Question 1

In 2020 Phosphate Aurora Inc. reported an increase in Accounts Receivable of $7,500 and cash collections on account of $430,000. Sales on account for the period were:

Accepted Answer

A)   $437,500
B)   $422,500
C)   $7,500
D)   $430,000E) B) and D)
F) A) and B)

Question 2

Under ASPE interest paid on debt would be reported on a statement of cash flows under the:

Accepted Answer

A)   operating activities
B)   investing activities
C)   financing activities
D)   interest paid on debt would not be reported on a statement of cash flowsE) B) and D)
F) All of the above

Question 3

The statement of cash flows is designed to fulfill all of the following purposes except:

Accepted Answer

A)   to predict future cash flows
B)   to determine the company's ability to pay dividends to shareholders
C)   to show the relationship of net income to changes in the company's cash
D)   to assess the collectibility of accounts receivableE) A) and C)
F) A) and B)

Question 4

Sometimes income and cash flow follow different patterns.

Accepted Answer

A) True 
 B)False

Question 5

The payment of a stock dividend would appear as a cash outflow in the financing activities section on a cash flow statement.

Accepted Answer

A) True 
 B)False

Question 6

Under the indirect method of preparing a statement of cash flows, cash disbursed for theacquisition of a capital asset is:

Accepted Answer

A)   added in the financing activities section
B)   subtracted in the investing activities section
C)   subtracted in the operating activities section
D)   added in the investing activities sectionE) C) and D)
F) None of the above

Question 7

The payment of principal amounts (excluding interest)  to creditors would be reported on a statement of cash flows under the:

Accepted Answer

A)   financing activities
B)   investing activities
C)   operating activities
D)   either investing activities or financing activitiesE) None of the above
F) B) and D)

Question 8

If the cash collections from customers amounted to $634,800 and the Accounts Receivable accountdecreased $19,400 during the same period, sales for the period were:

Accepted Answer

A)   $634,800
B)   $654,200
C)   $615,400
D)   indeterminable from the information givenE) A) and D)
F) C) and D)

Question 9

The declaration of dividends by the board of directors would be reported on a statement of cash flows as a(an) :

Accepted Answer

A)   activity that would not be reported on a statement of cash flows
B)   cash outflow under the financing activities
C)   cash outflow under the investing activities
D)   cash inflow under the financing activitiesE) A) and C)
F) All of the above

Question 10

All of the following would appear on a direct method statement of cash flows except:

Accepted Answer

A)   cash receipts from customers
B)   net income
C)   cash purchase of equipment
D)   cash payments for interest and taxesE) B) and C)
F) A) and D)

Question 11

Sustainability Enterprises uses the direct method when preparing its statement of cash flows. Sustainability sold equipment with a carrying amount of $22,000 at a gain of $5,000. The amount
To be reported on the statement of cash flows under "proceeds from the sale of capital assets" is:

Accepted Answer

A)   $27,000
B)   $22,000
C)   $5,000
D)   $17,000E) A) and D)
F) B) and C)

Question 12

Under ASPE all of the following would be reported in the financing activities section under the direct method statement of cash flows except:

Accepted Answer

A)   paying a cash dividend
B)   repurchase of shares
C)   issuing common shares
D)   issuing a stock dividendE) None of the above
F) A) and B)

Question 13

The amount of cash dividends declared during the period and the amount of cash dividends paid during the period are reflected in the statement of shareholders' equity and the cash flow statement, respectively.

Accepted Answer

A) True 
 B)False

Question 14

No Harm Corporation sold some of its used equipment with a carrying amount of $52,000 for $47,000. The indirect method statement of cash flows will reflect an addition in the investing
Activities section of:

Accepted Answer

A)   $52,000 and an addition of $5,000 in the operating activities section
B)   $47,000 and an addition of $5,000 in the operating activities section
C)   $52,000 and a deduction of $5,000 in the operating activities section
D)   $47,000 and a deduction of $5,000 in the operating activities sectionE) A) and B)
F) A) and C)

Question 15

Free cash flow is calculated by taking net cash flow provided by operations less capital expenditures on property, plant, and equipment.

