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acctg final
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Accounting
05/13/2008

Additional Accounting Flashcards

 


 

Cards

Term

  42.     The statement of cash flows

Definition

            a. must be prepared on a daily basis.

        b.   summarizes the operating, financing, and investing activities of an entity.

            c.   is another name for the income statement.

            d.   is a special section of the income statement.

Term

  43.     Which one of the following items is not generally used in preparing a statement of cash flows?

Definition

a. Adjusted trial balance

            b.   Comparative balance sheets

            c.   Current income statement

            d.   Additional information

 

Term

  44.     The primary purpose of the statement of cash flows is to

Definition

         a. provide information about the investing and financing activities during a period.

            b.   prove that revenues exceed expenses if there is a net income.

            c.   provide information about the cash receipts and cash payments during a period.

            d.   facilitate banking relationships.

Term

  45.     If a company reports a net loss, it

Definition

a. may still have a net increase in cash.

            b.   will not be able to pay cash dividends.

            c.   will not be able to get a loan.

                        d.         will not be able to make capital expenditures
Term

  46.     In addition to the three basic financial statements, which of the following is also a required financial statement?

Definition

a. The "Cash Budget"

            b.   Statement of Cash Flows

            c.   Statement of Cash Inflows and Outflows

            d.   The "Cash Reconciliation"

Term

  47.     The statement of cash flows will not report the

Definition

a. amount of checks outstanding at the end of the period.

            b.   sources of cash in the current period.

            c.   uses of cash in the current period.

            d.   change in the cash balance for the current period.

Term

  48.     The acquisition of land by issuing common stock is

Definition

a. a noncash transaction that is not reported in the body of a statement of cash flows.

            b.   a cash transaction and would be reported in the body of a statement of cash flows.

            c.   a noncash transaction and would be reported in the body of a statement of cash flows.

            d.   only reported if the statement of cash flows is prepared using the direct method.

Term

  49.     The order of presentation of activities on the statement of cash flows is

Definition

a. operating, investing, and financing.

            b.   operating, financing, and investing.

            c.   financing, operating, and investing.

            d.   financing, investing, and operating.

Term

  50.     Financing activities involve

Definition

a. lending money.

            b.   acquiring investments.

            c.   issuing debt.

            d.   acquiring long-lived assets.

Term

  51.     Investing activities include

Definition

a. collecting cash on loans made.

            b.   obtaining cash from creditors.

            c.   obtaining capital from owners.

                        d.         repaying money previously borrowed
Term

  52.     Generally, the most important category on the statement of cash flows is cash flows from

Definition

a. operating activities.

            b.   investing activities.

            c.   financing activities.

            d.   significant noncash activities.

Term

  53.     The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

Definition

a. cash flows from operating activities.

            b.   cash flows from investing activities.

            c.   cash flows from financing activities.

            d.   usually different from year to year.

Term

  54.     Cash receipts from interest and dividends are classified as

Definition

a. financing activities.

            b.   investing activities.

            c.   operating activities.

            d.   either financing or investing activities.

Term

  55.     Declared and issued a stock dividend.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  56.     Collected accounts receivable.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  57.     Purchased inventory with cash.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  58.     Retired long-term debt with cash.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  59.     Paid interest on note.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  60.     Issued stock for equipment.

Definition

    a.     Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  61.     Received dividends on securities held.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  62.     Paid income taxes.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  63.     Issued common stock for cash.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  64.     Purchased land for cash.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  65.     Purchased land and building with a mortgage.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  66.     Purchased treasury stock with cash.

Definition

a. Operating activities section

            b.   Investing activities section

            c.   Financing activities section

            d.   Does not represent a cash flow

Term

  67.     If a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section.

Definition

    a.     two cash effects must be netted and presented as one item

            b.   cash inflow and cash outflow must be reported separately

            c.   cash outflow is only is presented.

            d.   cash inflow and cash outflow can either be reported separately or presented as one item.

Term

  68.     Of the items below, the one that appears first on the statement of cash flows is

Definition

a. noncash investing and financing activities.

            b.   net increase (decrease) in cash.

            c.   cash at the end of the period.

