Question 1

The basic accounting equation can be restated in terms of cash by the following equation: Cash = current liabilities + long-term liabilities + capital stock - retained earnings - noncash current assets + long-term assets.

Accepted Answer

A) True 
 B)False

Question 2

When using the indirect method,how is the receipt of cash from the sale of long-term investments treated on the statement of cash flows?

Accepted Answer

A)  Operating activity
B)  Investing activity
C)  Financing activity
D)  Noncash investing or financing activity

Question 3

Which of the following items would be considered a cash equivalent if it was held at the balance sheet date?

Accepted Answer

A)  U.S.Treasury bill purchased when there were 90 days until maturity.
B)  Commercial paper with a 6-month maturity which was purchased at the issue date.
C)  The common stock of a company traded on the New York Stock Exchange which was purchased 30 days before the balance sheet date.
D)  U.S.Treasury note which matures 2 years after it is issued and which was purchased 4 months before the balance sheet date.

Question 4

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

Accepted Answer

A) True 
 B)False

Question 5

Two methods are available to prepare the operating activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

Accepted Answer

A)  If a company uses the indirect method,it must separately disclose the cash payments made for interest and income taxes.
B)  If a company uses the direct method,it must present a separate schedule which reconciles net income to net cash from operating activities.
C)  Advocates of the direct method believe that the indirect method reveals too much by telling readers gross amounts of cash receipts and cash payments from operations.
D)  The FASB prefers the direct method,while most companies use the indirect method in practice.

Question 6

Each of the following transactions would be classified as either an investing or a financing activity except

Accepted Answer

A)  investments in stock are purchased.
B)  a bank loan is obtained.
C)  stock is issued to acquire land.
D)  dividends are paid.

Question 7

Which of the following statements is false?

Accepted Answer

A)  The method of preparing the operating activities section of a statement of cash flows which adjusts net income to remove the effects of deferrals and accruals for revenues and expenses is the indirect method.
B)  The method of preparing the operating activities section of a statement of cash flows which reports major classes of gross cash receipts and cash payments for revenues and expenses is the direct method.
C)  The FASB prefers the direct method of preparing the operating activities section of the statement of cash flows.
D)  Most companies use the direct method of preparing the operating activities section of the statement of cash flows.

Question 8

Satir Corp.reported the following information for 2013 and 2014.  How much cash was paid for salaries during 2014?

Accepted Answer

A)  $55,100
B)  $55,200
C)  $57,000
D)  $58,900

Question 9

If the balance of accounts receivable decreases during the year,then cash collections will ____________________________ sales on account for the period.

Accepted Answer

The answer of If the balance of accounts receivable decreases...

Question 10

A decrease in retained earnings represents dividends that were ___________________ during the period,not necessarily those that were paid.

Accepted Answer

The answer of A decrease in retained earnings represents dividends...

Question 11

Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?

Accepted Answer

A)  In a supplemental schedule of noncash investing and financing activities or in a note.
B)  The acquisition of land should be reported as an investing activity and the issuance of the stock as a financing activity.
C)  Using the master T-account approach.
D)  The transaction does not need to be disclosed.

Question 12

The issuance of common stock in exchange for a building would appear both as a cash inflow in the financing activities section of the cash flow statement and also as a cash outflow in the investing activities section.

Accepted Answer

A) True 
 B)False

Question 13

When using the indirect method,how would the declaration and payment of cash dividends be shown on the statement of cash flows?

Accepted Answer

A)  Operating activities
B)  Investing activities
C)  Financing activities
D)  Noncash investing and financing activity

Question 14

Columbus Company prepays the rent on various office facilities.The beginning balance in Prepaid Rent was $9,500,and the ending balance was $7,200.The income statement reports Rent Expense of $45,800.
Required:
Under the direct method,what amount would appear for cash paid in rent in the Operating Activities section of the statement of cash flows? Show your work.

Accepted Answer

An analysis of the Prepaid Rent account ...

Question 15

Which category of cash flows - operating,investing,or financing activities - do you think is most likely to have a net cash outflow over a number of years? Explain.

Accepted Answer

Companies cannot remain in business if t...

Question 16

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA
 Which of the following activities results in a cash inflow?

Accepted Answer

A)  Increases in noncash current assets (NCC
A)  
B)  Decreases in current liabilities (CL) 
C)  Increases in common stock (CS) 
D)  Decreases in retained earnings (R
E)

Question 17

Many companies report cash flow per common share on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 18

For the statement of cash flows,companies are required to classify their cash activities into three categories: operating,investing,and borrowing.

Accepted Answer

A) True 
 B)False

Question 19

If the December 31,2012,balance of accounts receivable is higher than the January 1,2012,balance,then the amount of cash collections will be less than the sales on account for the year.

