Chapter 15 From Review Questions

Question 1

Basic Equation for asset accounts

Answer 1

Beg Balance+Debit-Credit=End Balance

Question 2

Cash flow to a company’s investing activities?

Answer 2

Selling Property Plant and Equipment

Question 3

Cash flows related to a company’s investing activities?

Answer 3

Collecting the principal on a loan to another entity

Question 4

True with respect to the direct and indirect methods?

Answer 4

They are two equivalent ways to compute the net cash provided by (used in) operating activities

Question 5

What is the first step of the indirect method?

Answer 5

add depreciation charges to the net income

Question 6

Depreciation charges added to net income represent?

Answer 6

the credits to the accumulated depreciation account during the period

Question 7

This is true when computing net cash provided by (used in) operating activities?

Answer 7

If the accounts payable balance increases during the period, the amount of the increase is added to the net income

Question 8

Which of the following statements is true when the indirect method is used to determine the net cash provided by operating activities?

Answer 8

A gain recorded on the sale of a noncurrent asset is subtracted from net income in the operating activities section of the statement of cash flows.

Question 9

When a company pays a dividend it:

Answer 9

Subtracts the amount of the dividend in the financing activities section of the statement of cash flows.