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Exam 12: Reporting and Interpreting the Statement of Cash Flows

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Question 61

Multiple Choice

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Given this information, what is the amount of inventory purchases?

A) $78,000
B) $80,000
C) $82,000
D) $79,000

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

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Question 62

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The issuance of a stock dividend is a cash outflow in the financing activities section of the statement of cash flows.

A) True
B) False

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Question 63

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The statement of cash flows of Aqua Company for the current year includes the following information: The balance sheet reports that the beginning balances in interest payable and income taxes payable were the same as their respective ending balances. Use the financial information above to calculate and interpret the: a. Capital Acquisitions Ratio. b. Quality of Income Ratio.

If a company reports negative net cash flows from operating activities, positive net cash flows from investing activities, and zero net cash flows from financing activities, this suggests that the company is selling its productive assets to cover its operating activities outflows.

When calculating net cash flow from financing activities using the direct method, a company must convert interest expense to cash paid for interest.

Which of the following would be classified as a financing activity on the statement of cash flows?

Wickersham Brothers Inc. is developing its annual financial statements at December 31, 2011. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized. a. Prepare the statement of cash flows for 2011 using the indirect method. b. Calculate the quality of income ratio and capital acquisitions ratio for 2011.

What is the net cash flows from financing activities?

Which of the following would not be considered cash and cash equivalents for purposes of preparing a statement of cash flows?

The net cash flow from operating activities is an inflow of $37,042, the net cash flow from investing activities is an outflow of $16,831, and the net cash flow from financing activities is an outflow of $26,397. If the beginning cash account balance is $11,283, what is the ending cash account balance?

The capital acquisitions ratio is often calculated as a multi-year average because of the volatility of:

A corporation had a net increase in retained earnings of $65,000 for the year. The corporation also paid $20,000 of cash dividends that had been declared in the previous year. This year, the corporation declared $18,000 of dividends but has not paid them as of year-end. Given this information, the net income for the current year must have been:

Cash transactions relating to the purchase and sale of which types of assets affect a company's cash flows from investing activities?

Condensed financial data of Monopoly Corporation appear below:

When the indirect method is used, details from which of the following balance sheet accounts are used in calculating both operating and financing cash flows?

If Wages Expense is $450,000 and the beginning and ending balances of Wages Payable are $18,000 and $16,500, respectively, the cash paid to employees is:

The company uses the indirect method in preparing the statement of cash flows. What is the amount of depreciation expense that will be reported in the operating activities section of the statement?

The income statement and selected balance sheet information for Fudnuddler Corporation for the year ended December 31, 2011 is presented below.

A company has net income of $43,560 with a net cash flow from operations of $91,476 and a net change in cash of $84,942. The company spent $72,600 on property, plant, and equipment during the year. The company's capital acquisitions ratio is approximately:

A company issues $1 million of new stock and pays $200,000 in cash dividends during the year. In addition, the company took advantage of falling interest rates to borrow $1.5 million in a new bond issue and paid off existing bonds with a face value of $2 million. The company bought 500 of another company's $1,000 bonds at a $100,000 premium. The net cash flow from financing activities is: