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Exam 13: Differential Analysis: The Key to Decision Making

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Question 71

Multiple Choice

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Which one of the following transactions should be classified as a financing activity on the statement of cash flows?

A) Purchase of equipment.
B) Purchase of the company's own stock.
C) Sale of a long-term investment.
D) Payment of interest to a lender.

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

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Question 72

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Marbry Corporation's balance sheet and income statement appear below: Cash dividends were $21.The company did not issue any bonds or repurchase any of its own common stock during the year.The net cash provided by (used in) financing activities for the year was:

A) $4
B) ($22)
C) ($5)
D) ($21)

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

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Question 73

Multiple Choice

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Morbeck Corporation's net income last year was $56,000.The company paid a cash dividend of $31,000 and did not sell or retire any property,plant,and equipment last year.Changes in selected balance sheet accounts for the year appear below: Based solely on this information,the net cash provided by operating activities under the indirect method on the statement of cash flows would be:

Clayborn Corporation's net cash provided by operating activities was $111,000;its net income was $101,000;its income taxes were $43,000;its capital expenditures were $90,000;and its cash dividends were $28,000. Required: Determine the company's free cash flow.

Paying taxes to governmental bodies is considered a cash outflow in the operating activities section on the statement of cash flows.

Sonier Corporation's most recent balance sheet appears below: The net income for the year was $97.Cash dividends were $19.The company did not issue any bonds or repurchase any of its common stock during the year.The net cash provided by (used in) financing activities for the year was:

Walmouth Corporation's comparative balance sheet and income statement for last year appear below: The company declared and paid a cash dividend of $54,000 during the year.It did not purchase or dispose of any property,plant,and equipment.It did not issue any bonds or repurchase any of its own common stock.The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities last year was:

Mattix Corporation's balance sheet and income statement appear below: The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1.It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in)operating activities for the year using the indirect method.

The statement of cash flows relies on a fundamental principle of double-entry bookkeeping;namely,the change in the cash balance must equal the change in total liabilities and stockholders' equity.

The following transactions occurred last year at Jogger Corporation: Based solely on the above information,the net cash provided by financing activities for the year on the statement of cash flows would be:

Belk Corporation's balance sheet appears below: The net income for the year was $126.Cash dividends were $21.The company did not dispose of any property,plant,and equipment,issue any bonds payable,or repurchase any of its own common stock during the year. Required: Prepare a statement of cash flows in good form using the indirect method.

The most recent balance sheet and income statement of Penaloza Corporation appear below: The company paid a cash dividend of $18.It did not dispose of any property,plant,and equipment.The company did not retire any bonds payable or repurchase any of its own common stock.The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:

Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows,a loss on the sale of an asset would be added to net income.