkins Corporation has provided the following information for the year ended December 31,2019: • The equipment account balance increased by $200,000 from the beginning of the year to the end of the year. • The equipment accumulated depreciation account balance increased by $35,000 from the beginning of the year to the end of the year. • Equipment costing $50,000 was sold during the year resulting in a $10,000 gain. • Depreciation expense recorded on the equipment during the year was $65,000. - What was the amount of the investing activities cash inflow from the sale of the equipment? Assume that the equipment purchase and sale resulted in cash flows.

A) $30,000.
B) $60,000.
C) $40,000.
D) $50,000.

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following statements regarding use of the direct and indirect methods of determining cash flows from operating activities is incorrect?

A) The indirect method starts with net income.
B) The direct method calculates cash collected from customers.
C) The majority of U.S.companies use the indirect method.
D) The FASB recommends use of the indirect method.

Correct Answer

verified

Show Answer

Question 33

Essay

Review LaterAdd Note

Use the following information to prepare a statement of cash flows for Stable Equipment Company for the year ended December 31,2019.Use the indirect method for the operating activities section of the statement. Net income for the year 2019 was $5,000.Accounts receivable decreased $2,000,while inventories increased $4,000,and accounts payable decreased $7,000.Depreciation expense included in net income was $8,000. During the year,a piece of land held for future expansion was sold for its book value of $8,000 and a new service truck was purchased for $14,000. The company borrowed $18,000 on a two-year note from the bank.Dividends of $6,000 were paid in cash.Preferred stock was issued to retire $7,000 of long-term notes payable. The beginning cash balance was $22,000 and the ending balance was $32,000.

Which of the following would be subtracted from net income when determining cash flows from operating activities under the indirect method?

Cash flows associated with issuance and retirement of long-term debt and equity are reported as cash flows from investing activities.

Roberts Company sold equipment for $250,000,purchased a building for $6,500,000,sold short-term investments for $280,000,repaid principal on a note payable for $2,300,000 plus $230,000 of interest,and paid cash dividends of $20,000. - What was the net cash flow from financing activities?

Which of the following transactions would not create a cash flow from operating activities?

Which of the following would be added to net income when determining cash flows from operating activities under the indirect method?

Which statement regarding the indirect method is false?

Madison Company had sales of $154,000.Additional information from the balance sheet is below: How much cash was collected from customers?

Under the indirect method,depreciation expense is added to net income because it decreases net income but does not affect cash flow.

Which of the following statements about the quality of income ratio is incorrect?

Which of the following transactions does not result in either a cash inflow or a cash outflow?

Which of the following is reported as a cash flow from investing activities?

A company reported net income of $200,000 during 2019.The company reported depreciation expense of $35,000,patent amortization of $10,000 and a $5,000 loss on the sale of equipment.Using the indirect method,how much is the company's net cash flow from operating activities?

Which of the following transactions would be reported within the investing section of the cash flow statement?

The payment of interest on a note payable is a cash flow from a financing activity.

For each of the following items,indicate with the letter X whether the transaction would appear in the operating,investing,or financing activities section of the statement of cash flows,or is not reported in any one of these three categories.Assume the indirect method is used for reporting.

Under the indirect method,an increase in accounts receivable during the year will be added to net income.

When a company borrows $150 million during the year and also repays $120 million of debt,the company reports the $30 million net amount as excess of borrowings over repayments in the financing activities section of the statement of cash flows.