                        d.         cash at the beginning of the period
Term

  69.     Which of the following transactions does not affect cash during a period?

Definition

a. Write-off of an uncollectible account

            b.   Collection of an accounts receivable

            c.   Sale of treasury stock

            d.   Redeeming bonds before maturity

Term

  70.     Significant noncash transactions would not include

Definition

a. conversion of bonds into common stock.

            b.   asset acquisition through bond issuance.

            c.   treasury stock acquisition.

            d.   exchange of plant assets.

Term

  71.     Preferred stock issued in exchange for land would be reported in the statement of cash flows in

Definition

    a.     the cash flows from financing activities section.

            b.   the cash flows from investing activities section.

            c.   a separate schedule or note to the financial statements.

            d.   the cash flows from operating section.

Term

  72.     In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Definition

    a.     the financing section.

            b.   the "extraordinary" section.

            c.   a separate schedule or note to the financial statements.

            d.   the stockholders' equity section.

Term

  73.     On the statement of cash flows, the cash flows from operating activities section would include

Definition

    a.     receipts from the issuance of capital stock.

            b.   receipts from the sale of investments.

            c.   payments for the acquisition of investments.

            d.   cash receipts from sales activities.

Term

  74.     Cash flows from operating activities, as reported on the statement of cash flows under the indirect method, would include

Definition

a. receipts from the sale of investments.

            b.   net income.

            c.   payments for dividends.

            d.   receipts from the issuance of capital stock.

Term

  75.     The issuance of debt to purchase assets would be classified as a(n)

Definition

a. operating activity.

            b.   investing activity.

            c.   financing activity.

                                d.             none of the above
Term

  76.     The payment of a cash dividend would be classified as a(n)

Definition

a. operating activity.

            b.   investing activity.

            c.   financing activity.

            d.   significant noncash activity.

Term

  77.     Which of the following activities would be classified as an investing activity?

Definition

    a.     Cash received from interest revenue.

            b.   Cash paid (loaned) to a borrower as a loan.

            c.   Cash received from dividend revenue.

            d.   Cash paid to reacquire capital stock.

Term

  78.     What is the net cash provided by operating activities?

Definition

    a.     $20,000.

            b.   $18,000.

            c.   $10,000.

            d.   $8,000.

Term

  79.     What is the net cash provided by financing activities?

Definition

a. $13,000.

            b.   $25,000.

            c.   $14,000.

            d.   $9,000.

Term

  80.     What is the net cash provided by investing activities?

Definition

a. $6,000.

            b.   $16,000

            c.   ($3,000).

                                d.             $3,000.
Term

  81.     Morris Company issued 10,000 shares of $1 par common stock for $25 per share during 2007.  The company paid dividends of $24,000 and issued long-term notes payable of $220,000 during the year.  What amount of cash flows from financing activities will be reported on the statement of cash flows?

Definition

a. $6,000 net cash inflow.

            b.   $226,000 net cash inflow.

            c.   $470,000 net cash outflow.

            d.   $446,000 net cash inflow.

Term

82. Miller Company purchased treasury stock with a cost of $15,000 during 2007. During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $816,000.  Cash flows from financing activities for 2007 total

Definition

    a.     $796,000 net cash inflow.

            b.   $811,000 net cash inflow.

            c.   $5,000 net cash outflow.

                                d.             $781,000 net cash inflow
Term

  83.     Which of the following is the first step in preparing the statement of cash flows?

Definition

a. Determine the net cash provided by operating activities.

            b.   Determine the net income.

            c.   Determine net cash provided by investing and financing activities.

            d.   Determine the net increase (decrease) in cash.

Term

  84.     Cline Company issued common stock for proceeds of $186,000 during 2007. The company paid dividends of $33,000 and issued a long-term note payable for $45,000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $7,000. The financing section of the statement of cash flows will report net cash inflows of

Definition

a. $146,000.

            b.   $202,000.

            c.   $153,000.

            d.   $179,000.

