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Exam 12: Statement Cash Flows

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Question 41

Multiple Choice

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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?

A) Bonds payable.
B) Taxes payable.
C) Retained earnings.
D) Contributed capital.

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

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Question 42

True/False

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Interest and dividends from investments held by a company are reported as cash inflows from investing activities on the statement of cash flows. BT: Comprehension

A) True
B) False

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Question 43

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Cash received from the sale of land would be classified in the statement of cash flows as investing activity. BT: Comprehension

Although Canadian Generally Accepted Accounting Principles prefer the direct method of accounting for cash flows from operations,most Canadian companies use the indirect method. BT: Knowledge

When the direct method is used to determine the net cash flow from operating activities,other operating expenses are converted into cash outflows for payments to suppliers of services by:

Noncash revenues and expenses must be included in net cash flow from operating activities when preparing a Statement of Cash Flows using the direct method. BT: Comprehension

Compared with the other major financial statements,the Statement of Cash Flows has become required relatively recently. BT: Knowledge

A company has net income of $43,560 with a net cash flow from operations of $91,476 and a net increase in cash of $84,942.The company paid $33,524 for income taxes and $25,000 for interest during the year.The company's quality of income ratio is approximately:

Cash flows from financing activities:

A company had a net increase in cash while it reported a net loss in income. BT: Comprehension

A company issues $1 million of new shares 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:

Which of the following represent cash inflows from financing activities?

A negative cash flow is referred to as a cash outflow. BT: Comprehension

Buffers,Inc.,uses cash when buying and selling all of its investment assets.Consider the following statements: i.When investment asset accounts increase,net cash inflows have occurred. Ii) When investment asset accounts increase,net cash outflows have occurred. Iii) When the investment asset accounts decreased,net cash inflows have occurred. Iv) When the investment asset accounts decrease,net cash outflows have occurred. Which of the following combination is true?

Amortization is added back to net income in a statement of cash flows prepared using the indirect method because it:

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

Condensed financial data of Monopoly Corporation appear below: Additional information: A cash dividend was declared and paid in full during the year. Instructions: Solve for the missing numbers and summarize your answers in the table below.Be sure to indicate in parenthesis ()if the missing number is negative (that is,a cash outflow).

A company purchases a $300,000 building,paying $200,000 in cash and signing a $100,000 promissory note.What will be reported on the statement of cash flows as a result of this transaction?

Which of the following would be included in calculating net cash flows from financing activities?

If a company uses the direct method of calculating net cash flows from operating activities,it must adjust net income for gains or losses when selling property,plant,and equipment. BT: Comprehension