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Exam 11: Statement of Cash Flows

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Question 1

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The total net cash flows from operating activities differ between the direct and indirect methods.

A) True
B) False

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Question 2

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During 2012,Smithson Corp.had the following cash flows: receipt from customers,$10,000; receipt from the bank for long-term borrowing,$6,000; payment to suppliers,$5,000; payment of dividends,$1,000,payment to workers,$2,000; and payment for machinery,$8,000.What amount would be reported for financing cash flows on the Statement of Cash Flows?

A) $5,000.
B) $2,000.
C) $6,000.
D) ($8,000) .

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

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Question 3

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The long-term assets section of the balance sheet is the place to look for investing activities.

Wireless Technologies reports sales of $50 million.Accounts receivable at the beginning and end of the year are $5 million and $7 million,respectively.What is the amount of cash received from customers?

The balance sheet of The Computer Doctor reports total assets of $160,000 and $220,000 at the beginning and end of the year,respectively.The cash return on assets for the year is 10%.Calculate The Computer Doctor's net cash flows from operating activities for the year.

Discount Computers' accounts receivable increases during the year by $3 million.What is the amount of cash received from customers during the reporting period if its sales are $47 million?

We add an increase in interest payable to interest expense in arriving at cash paid for interest under the direct method.

A company's Income Tax Payable account decreased from $14 million to $12 million during the year.If its income tax expense was $80 million,what would be shown as cash paid for income taxes under the direct method?

Under the indirect method,a decrease in accounts receivable is added to net income to arrive at net cash flows from operating activities.

The three primary categories of cash flows are cash flows from operating activities,cash flows from investing activities,and cash flows from financing activities.

Data Solutions reports operating expenses of $5 million.Operating expenses include rent expense.Prepaid rent at the beginning and end of the year are $120,000 and $80,000,respectively.All other operating expenses were paid in cash as incurred.What is the amount of cash paid for operating expenses?

If no cash was exchanged in the purchase of equipment financed entirely with a note payable,we represent this as both an investing activity and a financing activity in the statement of cash flows.

Cash return on assets can be separated to examine two important business strategies: cash flow to sales and asset turnover.

We add a decrease in income tax payable to income tax expense to calculate cash paid for income taxes.

Which of the following items is not reported in the operating section of the statement of cash flows using the direct method?

Using the direct method we adjust the items on the income statement to directly show the cash inflows and outflows from operations.

During 2012,Victoria Group: (1)received cash of $5,000 billed to a customer in 2011; (2)earned $20,000 of net income; (3)paid interest of $6,000 on a corporate bond issued; (4)paid dividends of $8,000 to its stockholders; (5)borrowed $40,000 from a local bank; and (6)purchased its own shares of common stock for $10,000.What is Victoria Group's cash flow from financing activities in 2012? A.$40,000. B.$30,000. C.$22,000. D.$16,000.

A gain on the sale of long-term assets is added to net income to arrive at net cash flows from operating activities under the indirect method.

Cash flows from financing activities include:

Arrow Printers paid $2,000 interest on short-term notes payable,$10,000 interest on long-term bonds,and $6,000 in dividends on its common stock.Arrow would report cash outflows from activities,as follows: