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| 1 | |
How would an increase in the Accounts Receivable account of a company from $40,000 at the beginning of the year to $60,000 at the end of the year be shown on the company's statement of cash flows prepared under the indirect method? |
| | A) | As an addition to net income of $20,000 in order to arrive at cash flows from operating activities |
| | B) | As an addition to net income of $40,000 in order to arrive at cash flows from operating activities |
| | C) | As a deduction from net income of $20,000 in order to arrive at cash flows from operating activities |
| | D) | As a deduction from net income of $60,000 in order to arrive at cash flows from operating activities |
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| 2 | |
How would an increase in the Prepaid Insurance account of $5,000 over the course of a year be shown on the company's statement of cash flows prepared under the indirect method? |
| | A) | As an addition of $5,000 under financing activities |
| | B) | As a deduction of $5,000 under financing activities |
| | C) | As an addition to net income of $5,000 in order to arrive at net cash provided by operating activities |
| | D) | As a deduction from net income of $5,000 in order to arrive at net cash provided by operating activities |
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| 3 | |
How would an increase in the Income Taxes Payable account of a company from $20,000 at the beginning of the year to $60,000 at the end of the year be shown on the company's statement of cash flows prepared under the indirect method? |
| | A) | As an addition to net income of $40,000 in order to arrive at cash flows from operating activities |
| | B) | As a cash flow of $40,000 under the investing activities heading |
| | C) | As a cash flow of $40,000 under the financing activities heading |
| | D) | As a deduction from net income of $40,000 in order to arrive at cash flows from operating activities |
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| 4 | |
Which of the following would be deducted from net income for purposes of constructing a statement of cash flows using the indirect method? |
| | A) | An increase in accounts payable |
| | B) | An increase in accrued liabilities |
| | C) | An increase in accumulated depreciation |
| | D) | An increase in prepaid expenses |
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| 5 | |
When using the indirect method to prepare the statement of cash flows, depreciation expense should be presented as a(n): |
| | A) | investing and financing activity not affecting cash. |
| | B) | addition to net income. |
| | C) | deduction from net income. |
| | D) | cash flow from financing activities. |
| | E) | cash flow from investing activities. |
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| 6 | |
McGill Company recorded the following events for the year just ended.
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/007802563x/1029179/ch14_q6.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (85.0K)</a>]]>
What was the net cash provided (used) by investing activities during the year? |
| | A) | ($5,000) |
| | B) | $10,000 |
| | C) | $40,000 |
| | D) | $260,000 |
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| 7 | |
McGill Company recorded the following events for the year just ended.
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/007802563x/1029179/ch14_q7.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (83.0K)</a>]]>
(Note that this is the same data that was provided for the previous question.) What was the net cash used by financing activities during the year? |
| | A) | $70,000 |
| | B) | $90,000 |
| | C) | $190,000 |
| | D) | $280,000 |
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| 8 | |
Korsak Company recorded the following activity for the year just ended:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/007802563x/1029179/ch14_q8.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (79.0K)</a>]]>
The net cash provided by investing activities for the year was: |
| | A) | $560,000. |
| | B) | $760,000. |
| | C) | $800,000. |
| | D) | $820,000. |
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| 9 | |
Korsak Company recorded the following activity for the year just ended:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/007802563x/1029179/ch14_q9.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (80.0K)</a>]]>
(Note that this is the same data that was provided for the previous question.) What was the net cash provided by financing activities during the year? |
| | A) | $400,000 |
| | B) | $520,000 |
| | C) | $560,000 |
| | D) | $600,000 |
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| 10 | |
Assume that equipment is sold at a gain during the year. How are the cash proceeds and the gain realized in this transaction shown on the statement of cash flows prepared under the indirect method? |
| | A) | The cash received would be reported as an adjustment to net income; the gain would not appear on the statement of cash flows. |
| | B) | The cash received would be reported under the Investing Activities section; the gain would not appear on the statement of cash flows. |
| | C) | The cash received would be reported under the Investing Activities section; the gain would be added to net income in the Operating Activities section. |
| | D) | The cash received would be reported under the Investing Activities section; and the gain would be deducted from net income in the Operating Activities section. |
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