Chapter 14 Cash Flows

Question 1

The section of the statement of cash flows that reports cash flows from transactions affecting the equity and debt of the business

Answer 1

cash flows from financing activities

Question 2

the section of the statement of cash flows that reports cash flows from transactions affecting investments in non-current assets

Answer 2

cash flows from investing activities

Question 3

a summary of the major cash receipts and cash payments for a period

Answer 3

statement of cash flows

Question 4

a method of reporting the cash flows from operating activities as the difference between the operating cash receipts and the operating cash payments

Answer 4

direct method

Question 5

the section of the statement of cash flows that reports the cash transactions affecting the determination of net income

Answer 5

cash flows from operating activites

Question 6

a method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments

Answer 6

indirect method

Question 7

the amount of operating cash flow remaining after replacing current productive capacity

Answer 7

free cash flow

Question 8

the financial statement that reports a firm’s major cash inflows and outflows for a period is the ____ ____ ____ ___

Answer 8

statements of cash flows

Question 9

the two alternative methods of reporting operating activities in the statement of cash flows are the ___ and ____ method

Answer 9

direct and indirect

Question 10

cash flows resulting from the redemption of debt securities are classifies in the statement of cash flows as related to _____ activities

Answer 10

financing

Question 11

the _____ method of analyzing operating cash flows beings with net income and adjusts it for revenues and expenses that do not involve the receipt or payment of cash

Answer 11

indirect

Question 12

the statement of cash flows groups cash flow activities as financing, investing, or _____

Answer 12

operating

Question 13

when the _____ method of reporting cash flows is used, a supplemental schedule reconciling net income and net cash flow from operating activities must also be prepared

Answer 13

direct

Question 14

retirement of long-term debt would appear under ___ activities

Answer 14

financing

Question 15

sale of common stock would appear under ____ activities

Answer 15

financing

Question 16

net income would appear under _____ activites

Answer 16

operating

Question 17

payment of cash dividends would appear under ____ activities

Answer 17

financing

Question 18

purchase of equipment would appear under ____ activites

Answer 18

investing

Question 19

_____ investing and financing activities that will affect future cash flows are reported in a separate schedule to the statement of cash flows

Answer 19

non cash

Question 20

which of the following is not one of the major sections of the statement of cash flows

• cash flows from financing activities
• cash flows from selling activities
• cash flows from operating activities
• cash flows from investing activities

Answer 20

-cash flows from selling activities

Question 21

non-cash investing and financing activities which may have a significant effect on future cash flows are reported

• in the statement of cash flows
• in a separate schedule to accompany the statement of cash flows
• in the retained earnings statement
• in a footnote accompanying the balance sheet

Answer 21

-in a separate schedule to accompany the statement of cash flows

Question 22

under the indirect method, which of the following items must be deducted from reported net income to determine net cash flow from operating activities ?

• depreciation of fixed assets
• decreases in current assets
• decreases in current liabilities
• loss on sale of equipment

Answer 22

-decreases in current liabilities

Question 23

during the past year, lock inc declared $40,000 in cash dividends. beg and end year balances were 12000 and 10000, what amount of cash paid for dividends will appear in the cash flows from financing activities section of the socf

Answer 23

42,000

Question 24

under the direct method which of the following items must be added to operating expenses reported on the income statement to determine cash payments for operating expenses?

• increase in accrued expenses
• decrease in prepaid expenses
• increase in income taxes payable
• increase in prepaid expenses

Answer 24

-increase in prepaid expenses

Question 25

t or f: | the statement of cash flows is required as a part of the basic set of financial statements

Answer 25

true

Question 26

t or f: | cash outflows from the payment of cash dividends is a type of financing activity

Answer 26

true

Question 27

t or f: | cash receipts from the sale of fixed assets would be classifies as a cash flow from investing activites

Answer 27

true

Question 28

under the indirect method, increases in current liabilities are deducted from net income reported on the income statement in determining cash flows from operating activities

Answer 28

false

Question 29

non-cash investing and financing activities that may have a significant effect on future cash flows should be included in a separate schedule to the statement of cash flows

Answer 29

true

Question 30

the correct amount to include in cash flows from financing activities is cash dividends paid, not cash dividends declared

Answer 30

true

Question 31

depreciation expense on equipment would appear under ___ activities

Answer 31

operating

Question 32

sale of long-term investments would appear under ___ activities

Answer 32

investing

Question 33

issuance of bonds would appear under ____ activities

Answer 33

financing

Question 34

sale of patents would appear under ____ activities

Answer 34

investing

Question 35

young company issued 500,000 shares of common stock, inventory increased by $20,000 and a new asset was purchased for $1,000,000. common stock issued, net cash flows ____

Answer 35

increases

Question 36

young company issued 500,000 shares of common stock, inventory increased by $20,000 and a new asset was purchased for $1,000,000. inventory increased. net cash flows ____

Answer 36

decreases

Question 37

young company issued 500,000 shares of common stock, inventory increased by $20,000 and a new asset was purchased for $1,000,000. new asset purchased. net cash flows ____

Answer 37

decreases

Question 38

cash dividends of $35000 were declared. 8000 and 8750 at beginning and end of year. the amount of cash flows for payment of dividends during the year is ____

Answer 38

$34250

Question 39

the net income from operations was 75,000 and the only revenue or expense item not affecting cash was depreciation expense of 27,000/ the amount of net cash flows from operating activities that would appear on the statement of cash flows is ____

Answer 39

$102,000 | 75000+27000

Question 40

a corp purchased and retired 3,000 shares of its $50 par common stock, originally issued at par for $65. cash flows amounted to _____

Answer 40

$195,000 | 3000 times 65

Question 41

if a fized asset having a book value of $54,000 is sold for cash at a gain of $6,000, the total amount reported as cash flow is

Answer 41

$60,000 | 54000+6000

Question 42

the $47000 net income for the year included a loss of $2500 on the sale of land. exclusive of the effect of other adjustments, the amount of net cash flows from operating activities is

Answer 42

49,500 | 47000+2500

Question 43

a corp issued $1,000,000 of bonds payable at 104. cash flow from this transaction was

Answer 43

1,400,000 | 1000000x104

Question 44

if 15,000 shared of $20 par common stock were issued at 22, the amount to be reported in the cash flows from financing activities section of the statement of cash flows would be 330,000

Answer 44

330,000 | 15,000x22