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Exam 9: The Cash Flow Statement

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Question 71

Multiple Choice

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Which one of the following affects cash during a period?

A) recording depreciation expense
B) declaration of a cash dividend
C) write off of an uncollectible account receivable
D) payment of an accounts payable

E) A) and B)
F) C) and D)

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Question 72

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Quality Kitchen Company's 2021 single-step income statement and comparative balance sheet are provided below: Additional information: 1. No new long-term debt was taken during the year. 2. New equipment was purchased, and none was sold. 3. Common shares were issued for cash. 4. Cash dividends were paid to common shareholders. 5. All operating expenses were paid in the period incurred. Instructions Prepare the cash flow statement for 2021, using the direct method.

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Question 73

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The purchase of a building for cash would be reported in the financing section of the cash flow statement.

Operating activities of a company show the cash effects of revenues and expense transactions.

Barney Day Inc. had credit sales of $ 800,000. The beginning accounts receivable balance was $ 40,000 and the ending accounts receivable balance was $ 140,000. What were the cash collections from customers during the period?

In the direct method, cash payments to employees would include the salary expense reported in the income statement plus any decrease during the period in salaries payable.

An issuance of debt to purchase long-lived assets would be an investing activity.

Ferrell Fine Meats reported sales revenue of $ 377,000 on the income statement. There has also been a decrease in the accounts receivable account in the amount of $ 12,000 when compared to prior year. Cash receipts from customers were therefore

The Fisheries Processing Corporation prepared the following income statement and comparative balance sheet for 2021: Additional data: 1. Equipment was purchased for $ 400,000. 2. Land was sold for cash proceeds of $ 200,000. 3. The company sold bonds of $ 500,000 and made $ 380,000 of principal payments on notes payable. Instructions Prepare a cash flow statement for 2021, using the indirect method.

Boone Inc. reports the following: If cost of goods sold for the year is $ 150,000, the amount of cash paid to suppliers is

The order of presentation of activities on the cash flow statement is

Which of the following would NOT be an adjustment to profit using the indirect method?

In preparing a cash flow statement, a conversion of bonds into common shares will be reported in

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

Which of the following characteristics does NOT apply to cash equivalents?

The cash flow statement is an optional statement when preparing the financial statements of a company.

The cash flow statement is the only statement that shows the flow of cash in a company.

If the balance of prepaid insurance increases during a period, it indicates more cash was expended for insurance than is reported in the income statement.

The information in the cash flow statement should help customers and employees evaluate the company's financial position.

Which of the following would be added to profit using the indirect method?