Term

  85.     During 2007, Dole Company sold equipment with a book value of $90,000 for proceeds of $104,000.  The company purchased new equipment for $240,000 by signing a long-term note payable.  No other transactions impacted long-term asset accounts during 2007. The investing section of the statement of cash flows will report

Definition

a. net cash outflows of $226,000.

            b.   net cash outflows of $136,000.

            c.   net cash inflows of $104,000.

            d.   net cash inflows of $14,000.

Term

  86.     In Gentry Company, land decreased $120,000 because of a cash sale for $120,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value. The net cash provided by investing activities is

Definition

a. $120,000.

            b.   $210,000.

            c.   $80,000.

            d.   $90,000.

Term

  87.     In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

Definition

a. the direct method only.

            b.   the indirect method only.

            c.   both the direct method and the indirect method.

            d.   neither the direct nor the indirect method.

Term

  88.     Cash from investing becomes positive and cash from financing becomes more negative during the

Definition

a. introductory phase.

            b.   growth phase.

            c.   maturity phase.

            d.   decline phase.

Term

  89.     Cash generated from operations exceeds investing needs, and the company can begin retiring debt during the

Definition

a. introductory phase.

            b.   growth phase.

            c.   maturity phase.

                                d.             decline phase
Term

  90.     Collections on accounts receivable will lag behind sales, and accrual sales during a period will exceed cash collections during the

Definition

a. introductory phase.

            b.   growth phase.

            c.   maturity phase.

            d.   decline phase.

Term

  91.     A company would be expected to generate small amounts of cash from operations during the

Definition

a. introductory phase.

            b.   growth phase.

            c.   maturity phase.

            d.   decline phase.

Term

  92.     The phase in the product life cycle when a company is purchasing fixed assets and beginning to produce and sell is the

Definition

    a.     introductory phase.

            b.   growth phase.

            c.   maturity phase.

            d.   decline phase.

Term

  93.     Cash from operations and net income are approximately the same during the

Definition

a. introductory phase.

            b.   growth phase.

            c.   maturity phase.

            d.   decline phase.

Term

  94.     Which one of the following items is not necessary in preparing a statement of cash flows?

Definition

a. Determine the change in cash

            b.   Determine the cash provided by operations

            c.   Determine cash from financing and investing activities

            d.   Determine the cash in each of the bank accounts

Term

  95.     If accounts receivable have increased during the period

Definition

a. revenues on an accrual basis are less than revenues on a cash basis.

            b.   revenues on an accrual basis are greater than revenues on a cash basis.

            c.   revenues on an accrual basis are the same as revenues on a cash basis.

            d.   expenses on an accrual basis are greater than expenses on a cash basis.

Term

  96.     Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

Definition

a. $240,000.

            b.   $250,000.

            c.   $310,000.

                                d.             $230,000
Term

  97.     Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

Definition

a. $120,000.

            b.   $125,000.

            c.   $155,000.

            d.   $115,000.

Term

  98.     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

Definition

a. $110,000.

            b.   $105,000.

            c.   $115,000.

            d.   $150,000.

Term

  99.     If accounts payable have increased during a period

Definition

a. revenues on an accrual basis are less than revenues on a cash basis.

            b.   expenses on an accrual basis are less than expenses on a cash basis.

            c.   expenses on an accrual basis are greater than expenses on a cash basis.

            d.   expenses on an accrual basis are the same as expenses on a cash basis.

Term

100.     Which one of the following affects cash during a period?

Definition

a. Recording depreciation expense

            b.   Declaration of a cash dividend

            c.   Write-off of an uncollectible account receivable

            d.   Payment of an accounts payable

Term

101.     In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

Definition

    a.     added to net income.

            b.   deducted from net income.

            c.   ignored because it does not affect cash.

            d.   not reported on a statement of cash flows.

Term

102.     In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

Definition

a. added to net income.

            b.   deducted from net income.

            c.   ignored because it does not affect cash.

            d.   not reported on a statement of cash flows.

Term

103.     Bilton Company reported net income of $30,000 for the year.  During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $5,000 was recorded.  Net cash provided by operating activities for the year is

Definition

    a.     $25,000.

            b.   $45,000.

            c.   $29,000.

            d.   $30,000.

