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Exam 12: Statement of Cash Flows

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Question 21

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How would the issuance of a mortgage note in exchange for a building be reported on the statement of cash flows?

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

E) A) and D)
F) B) and C)

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Question 22

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Warren Corporation's balance sheet reports equipment that originally cost $65,000.The accumulated depreciation for the equipment is $25,000.Warren sells the equipment for $37,000.What would the effect be on its income statement and statement of cash flows? Income Statement $\quad$$\quad$$\quad$ Cash Flows

A) $\text { Gain: } \$ 37,000 \quad \text { Irvesting } + \$ 37,000$
B) $\text { Gain: } \$ 3,000 \quad \text { Operating } - \$ 3,000$
C) $\text { Loss : } \$ 3,000 \quad \text { Operating } - \$ 3,000$
D) $\text { Loss : } \$ 3,000 \quad \text { Irvesting } + \$ 37,000$

E) A) and C)
F) A) and B)

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Question 23

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Companies report significant noncash investing and financing activities on a schedule that accompanies the statement of cash flows.

If cash from operating activities was $48,000,cash used for investing activities was ($88,000) and the net change in cash was $96,000,what was cash from/used for financing activities?

Which of the following is an incorrect statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?

A cash payment to purchase treasury stock is reported on the statement of cash flows as a financing activity.

Anton Company reported a beginning balance of $13,200 and an ending balance of $14,400 in its Unearned Revenue account for the current year.During the year,$36,000 of revenue (previously unearned) was recognized.Considering only this information,how much cash was received in advance from customers during the year?

How is the cash paid to purchase land reported in the statement of cash flows?

Pittsburgh Company pays cash for all inventory purchases.The company had a beginning inventory of $18,500 and an ending inventory of $16,900.Their cost of goods sold amounted to $75,000.Based on this information,what was the amount of cash paid for inventory purchases?

Which of the following transactions affects cash flows?

What is the name given to the sum of the subtotals of the three sections (operating activities,investing activities,and financing activities) of the statement of cash flows?

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.

Which of the following cash flows would be included in the operating activities section of the statement of cash flows if the direct method is used?

Chisholm Associates uses the indirect method to prepare the operating activities section of the statement of cash flows.The following accounts and balances were drawn from the company's accounting records: Net income for the period was $80,000.What is the net cash flows from operating activities?

Bristol Corporation reported a beginning balance of $6,200 in accounts receivable.During the year,sales on account totaled $49,600.If the ending balance of accounts receivable amounts to $25,000,what was the amount of cash received from customers?

The financial statements of Gregg Co.reported wages expense of $160,000 during Year 2,wages payable of $16,000 at the beginning of Year 2,and wages payable of $22,000 at the end of Year 2.What amount of cash was paid for wages during Year 2?

On January 1,Year 1,Mayer Corporation signed a contract to perform $25,000 worth of services for Phips Company over the next three years.Which of the following indicates the effects of this event on the Year 1 income statement and statement of cash flows of Mayer Corporation? Cash Flows Net Income Operating Investing Financing

Cash flow from operating activities is often less stable from year to year than the amount of net income reported on the income statement.

In preparing the operating activities section of the statement of cash flows by the indirect method,decreases in noncash current liabilities are added to net income.

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.