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Exam 12: Statement of Cash Flows

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Question 51

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The following beginning and ending balances were drawn from the records of Allen Company. If Allen Company sold equipment that had an original cost of $175,000 and accumulated depreciation of $75,000 for $62,500, how much did Allen pay for new equipment?

A) $12,500
B) $25,000
C) $100,000
D) $250,000

E) B) and C)
F) All of the above

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Question 52

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The following income statement was drawn from the annual report of Newtown Company: What is the net cash flow from operating activities?

A) $37,400
B) $43,900
C) $41,000
D) $34,500

E) None of the above
F) A) and B)

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Question 53

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In preparing the statement of cash flows by the indirect method, increases in noncash current assets are subtracted from net income.

What is the major advantage of using the direct method of preparing the operating activities section of the statement of cash flows?

Rapid growth of a company can cause it to be short of cash.

O'Hara Company uses the direct method to prepare the operating activities section of its statement of cash flows. The following information is available for Year 2. Required:a)What amount of cash was paid for the purchase of merchandise?b)Using only this information, prepare the operating activities section of the statement of cash flows.

Jones Company requires prepayment from all customers. Jones Company reported revenue of $258,000 on its Year 1 income statement. The balance in its Unearned Revenue account was $12,000 at the start of Year 1 and $4,000 at the end of the year. Based on this information alone, the amount of cash that Jones collected from customers for Year 1 was $250,000.

Which of the following items would be classified as a cash flow from investing activities?1) Issue common stock for cash2) Payment on principal of note payable3) Payment of dividends4) Sale of equipment for cash

Belvedere Corporation had a balance in its Equipment account on January 1, Year 2 of $320,000. During the year, equipment originally costing $85,000 and having Accumulated Depreciation of $20,000 was sold for $67,000. The ending balance of the Equipment Account was $275,000. How much did the company spend to purchase additional equipment during Year 2?

On January 1, Year 2, the balance of Jacobs Corporation's Accounts Receivable was $40,000. Sales on account for Year 2 amounted to $320,000 and the ending balance of Accounts Receivable was $64,000. What is the amount of cash collected from customers?

During Year 1, El Paso Company had the following changes in account balances: The Accumulated Depreciation account had a beginning balance of $100,000 and an ending balance of $140,000. The increase was due to depreciation expense.The Long-Term Notes Payable account had a beginning balance of $160,000 and an ending balance of $90,000. The decrease was due to repayment of debt.The Equipment Account had a beginning balance of $150,000 and an ending balance of $375,000. The increase was due to the purchase of other operational assets.The Long-Term Investments Account (Marketable Securities) had a beginning balance of $108,000 and an ending balance of $75,000. The decrease was due to the sale of investments at cost.The Dividends Payable account had a beginning balance of $72,000 and an ending balance of $60,000. There were $120,000 of dividends declared during the period.The Interest Payable account had a beginning balance of $13,500 and an ending balance of $7,500. The difference was due to the payment of interest.What is the net cash flow from financing activities?

Which of the following transactions is a use of cash?

On August 1, Year 1, Jackson Company issued a one-year $52,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end. What is the amount of interest expense and the cash outflow for interest during the year ending December 31, Year 1? (Do not round your intermediate calculations.)

For the year ended December 31, Year 1, Fields Company made cash payments of $57,300 for dividends, paid interest of $26,100, paid $35,300 cash to suppliers, and purchased equipment for $73,300 cash. What is the net cash used by investing activities for Year 1?

The following beginning and ending balances were drawn from the records of Allen Company. If Allen Company sold equipment that had an original cost of $1,150,000 and accumulated depreciation of $550,000 for $325,000, how much did Allen pay for new equipment?

If cash from operating activities was $33,000, cash used for investing activities was ($53,000) and the net change in cash was $61,200, what was cash from/used for financing activities?

If a company sells equipment at a loss, the loss from selling the equipment is reported in the investing activities section of the statement of cash flows.

The Club, Incorporated (TCI) presents its statement of cash flows using the indirect method. For the current year the Company reported net income of $120,000. All sales are on account and the balance in the Accounts Receivable account increased by $7,000. The balance in the unearned revenue account decreased by $6,000. Also, the company reported depreciation expense of $15,000 and a gain on the sale of equipment of $8,000. Based on this information alone, the amount of the cash flow from operating activities shown on statement of cash flows is

The direct method of preparing the operating activities section of the statement of cash flows shows increases and decreases in noncash current assets and current liabilities to arrive at cash flows from operating activities.

Why are financial analysts interested in the statement of cash flows?. a)________ Purchase of treasury stock would appear in the financing activities section of the SCF.b)________ Purchase of merchandise on account would appear in the operating activities section of the SCF.c)________ Payment of an account payable is an operating activity.d)________ Purchase of office supplies with cash would appear in the operating activities section of the SCF.e)________ Declarations of cash dividends would appear in the financing activities section of the SCF.