Term

104.     Wilton Company reported net income of $40,000 for the year.  During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $5,000 was recorded.  Net cash provided by operating activities for the year is

Definition

    a.     $30,000.

            b.   $45,000.

            c.   $39,000.

            d.   $35,000  

Term

105.     Loster Company reported a net loss of $10,000 for the year ended December 31, 2007. During the year, accounts receivable decreased $5,000, merchandise inventory increased $8,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded.  During 2007, operating activities

Definition

a. used net cash of $2,000.

            b.   used net cash of $8,000.

            c.   provided net cash of $2,000.

            d.   provided net cash of $8,000.

Term

106.     Buster Company reported a net loss of $3,000 for the year ended December 31, 2007. During the year, accounts receivable decreased $7,000, merchandise inventory increased $5,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. During 2007, operating activities

Definition

    a.     used net cash of $1,000.

            b.   used net cash of $14,000.

            c.   provided net cash of $14,000.

            d.   provided net cash of $9,000.

Term
107.     Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the
Definition

a. direct method.

            b.   indirect method.

            c.   working capital method.

            d.   cost-benefit method.

Term

108.     In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Definition

a. deducted from net income.

            b.   added to net income.

            c.   ignored because it does not affect income.

            d.   ignored because it does not affect expenses.

Term

109.     Using the indirect method, patent amortization expense for the period

Definition

a. is deducted from net income.

            b.   causes cash to increase.

            c.   causes cash to decrease.

            d.   is added to net income.

Term

110.     In developing the cash flows from operating activities, most companies in the United States

Definition

a. use the direct method.

            b.   use the indirect method.

            c.   present both the indirect and direct methods in their financial reports.

            d.   prepare the operating activities section on the accrual basis.

Term

111.     Which of the following would be subtracted from net income using the indirect method?

Definition

a. Depreciation expense

            b.   An increase in accounts receivable

            c.   An increase in accounts payable

            d.   A decrease in prepaid expenses

Term
Definition
Term

112.     Which of the following would be added to net income using the indirect method?

Definition

a. An increase in accounts receivable

            b.   An increase in prepaid expenses

            c.   Depreciation expense

            d.   A decrease in accounts payable

Term

113.     Which of the following would not be an adjustment to net income using the indirect method?

Definition

a. Depreciation Expense

            b.   An increase in Prepaid Insurance

            c.   Amortization Expense

            d.   An increase in Land

Term

114.     In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Definition

a. subtraction from net income.

            b.   addition to net income.

            c.   addition to cash flow from investing activities.

            d.   subtraction from cash flow from investing activities.

Term

115.     Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is correct?

Definition

                  Add to Net Income         Deduct from Net Income

            a.   Accounts Receivable            increase                              decrease

            b.   Prepaid Expenses                 increase                              decrease

            c.   Inventory                              decrease                           increase

            d.   Taxes Payable                       decrease                            increase

Term

116.     Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Definition

Add to Net Income                           Deduct from Net Income

            a.   Accounts Receivable              decrease                         increase

            b.   Prepaid Expenses                increase                         decrease

            c.   Inventory                                  decrease                         increase

            d.   Accounts Payable                   increase                           decrease

Term

117.     Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?

Definition

a. Gain on Sale of Equipment

            b.   Depreciation Expense

            c.   Patent Amortization Expense

            d.   Depletion Expense

Term

118.     Using the indirect method, if equipment is sold at a gain, the

Definition

    a.     sale proceeds received are deducted in the operating activities section.

            b.   sale proceeds received are added in the operating activities section.

            c.   amount of the gain is added in the operating activities section.

            d.   amount of the gain is deducted in the operating activities section.

Term

119.     On the statement of cash flows using the indirect method, patent amortization expense will

Definition

a. be added to net income in the operating section.

            b.   be deducted from net income in the operating section.

            c.   appear as an inflow of cash in the investing section.

            d.   appear as an outflow of cash in the investing section.

Term

120.     A company had net income of $705,000. Depreciation expense is $78,000.  During the year, accounts receivable and inventory increased $45,000 and $120,000, respectively. Prepaid expenses and accounts payable decreased $6,000 and $12,000, respectively. There was also a loss on the sale of equipment of $9,000. How much cash was provided by operating activities?

