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Consider the following information: Consider the following information: Required: Use the indirect method to compute the amount of net cash flows provided by (used in)operating activities. Required: Use the indirect method to compute the amount of net cash flows provided by (used in)operating activities.

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The cash flow statement should be evaluated by examining the cash flow pattern suggested by the:


A) subtotals of each of the three main sections.
B) operating activities section since this section details the day to day operations of the business.
C) change in cash regardless of which section had the biggest impact on the change.
D) financing section since this section details how much debt the company has incurred.

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

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All of the following might be used to evaluate cash flow performance,except:


A) the absolute amount of cash flow.
B) whether cash flow is positive or negative.
C) the relationship between net income and cash flow.
D) the trend in sales and operating expenses.

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

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Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows.

A) True
B) False

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Which of the following are used to determine cash flows from financing activities?


A) Short-term debt, Accrued Liabilities, Common Stock, and Notes Payable
B) Long-term debt, Common Stock, and Retained Earnings
C) Short-term debt, Accrued Liabilities, Retained Earnings, and Bonds Payable
D) Long-term debt, Notes Payable, Interest Expense, and Bonds Payable

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

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Cash flows from operating activities include all of the following except:


A) a purchase of land.
B) collections from customers on account.
C) payments to employees for hours worked.
D) receipt of cash dividends.

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

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Which of the following statements about the statement of cash flows is not correct?


A) GAAP requires every company to report a statement of cash flows.
B) The statement of cash flows is contained in the notes to the financial statements.
C) The statement of cash flows is needed because the income statement and balance sheet do not provide adequate information about the changes in cash.
D) The statement of cash flows provides information about how each major type of business activity causes a company's cash to change.

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

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Supplemental disclosures required by companies using the indirect method include all of the following except:


A) cash paid for interest.
B) cash paid for income tax.
C) cash paid for dividends.
D) noncash investing and financing activities.

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

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When using the T-account approach to preparing the indirect method of the statement of cash flows,which of the following would be associated with amounts entered on the credit side of the Cash T-account?


A) Increase in Inventory
B) Decrease in Accounts Receivable
C) Decrease in Inventory
D) Increase in Accrued Liabilities

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

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Which of the following would be reported as a cash outflow from investing activities?


A) Donating an old piece of equipment to charity
B) Repaying the principal of a bond
C) Buying another company's bonds with cash
D) Acquiring an investment security by issuing company stock

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

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Use the information above to answer the following question.What was the amount of cash paid for purchases of equipment during the year?


A) $40,000
B) $43,000
C) $50,000
D) $31,000

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

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Cash flows from financing activities include all of the following except:


A) payment of long-term debt.
B) payment of interest.
C) proceeds from stock issuance.
D) cash dividends paid.

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

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The following additional information is available from the financial statements of Hitchens Company: The following additional information is available from the financial statements of Hitchens Company: What is the net cash provided by operating activities? A) $263,000 B) $285,000 C) $396,000 D) $368,000 What is the net cash provided by operating activities?


A) $263,000
B) $285,000
C) $396,000
D) $368,000

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

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During the current year,Todd Electronics had $610,000 in cash sales and $2,220,000 in credit sales.The Accounts Receivable balance was $530,000 at the beginning of the year and $425,000 at the end of the year.What was the total cash collected from customers during the year?


A) $2,935,000
B) $2,830,000
C) $2,725,000
D) $2,325,000

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

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Which of the following is included in the financing activities on a statement of cash flows?


A) Changes in accounts payable
B) Purchases of equipment
C) Paying interest to lenders
D) Cash dividends paid

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

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The Extra Surplus Company's Balance Sheet for December 31,2015 and the Income Statement for 2016 are shown below. The Extra Surplus Company's Balance Sheet for December 31,2015 and the Income Statement for 2016 are shown below. Additional data: -Sales were $13,000; $8,000 in cash was received from customers. -Bought new land for cash,$10,000. -Sold other land for its book value of $5,000. -Paid $1,000 principal on the long-term note payable and $1,000 in interest. -Issued new shares of stock for $10,000 cash. -Cash dividends of $1,000 were declared and paid to stockholders. -Paid $5,500 on accounts payable. -No inventory purchases were made; other expenses were incurred on account. -All wages were paid in cash. -Other expenses were on account. Required: Part a.Prepare a balance sheet at December 31,2016. Part b.Prepare the statement of cash flows using the direct method. Additional data: -Sales were $13,000; $8,000 in cash was received from customers. -Bought new land for cash,$10,000. -Sold other land for its book value of $5,000. -Paid $1,000 principal on the long-term note payable and $1,000 in interest. -Issued new shares of stock for $10,000 cash. -Cash dividends of $1,000 were declared and paid to stockholders. -Paid $5,500 on accounts payable. -No inventory purchases were made; other expenses were incurred on account. -All wages were paid in cash. -Other expenses were on account. Required: Part a.Prepare a balance sheet at December 31,2016. Part b.Prepare the statement of cash flows using the direct method.

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If the calculation of cash flows from operating activities starts with net income,the company:


A) is using the net income method.
B) will remove the effects of all noncash items included in the calculation of net income.
C) is using the direct method.
D) will add all noncash items not included in the calculation of net income.

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

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In arriving at cash from operating activities,subtracting a decrease in Salaries and Wages Payable from net income includes the cash effects of transactions that:


A) increased cash, but did not affect net income.
B) increased cash and increased net income.
C) decreased cash, but did not affect net income.
D) decreased cash and decreased net income.

E) C) and D)
F) None of the above

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Company X paid Company Y $1.35 million for a new plant.During the same accounting period,Company X experienced the following changes in its balance sheet: Cash decreased by $350,000,Accounts Receivable increased by $321,300,Inventory increased by $275,800,Property,Plant,and Equipment increased by $752,900,and Bonds Payable increased by $1 million.The net cash flow provided by financing activities is:


A) An inflow of $1.35 million.
B) An outflow of $350,000.
C) An inflow of $1 million.
D) An inflow of $752,900.

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

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When preparing the operating activities section of the statement of cash flows using the indirect method,a decrease in accounts receivable is subtracted from net income.

A) True
B) False

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