Accepted Answer

A) True 
 B)False

Question 16

The amount of cash paid for dividends for the current year can be calculated by the following formula:

Accepted Answer

A)   beginning dividends payable plus ending dividends payable plus dividends declared
B)   beginning dividends payable plus ending dividends payable minus dividends declared
C)   beginning dividends payable minus ending dividends payable minus dividends declared
D)   beginning dividends payable minus ending dividends payable plus dividends declaredE) All of the above
F) B) and D)

Question 17

Under ASPE interest paid on debt would be reported on a statement of cash flows under the:

Accepted Answer

A)   operating activities
B)   investing activities
C)   financing activities
D)   interest paid on debt would not be reported on a statement of cash flowsE) C) and D)
F) None of the above

Question 18

Cash collections from customers during the period can be computed as the ending balance in Accounts Receivable plus Sales during the period minus the beginning balance in Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 19

Cash equivalents would include money market accounts, Canadian Treasury bills, and notes receivable.

Accepted Answer

A) True 
 B)False

Question 20

Cassidy Lake Corporation sold some of its used equipment for $65,000. The indirect method statement of cash flows shows an addition to net income of $6,000. The accumulated depreciation on the equipment to date of sale was $63,000. The original cost of the equipment was:

Accepted Answer

A)   $71,000
B)   $122,000
C)   $69,000
D)   $134,000E) A) and D)
F) B) and D)

Exam 9: The Statement of Cash Flows

Under ASPE interest paid on debt would be reported on a statement of cash flows under the:

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Sustainability Enterprises uses the direct method when preparing its statement of cash flows. Sustainability sold equipment with a carrying amount of $22,000 at a gain of $5,000. The amount To be reported on the statement of cash flows under "proceeds from the sale of capital assets" is:

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Under ASPE all of the following would be reported in the financing activities section under the direct method statement of cash flows except:

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Under the indirect method of preparing a statement of cash flows, cash disbursed for theacquisition of a capital asset is:

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Free cash flow is calculated by taking net cash flow provided by operations less capital expenditures on property, plant, and equipment.

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All of the following would appear on a direct method statement of cash flows except:

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Cassidy Lake Corporation sold some of its used equipment for $65,000. The indirect method statement of cash flows shows an addition to net income of $6,000. The accumulated depreciation on the equipment to date of sale was $63,000. The original cost of the equipment was:

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The amount of cash paid for dividends for the current year can be calculated by the following formula:

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The amount of cash dividends declared during the period and the amount of cash dividends paid during the period are reflected in the statement of shareholders' equity and the cash flow statement, respectively.

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The payment of principal amounts (excluding interest) to creditors would be reported on a statement of cash flows under the:

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Cash collections from customers during the period can be computed as the ending balance in Accounts Receivable plus Sales during the period minus the beginning balance in Accounts Receivable.

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If the cash collections from customers amounted to $634,800 and the Accounts Receivable accountdecreased $19,400 during the same period, sales for the period were:

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In 2020 Phosphate Aurora Inc. reported an increase in Accounts Receivable of $7,500 and cash collections on account of $430,000. Sales on account for the period were:

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No Harm Corporation sold some of its used equipment with a carrying amount of $52,000 for $47,000. The indirect method statement of cash flows will reflect an addition in the investing Activities section of:

Correct AnswerverifiedShow Answer

Sometimes income and cash flow follow different patterns.

Correct AnswerverifiedShow Answer

The payment of a stock dividend would appear as a cash outflow in the financing activities section on a cash flow statement.

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Cash equivalents would include money market accounts, Canadian Treasury bills, and notes receivable.

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The statement of cash flows is designed to fulfill all of the following purposes except:

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The declaration of dividends by the board of directors would be reported on a statement of cash flows as a(an) :

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Under ASPE interest paid on debt would be reported on a statement of cash flows under the:

Correct AnswerverifiedShow Answer

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