Definition

a. $603,000.

            b.   $621,000.

            c.   $843,000.

            d.   $879,000.

Term

121.     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?

Definition

a. $214,000.

            b.   $207,000.

            c.   $274,000.

d.   $295,000.

Term

122.     The net income reported on the income statement for the current year was $840,000. Depreciation recorded on plant assets was $38,000. Accounts receivable and inventories increased by $8,000 and $32,000, respectively. Prepaid expenses and accounts payable decreased by $4,000 and $44,000, respectively. How much cash was provided by operating activities?

Definition

a. $760,000

            b.   $840,000

            c.   $798,000

            d.   $984,000

Term
Definition
Term

123.     The net income reported on the income statement for the current year was $205,000. Depreciation recorded on plant assets was $38,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $1,000 and $11,000, respectively. How much cash was provided by operating activities?

Definition

    a.     $185,000

            b.   $223,000

            c.   $205,000

            d.   $239,000

Term

124.     The net income reported on the income statement for the current year was $220,000.  Depreciation was $50,000. Accounts receivable and inventories decreased by $10,000 and $30,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $1,000 and $8,000. How much cash was provided by operating activities?

Definition

    a.     $281,000

            b.   $317,000

            c.   $301,000

            d.   $239,000

Term

125.     The net income reported on the income statement for the current year was $210,000. Depreciation was $25,000. Accounts receivable and inventories decreased by $5,000 and $15,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $500 and $4,000. How much cash was provided by operating activities?

Definition

    a.     $240,500

            b.   $250,500

            c.   $258,500

            d.   $219,500

Term

126.     The indirect and direct methods of preparing the statement of cash flows are identical except for the

Definition

a. significant noncash activity section.

            b.   operating activities section.

            c.   investing activities section.

            d.   financing activities section.

Term
127.     If $180,000 of bonds are issued during the year but $300,000 of old bonds are retired during the year, the statement of cash flows will show a(n)
Definition

a. net increase in cash of $120,000.

            b.   net decrease in cash of $120,000.

            c.   increase in cash of $180,000 and a decrease in cash of $300,000.

            d.   net loss on retirement of bonds of $120,000.

Term

128.     If $120,000 of bonds are issued during the year but $200,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Definition

a. net increase in cash of $80,000.

            b.   net decrease in cash of $80,000.

            c.   increase in cash of $120,000 and a decrease in cash of $200,000.

            d.   net loss on retirement of bonds of $80,000.

Term

129.     Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?

                           1.   Declaration and payment of a cash dividend during the period

                           2.   Net income for the period

Definition

a. 1

            b.   2

            c.   Neither 1 nor 2

            d.   Both 1 and 2

Term

130.     The statement of cash flows

Definition

a.   is prepared instead of an income statement under generally accepted accounting principles.

      b.   is used to assess an entity's ability to pay dividends and meet obligations.

      c.   is prepared from comparative income statements.

      d.   reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement.

Term

131.     In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Definition

a. the adjusted trial balance.

            b.   the current period's retained earnings statement.

            c.   a comparative balance sheet.

                        d.         a comparative income statement
Term

132.     To determine the net cash provided (used) by operating activities, it is necessary to analyze

Definition

    a.     the current year's income statement.

            b.   a comparative balance sheet.

            c.   additional information.

            d.   all of the above.

Term

133.     Which of the following would not be needed to determine net cash provided by operating activities?

Definition

a. Depreciation expense

            b.   Change in accounts receivable

            c.   Payment of cash dividends

            d.   Change in prepaid expenses

Term

134.     When equipment is sold for cash, the amount received is reflected as a cash

Definition

a. inflow in the operating section.

            b.   inflow in the financing section.

            c.   inflow in the investing section.

            d.   outflow in the operating section.

Term

135.     The statement of cash flows will not provide insight into

Definition

a. why dividends were not increased.

            b.   whether cash flow is greater than net income.

            c.   the exact proceeds of a future bond issue.

            d.   how the retirement of debt was accomplished.

Term

136.     If a gain of $18,000 is incurred in selling (for cash) office equipment having a book value of $120,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Definition

a. $102,000.

            b.   $120,000.

            c.   $138,000.

            d.   $18,000.

