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Exam 12: Statement of Cash Flows

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Question 1

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Belvedere Corporation had a balance in its Equipment account on January 1,Year 1 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 1?

A) $40,000
B) $25,000
C) $90,000
D) $92,000

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

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Question 2

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[The following information applies to the questions displayed below.] During Year 1, El Paso Company had the following changes in account balances: The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000. The increase was due to depreciation expense. The Long-Term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000. The decrease was due to repayment of debt. The Equipment Account had a beginning balance of $25,000 and an ending balance of $92,500. The increase was due to the purchase of other operational assets. The Long-Term Investments Account (Marketable Securities) had a beginning balance of $18,000 and an ending balance of $12,500. The decrease was due to the sale of investments at cost. The Dividends Payable account had a beginning balance of $12,000 and an ending balance of $10,000. There were $20,000 of dividends declared during the period. The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250. The difference was due to the payment of interest. -What is the net cash flow from financing activities?

A) $22,000 inflow
B) $25,000 inflow
C) $25,000 outflow
D) $47,000 outflow

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

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Question 3

Multiple Choice

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LePage Corporation reported a beginning balance of $2,200 in its Prepaid Insurance account.During the year,a total of $17,000 was recognized as Insurance Expense and the Prepaid Insurance account had an ending balance of $1,800.How much cash did LePage pay for insurance during the year?

Erie Company reports the following comparative balance sheets and income statement information for the current year. Comparative Balance Sheets 12/31/2015 12/31/2016 -Assuming accounts payable is used for inventory purchases only,what was the amount of cash paid for inventory purchases during the year?

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? $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Cash Flows Net Income $\quad$$\quad$ Operating $\quad$$\quad$ Investing $\quad$$\quad$$\quad$$\quad$ Financing

When the direct method is used to prepare the operating activities section of the statement of cash flows,cash inflows from customers and cash outflows for depreciation are among the categories of cash flows likely to be reported.

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?

Erie Company reports the following comparative balance sheets and income statement information for the current year. Comparative Balance Sheets 12/31/2015 12/31/2016 -What was the cash received from customers during the year?

In preparing the operating activities section of the statement of cash flows by the indirect method,gains are added to net income.

Which of the following describes the only difference between the direct and indirect methods of preparing the statement of cash flows?

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.

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

Which of the following transactions is a use of cash?

The following beginning and ending balances were drawn from the records of Allen Co. If Allen Co.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?

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

The indirect method for preparing the operating activities section of the statement of cash flows begins with the amount of sales revenue reported on the income statement.

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.

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?

Statler Corporation has beginning and ending accounts payable balances of $400 and $800,respectively.Inventory had beginning and ending balances of $700 and $600,respectively.If cost of goods sold was $2,800,how much cash was spent to purchase inventory?

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