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1 | |
Which of the following would be considered a "use" of cash for purposes of constructing a statement of cash flows? |
| | 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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2 | |
An increase in the Accounts Payable account of a company from $1,000 at the beginning of the year, to $3,000 at the end of the year, would be shown on the company's statement of cash flows prepared under the indirect method as: |
| | A) | an addition to net income of $2,000 in order to arrive at cash flows from operating activities. |
| | B) | a cash flow of $2,000 under the investing Activities heading. |
| | C) | a cash flow of $2,000 under the financing Activities heading. |
| | D) | a deduction from net income of $2,000 in order to arrive at cash flows from operating activities. |
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3 | |
An increase in the Accounts Receivable account of a company from $20,000 at the beginning of the year to $25,000 at the end of the year would be shown on the company's statement of cash flows prepared under the indirect method as: |
| | A) | an addition to net income of $5,000 in order to arrive at cash flows from operating activities. |
| | B) | an addition to net income of $15,000 in order to arrive at cash flows from operating activities. |
| | C) | a deduction from net income of $5,000 in order to arrive at cash flows from operating activities. |
| | D) | a deduction from net income of $10,000 in order to arrive at cash flows from operating activities. |
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4 | |
An increase in the Prepaid Insurance account of $6,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as: |
| | A) | an addition of $6,000 under financing activities. |
| | B) | a deduction of $6,000 under financing activities. |
| | C) | an addition to net income of $6,000 in order to arrive at net cash provided by operating activities. |
| | D) | a deduction from net income of $6,000 in order to arrive at net cash provided by operating activities. |
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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) | addition to net income. |
| | B) | cash flow from financing activities. |
| | C) | cash flow from investing activities. |
| | D) | deduction from net income. |
| | E) | investing and financing activity not affecting cash. |
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6 | |
The sale of land at a gain would be shown on the statement of cash flows prepared under the indirect method in which of the following manners? The cash received would be shown: |
| | A) | As an adjustment to net income and the gain would not appear on the statement of cash flows. |
| | B) | Under Investing Activities and the gain would not appear on the statement of cash flows. |
| | C) | Under Investing Activities and the gain would be added to net income. |
| | D) | Under Investing Activities and the gain would be deducted from net income. |
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7 | |
Riley Company recorded the following events for the year just ended:| Retirement of preferred stock | $100,000 | | Sale of bonds issued by other companies | 150,000 | | Interest paid on notes payable | 70,000 | | Dividends paid to shareholders | 180,000 | | Collection by Riley of a loan made to a subsidiary | 110,000 | | Payment of deferred taxes | 90,000 |
The net decrease in cash resulting from financing activities for the year was: |
| | A) | $70,000. |
| | B) | $90,000. |
| | C) | $190,000. |
| | D) | $280,000. |
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8 | |
Riley Company recorded the following events for the year just ended. (Note that this is the same data as that provided for the question above.)| Retirement of preferred stock | $100,000 | | Sale of bonds issued by other companies | 150,000 | | Interest paid on notes payable | 70,000 | | Dividends paid to shareholders | 180,000 | | Collection by Riley of a loan made to a subsidiary | 110,000 | | Payment of deferred taxes | 90,000 |
The net change in cash resulting from investing activities for the year was: |
| | A) | ($5,000). |
| | B) | $10,000. |
| | C) | $40,000. |
| | D) | $260,000. |
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9 | |
Cranston Company recorded the following activity for the year just ended:| Proceeds from sale of plant equipment | $800,000 | | Dividends received from investments | 120,000 | | Common stock issued | 400,000 | | Notes issued to creditors for borrowed funds | 160,000 | | Dividends paid to stockholders | 40,000 | | Purchase of plant equipment | 240,000 |
The net cash provided by financing activities for the year was: |
| | A) | $400,000. |
| | B) | $520,000. |
| | C) | $560,000. |
| | D) | $600,000. |
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10 | |
Cranston Company recorded the following activity for the year just ended. (Note that this is the same data as that provided for the question above.)| Proceeds from sale of plant equipment | $800,000 | | Dividends received from investments | 120,000 | | Common stock issued | 400,000 | | Notes issued to creditors for borrowed funds | 160,000 | | Dividends paid to stockholders | 40,000 | | Purchase of plant equipment | 240,000 |
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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2002 McGraw-Hill Higher Education