Term

137.     If a loss of $31,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Definition

            a.   $69,000.

            b.   $100,000.

            c.   $131,000.

            d.   $31,000.

Term
138. If a gain of $10,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is
Definition

a. $90,000.

            b.   $110,000.

            c.   $100,000.

            d.   $10,000.

Term

139.     If a loss of $12,500 is incurred in selling (for cash) office equipment having a book value of $50,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Definition

a. $37,500.

            b.   $50,000.

            c.   $62,500.

            d.   $12,500.

Term

140.     Land costing $125,000 was sold for $155,000 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?

Definition

    a.     $125,000

            b.   $155,000

            c.   $185,000

            d.   $30,000

Term

141.     When using the indirect method to compute cash provided by operating activities

Definition

a. income taxes paid may be ignored.

            b.   amortization expense is added to net income.

            c.   decreases in inventory are subtracted from net income.

            d.   increases in accounts receivable are added to net income.

Term

142.     A transaction involving a gain on the sale of equipment affects cash provided (used) by

Definition

    a.     financing and investing activities.

            b.   operating and financing activities.

            c.   operating and investing activities.

            d.   operating, financing, and investing activities.

Term

143.     Harbor Company reported net income of $60,000 for the year ended December 31, 2007.  During the year, inventories decreased by $12,000, accounts payable decreased by $18,000, depreciation expense was $20,000 and a gain on disposal of equipment of $9,000 was recorded.  Net cash provided by operating activities in 2007 using the indirect method was

Definition

a. $119,000.

            b.   $65,000.

            c.   $77,000.

            d.   $55.000.

Term

144.     All of the following adjustments are added to net income in computing net cash provided by operating activities except

Definition

    a.     amortization expense.

            b.   a decrease in accounts receivable.

            c.   an increase in accounts payable.

            d.   an increase in prepaid expenses.

Term

145.     All of the following adjustments would be deducted in determining net cash provided by operating activities except a(n)

Definition

a. increase in inventories.

            b.   depreciation expense.

            c.   gain on sale of plant assets.

            d.   decrease in accrued expenses payable.

Term

146.     Each of the following is an adjustment to convert net income to net cash provided by operating activities except

Definition

a. adding back noncash expenses.

            b.   adding gains and deducting losses.

            c.   analyzing changes to noncash current asset and current liability accounts.

            d.   All of the above are adjustments.

Term

147.     The current cash debt coverage ratio is computed by dividing

Definition

    a.     average current liabilities by cash provided by operating activities.

            b.   cash provided by operating activities by average current liabilities.

            c.   ending current liabilities by cash provided by operating activities.

            d.   cash provided by operating activities by ending current liabilities.

Term

148.     What is the current cash debt coverage ratio?

Definition

a. 1.167 times

            b.   .525 times

            c.   .833 times

            d.   .333 times

Term

149.     What is the cash debt coverage ratio?

Definition

a.   .375 times

            b.   1.17 times

            c.   .525 times

            d.   1.625 times

Term

150.     The current cash debt coverage ratio is used to evaluate

Definition

a. solvency.

            b.   profitability.

            c.   liquidity.

            d.   earning power.

Term

151.     The cash debt coverage ratio is computed by dividing net cash provided by operating activities by

Definition

a. average current liabilities.

            b.   net sales.

            c.   average long-term liabilities.

            d.   average total liabilities.

Term

152.     Free cash flow provides an indication of a company’s ability to

Definition

a. generate cash to invest in new capital expenditures.

            b.   generate net income.

            c.   generate cash to pay dividends.

            d.   both (a) and (c).

Term

*153.    Cent Company reports a $24,000 increase in inventory and a $6,000 increase in accounts payable during the year. Cost of goods sold for the year was $180,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Definition

a. $180,000.

            b.   $198,000.

            c.   $150,000.

            d.   $162,000.

Term

*154.    The cost of goods sold during the year was $165,000. Merchandise inventory decreased by $6,000 during the year and accounts payable decreased by $3,000 during the year.  Using the direct method of reporting cash flows from operating activities, cash payments for       merchandise total

Definition

a. $168,000.

            b.   $162,000.

            c.   $156,000.

            d.   $174,000.

