Question 1 1. Which of the following is a cash equivalent for purposes of prepar

Question

Question 1
1.
Which of the following is a cash equivalent for purposes of preparing a statement of cash flows?
Answer

A. Accounts receivable

B. Investment in a money market fund

C. Inventory

D. Investment in subsidiary company common stock
1 points

Question 2
1.
A typical example of a cash equivalent is an investment in:
Answer

A. Treasury stock

B. Commercial paper

C. Stock of other companies selling on an exchange

D. All of the above
1 points

Question 3
1.
A firm's net cash flow from operating activities includes:
Answer

A. Cash received from issuance of common stock

B. Cash received from sale of equipment

C. Cash received as payment of loan from a borrower

D. Cash received from sale of merchandise
1 points

Question 4
1.
A firm's cash flow from financing activities includes:
Answer

A. Cash received as interest income

B. Cash received from sale of investment in bonds

C. Cash paid to reacquire treasury stock

D. Cash paid for merchandise purchased
1 points

Question 5
1.
Which of the following is disclosed separately in a statement of cash flows using the indirect method?
Answer

A. Cash received from customers

B. Cash paid to employees and other suppliers

C. Increase in retained earnings for the period

D. Net income
1 points

Question 6
1.
Laborto Inc. has an accrual basis net loss of $14,000 and the following related items:
Depreciation expense $11,000
Accounts receivable decrease 8,000
Inventory increase 6,000
Accounts payable increase 3,000
Accrued liabilities increase 5,000

How much is Laborto's net cash flow from operating activities?
Answer

A. $35,000

B. $ 7,000

C. ($ 4,000)

D. ($13,000)
1 points

Question 7
1.
A company reported annual sales revenue of $450,000. During the year, accounts receivable decreased from a $14,000 beginning balance to a $12,000 ending balance. Accounts payable decreased from a $11,000 beginning balance to a $8,000 ending balance. How much is cash received from customers for the year?
Answer

A. $448,000

B. $462,000

C. $449,000

D. $452,000
1 points

Question 8
1.
A company reported cost of goods sold of $440,000 for the year. During the year, inventory increased from a $23,000 beginning balance to a $35,000 ending balance, and accounts payable increased from a $12,000 beginning balance to a $14,000 ending balance. How much is the cash paid for merchandise purchased during the year?
Answer

A. $450,000

B. $426,000

C. $452,000

D. $430,000
1 points

Question 9
1.
With reference to the reporting of net cash flow from operating activities, which method do most companies use and why?
Answer

A. Direct method because it requires a supplemental indirect method section

B. Indirect method because it provides better information for decision making

C. Direct method because it is based on the accrual basis of accounting

D. Indirect method because it is less expensive to prepare
1 points

Question 10
1.
Consider the following events. Compute the net cash flow from investing activities (parentheses indicate an outflow).

Explanation / Answer

1.
Which of the following is a cash equivalent for purposes of preparing a statement of cash flows?
A. Accounts receivable

Question 2
A typical example of a cash equivalent is an investment in:
B. Commercial paper

Question 3
A firm's net cash flow from operating activities includes:
D. Cash received from sale of merchandise

Question 4
A firm's cash flow from financing activities includes:
C. Cash paid to reacquire treasury stock

Question 6
Laborto Inc. has an accrual basis net loss of $14,000 and the following related items:
Depreciation expense $11,000
Accounts receivable decrease 8,000
Inventory increase 6,000
Accounts payable increase 3,000
Accrued liabilities increase 5,000

How much is Laborto's net cash flow from operating activities?
C. ($ 4,000)

Question 7
A company reported annual sales revenue of $450,000. During the year, accounts receivable decreased from a $14,000 beginning balance to a $12,000 ending balance. Accounts payable decreased from a $11,000 beginning balance to a $8,000 ending balance. How much is cash received from customers for the year?
D. $452,000

Question 8
A company reported cost of goods sold of $440,000 for the year. During the year, inventory increased from a $23,000 beginning balance to a $35,000 ending balance, and accounts payable increased from a $12,000 beginning balance to a $14,000 ending balance. How much is the cash paid for merchandise purchased during the year?
A. $450,000

Question 9
With reference to the reporting of net cash flow from operating activities, which method do most companies use and why?
B. Indirect method because it provides better information for decision making

Question 10
1.
Consider the following events. Compute the net cash flow from investing activities (parentheses indicate an outflow).
• Cash of $46,000 was used to purchase a used truck.
• Cash of $40,000 was used to retire bonds.
• Cash of $25,000 was received from the sale of an investment at a loss.
• Cash dividends of $14,000 were received from an investment.
• Plant assets were depreciated $6,000, under the straight-line method
B. ($21,000)


Question 11
Consider the following. Using the Indirect Method, the Net Cash provided by Operating Activities was:
• Net income, $90,000
• Depreciation Expense $11,000
• Increase in accounts receivable, $4,000
• Decrease in merchandise inventory, $20,000
• Decrease in accounts payable, $8,000
• Increase in income taxes payable, $3,000
D. $112,000

Question 12
Chen Company's financial statements show a net income of $184,000. The following items also appear on Chen's balance sheet:
Depreciation expense $40,000
Accounts receivable decrease 12,000
Inventory increase 28,000
Accounts payable increase 8,000

Using the indirect method, what is Chen's net cash flow from operating activities?
C. $216,000

Question 13
Consider the following. Calculate the net cash provided (or used) by operating activities using the indirect method.
Net Income $12,300
Depreciation Expense 12,000
Gain on Sale of Land 7,500
Increase in Inventory 2,050
Increase in Wages Payable 6,150
Payment of Dividends 2,000
D. $35,900

Question 14
The beginning balance of Prepaid Interest was $1,800 and the ending balance was $2,100. The Interest Expense account for the year was $8,600. How much cash was paid for interest?
C. $8,300

Question 15
Boyer Corporation shows income tax expense of $60,000. There has been a $5,000 decrease in federal income taxes payable and a $7,000 increase in state income taxes payable during the year. What was Boyer's cash payment for income taxes?
C. $62,000

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