Accepted Answer

A) True 
 B)False

Question 20

Use the information below for Oakland Inc.for 2013 and 2014 to answer the following question.  During 2014,Oakland Inc.sold equipment with a cost of $30,000 and accumulated depreciation of $25,000.A gain of $3,000 was recognized on the sale of the equipment This was the only equipment sale during the year.
Assume that all purchases of equipment were paid with cash.How much cash was paid by Oakland for the purchase of equipment during 2014?

Accepted Answer

A)  $ 7,000
B)  $30,000
C)  $37,000
D)  $72,000

Exam 12: The Statement of Cash Flows

A decrease in retained earnings represents dividends that were ___________________ during the period,not necessarily those that were paid.

Correct Answer
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Correct Answer
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Which of the following items would be considered a cash equivalent if it was held at the balance sheet date?

Correct Answer
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When using the indirect method,how is the receipt of cash from the sale of long-term investments treated on the statement of cash flows?

Correct Answer
verified

Two methods are available to prepare the operating activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

Correct Answer
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If the balance of accounts receivable decreases during the year,then cash collections will ____________________________ sales on account for the period.

Correct Answer
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Each of the following transactions would be classified as either an investing or a financing activity except

Correct Answer
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The issuance of common stock in exchange for a building would appear both as a cash inflow in the financing activities section of the cash flow statement and also as a cash outflow in the investing activities section.

Correct Answer
verified

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA Which of the following activities results in a cash inflow?

Correct Answer
verified

Satir Corp.reported the following information for 2013 and 2014. How much cash was paid for salaries during 2014?

Correct Answer
verified

When using the indirect method,how would the declaration and payment of cash dividends be shown on the statement of cash flows?

Correct Answer
verified

The basic accounting equation can be restated in terms of cash by the following equation: Cash = current liabilities + long-term liabilities + capital stock - retained earnings - noncash current assets + long-term assets.

Correct Answer
verified

If the December 31,2012,balance of accounts receivable is higher than the January 1,2012,balance,then the amount of cash collections will be less than the sales on account for the year.

Correct Answer
verified

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

Correct Answer
verified

Correct Answer
verified
An analysis of the Prepaid Rent account ...
View Answer

Many companies report cash flow per common share on the statement of cash flows.

Correct Answer
verified

Which category of cash flows - operating,investing,or financing activities - do you think is most likely to have a net cash outflow over a number of years? Explain.

Correct Answer
verified
Companies cannot remain in business if t...
View Answer

Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?

Correct Answer
verified

For the statement of cash flows,companies are required to classify their cash activities into three categories: operating,investing,and borrowing.

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

Exam 12: The Statement of Cash Flows

A decrease in retained earnings represents dividends that were ___________________ during the period,not necessarily those that were paid.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following items would be considered a cash equivalent if it was held at the balance sheet date?

Correct AnswerverifiedShow Answer

When using the indirect method,how is the receipt of cash from the sale of long-term investments treated on the statement of cash flows?

Correct AnswerverifiedShow Answer

Two methods are available to prepare the operating activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

Correct AnswerverifiedShow Answer

If the balance of accounts receivable decreases during the year,then cash collections will ____________________________ sales on account for the period.

Correct AnswerverifiedShow Answer

Each of the following transactions would be classified as either an investing or a financing activity except

Correct AnswerverifiedShow Answer

The issuance of common stock in exchange for a building would appear both as a cash inflow in the financing activities section of the cash flow statement and also as a cash outflow in the investing activities section.

Correct AnswerverifiedShow Answer

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA Which of the following activities results in a cash inflow?

Correct AnswerverifiedShow Answer

Satir Corp.reported the following information for 2013 and 2014. How much cash was paid for salaries during 2014?

Correct AnswerverifiedShow Answer

When using the indirect method,how would the declaration and payment of cash dividends be shown on the statement of cash flows?

Correct AnswerverifiedShow Answer

The basic accounting equation can be restated in terms of cash by the following equation: Cash = current liabilities + long-term liabilities + capital stock - retained earnings - noncash current assets + long-term assets.

Correct AnswerverifiedShow Answer

If the December 31,2012,balance of accounts receivable is higher than the January 1,2012,balance,then the amount of cash collections will be less than the sales on account for the year.

Correct AnswerverifiedShow Answer

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAn analysis of the Prepaid Rent account ...View AnswerShow Answer

Many companies report cash flow per common share on the statement of cash flows.

Correct AnswerverifiedShow Answer

Which category of cash flows - operating,investing,or financing activities - do you think is most likely to have a net cash outflow over a number of years? Explain.

Correct AnswerverifiedCompanies cannot remain in business if t...View AnswerShow Answer

Klein Corp.acquired land by issuing its common stock.How should this transaction be disclosed when a statement of cash flows is prepared?

Correct AnswerverifiedShow Answer

For the statement of cash flows,companies are required to classify their cash activities into three categories: operating,investing,and borrowing.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

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An analysis of the Prepaid Rent account ...
View Answer

Correct Answer
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Correct Answer
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Companies cannot remain in business if t...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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