Term

*155.    Bent Company reports a $20,000 increase in inventory and a $5,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $150,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Definition

a. $150,000.

            b.   $165,000.

            c.   $175,000.

            d.   $135,000.

Term

*156.    The cost of goods sold during the year was $220,000. Merchandise inventory increased by $8,000 during the year and accounts payable decreased by $4,000 during the year.  Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

Definition

a.     $224,000.

        b.   $216,000.

        c.   $208,000.

        d.   $232,000.

Term

*157.    Simon Company had credit sales of $1,050,000. The beginning accounts receivable balance was $60,000 and the ending accounts receivable balance was $210,000. Using the direct method of reporting cash flows from operating activities, what were the cash collections from customers during the period?

Definition

    a.     $1,200,000

            b.   $1,050,000

            c.   $900,000

            d.   $1,110,000

Term

* 158.    During 2007, Unruh Company had $160,000 in cash sales and $1,400,000 in credit sales. The accounts receivable balances were $180,000 and $212,000 at December 31, 2006 and 2007, respectively. Using the direct method of reporting cash flows from operating activities, what was the total cash collected from all customers during 2007?

Definition

a. $1,368,000

            b.   $1,592,000

            c.   $1,560,000

            d.   $1,528,000

Term
Using the direct method of reporting cash flows from operating activities, what was the amount of cash paid for insurance premiums by Klugman during 2007?
Definition

    a.     $679,000

            b.   $721,000

            c.   $840,000

            d.   $861,000

Term

*160.    Cash receipts from customers are greater than sales revenues when there is a(n)

Definition

    a.     increase in accounts receivable.

            b.   decrease in accounts receivable.

            c.   increase in cost of goods sold.

            d.   decrease in cost of goods sold.

Term

*161.    Wynn Company had an increase in inventory of $80,000. The cost of goods sold was $180,000. There was a $20,000 decrease in accounts payable from the prior period. Using the direct method of reporting cash flows from operating activities, what were Wynn's cash payments to suppliers?

Definition

a. $280,000

            b.   $120,000

            c.   $240,000

            d.   $200,000

Term

*162.    Which of the following items does not appear in the statement of cash flows under the direct method?

Definition

a. Cash payments to suppliers

            b.   Cash collections from customers

            c.   Depreciation Expense

            d.   Cash from the sale of equipment

Term

*163.    Logan Company has other operating expenses of $260,000. There has been a decrease in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 larger than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Logan's cash payments for operating expenses?

Definition

    a.     $248,000

            b.   $252,000

            c.   $220,000

            d.   $300,000

Term

*164.    Miley Corporation shows income tax expense of $210,000. There has been a $15,000 decrease in federal income taxes payable and a $21,000 increase in state income taxes payable during the year. Using the direct method of reporting cash flows from operating activities, what was Miley's cash payment for income taxes?

Definition

    a.     $210,000

            b.   $204,000

            c.   $174,000

            d.   $246,000

Term

*165.    Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?

Definition

a. Cash receipts from customers

            b.   Cash paid for income taxes

            c.   Gain on sale of equipment

            d.   Cash paid to employees

Term

*166.    Which of the following statements concerning the statement of cash flows is true?

Definition

a. The statement of cash flows is usually more accurate when using the indirect method.

      b.   If the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided.

      c.   The statement of cash flows reflects both earnings per share and cash per share.

      d.   The statement of cash flows is an optional financial statement for external reporting purposes.

Term

            If cost of goods sold for the year is $180,000,  the amount of cash paid to suppliers using the direct method is

Definition

    a.     $175,000.

            b.   $185,000.

            c.   $145,000.

            d.   $215,000.

Term

*168.    During the year, Salaries Payable decreased by $6,000. Using the direct method of reporting cash flows from operating activities, if Salary Expense amounted to $190,000 for the year, the cash paid to employees (including deductions from gross pay) is

Definition

    a.     $196,000.

            b.   $190,000.

            c.   $184,000.

            d.   $202,000.

Term
Definition