Question 1

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  What is the ending balance for retained earnings?

Accepted Answer

A)   $276,000.
B)   $202,000.
C)   $254,000.
D)   $248,000.
E)   $174,000.F) All of the above
G) B) and E)

Question 2

A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

Accepted Answer

A) True 
 B)False

Question 3

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.

Accepted Answer

A)   $218,000.
B)   $223,200.
C)   $220,000.
D)   $228,800.
E)   $234,000.F) A) and B)
G) D) and E)

Question 4

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

Accepted Answer

Operating ...

Question 5

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 6

The statement of cash flows is divided into three sections called the ___________, ___________, and _______________ sections.

Accepted Answer

Operati ng...

Question 7

Use the following calendar-year information to prepare David Company's statement of cash flows using the direct method.

Accepted Answer

The answer of Use the following calendar-year information to prepare...

Question 8

Sebring Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Sebring Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

Accepted Answer

A)   $23,000.
B)   $33,000.
C)   $28,000.
D)   $40,000.
E)   $68,000.F) C) and D)
G) B) and C)

Question 9

In preparing a company's statement of cash flows for the year just ended, the following information is available:  Net cash flows from financing activities for the year were:

Accepted Answer

A)   $130,000 of net cash used by financing activities.
B)   $165,000 of net cash used by financing activities.
C)   $222,000 of net cash used by financing activities.
D)   $88,000 of net cash used by financing activities.
E)   $206,000 of net cash used by financing activities.F) B) and D)
G) A) and E)

Question 10

Based on the information in the following income statement and balance sheet for Montego Bay Corporation, determine the cash flows from operating activities using the direct method.

Accepted Answer

The answer of Based on the information in the following...

Question 11

Define and discuss the differences between operating, investing and financing activities.

Accepted Answer

Operating activities involve the day-to-...

Question 12

___________________ activities generally include those transactions and events that affect long-term assets.

Accepted Answer

The answer of ___________________ activities generally include those transactions and...

Question 13

Cash paid for merchandise is an operating activity.

Accepted Answer

A) True 
 B)False

Question 14

The direct method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)   Separately lists each major item of operating cash receipts and cash payments.
B)   Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement.
C)   Reports a different amount of cash flows from operations than if the indirect method is used.
D)   Is required if the company is a merchandiser.
E)   Is required by the FASB.F) B) and D)
G) A) and E)

Question 15

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

Accepted Answer

A)   Operating activities.
B)   Financing activities.
C)   Investing activities.
D)   Schedule of noncash investing or financing activity.
E)   None of these. This is not reported on the statement of cash flows.F) A) and B)
G) B) and D)

Question 16

A purchase of land in exchange for shares of stock is disclosed on the statement of cash flows or in a note to the statement.

Accepted Answer

A) True 
 B)False

Question 17

All of the following statements related to preparation of the statement of cash flows under U.S. GAAP and IFRS are true except:

Accepted Answer

A)   Both U.S. GAAP and IFRS permit the reporting of cash flows from operating activities using either the direct or indirect method.
B)   IFRS permits classification of cash outflows for interest expense under operating or financing depending on which one results in better cash flows from operating activities.
C)   U. S. GAAP requires cash outflows for income tax be classified as operating activities.
D)   IFRS permits the splitting of income tax cash flows among operating, investing and financing depending on the sources of that tax.
E)   IFRS permits classification of interest expense under operating or financing activities provided it is consistently applied across periods.F) A) and B)
G) C) and D)

Question 18

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

Accepted Answer

A)   Operating activities.
B)   Investing activities.
C)   Financing activities.
D)   Direct activities.
E)   Indirect activities.F) A) and B)
G) B) and C)

Question 19

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n) :

Accepted Answer

A)   Operating activity.
B)   Investing activity.
C)   Financing activity.
D)   Noncash investing and financing activity.
E)   None of these. This is not reported in the statement of cash flows.F) A) and B)
G) B) and C)

Question 20

When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added to net income.

Accepted Answer

A) True 
 B)False

Exam 16: Reporting the Statement of Cash Flows

___________________ activities generally include those transactions and events that affect long-term assets.

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When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added to net income.

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A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

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Cash paid for merchandise is an operating activity.

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The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

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Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

Correct AnswerverifiedOperating ...View AnswerShow Answer

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.

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The direct method for the preparation of the operating activities section of the statement of cash flows:

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The statement of cash flows is divided into three sections called the ___________, ___________, and _______________ sections.

Correct AnswerverifiedOperati ng...View AnswerShow Answer

Define and discuss the differences between operating, investing and financing activities.

Correct AnswerverifiedOperating activities involve the day-to-...View AnswerShow Answer

Based on the information in the following income statement and balance sheet for Montego Bay Corporation, determine the cash flows from operating activities using the direct method.

Correct AnswerverifiedShow Answer

A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n) :

Correct AnswerverifiedShow Answer

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

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Use the following calendar-year information to prepare David Company's statement of cash flows using the direct method.

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In preparing a company's statement of cash flows for the year just ended, the following information is available: Net cash flows from financing activities for the year were:

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All of the following statements related to preparation of the statement of cash flows under U.S. GAAP and IFRS are true except:

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The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: What is the ending balance for retained earnings?

Correct AnswerverifiedShow Answer

A purchase of land in exchange for shares of stock is disclosed on the statement of cash flows or in a note to the statement.

Correct AnswerverifiedShow Answer

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Operating ...
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The statement of cash flows is divided into three sections called the _____, _, and ___________ sections.

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Operati ng...
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Operating activities involve the day-to-...
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