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Exam 5: Communicating and Interpreting Accounting Information

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Question 51

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ABC Company reported total sales revenue of $80,000 and total expenses of $72,000 for the year ended December 31,20X.During 20X,trade receivables increased by $3,000,merchandise inventory decreased by $2,000,trade payables increased by $1,000,and $5,000 in depreciation expense was recorded.Assuming no other adjustments to profit are needed,what was the net cash inflow from operating activities?

A) $10,000.
B) $11,000.
C) $13,000.
D) $19,000.

E) None of the above
F) C) and D)

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Question 52

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Wish Corporation acquired a computer for $15,000 and paid for it in full by issuing 1,000 shares of its own common shares,par $10 (current market price $15 share).This transaction should not be reported on the statement of cash flows because cash was neither paid out nor received.

A) True
B) False

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Question 53

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Only investments with original maturities of less than three months at the date of purchase qualify as cash equivalents.

The 20B income statement of Dunn Company reported total sales revenue of $106,000 and total expenses of $108,000 .Expenses were: building depreciation,$10,000 and patent amortization,$5,000.There was an increase in inventory of $1,000.What was cash flow from operating activities during 20B (parentheses indicate outflow) ?

The indirect method for reporting cash flows from operating activities presents a conversion of profit to net cash flow from operating activities.

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 transactions is not a typical use of cash?

Investing activities include cash proceeds from the sale of property,plant,and equipment,and short- and long-term investments.

McIntire Company reported profit of $40,000 which included depreciation expense and depletion expense of $21,000 and $18,000,respectively.The following changes also occurred during 20C The amount of "cash flows from operating activities" was $______________

The statement of cash flows (indirect method) reports depreciation expense as an addition to profit because depreciation does which of the following?

The financial statements of Juliet Company show the following: How much cash was collected from customers?

Which of the following is a cash inflow from financing activities?

In order to prepare the statement of cash flows,the accountant must analyze current asset and current liability balances.

Trade receivables arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year,respectively.Profit reported on the income statement for the year was $120,000.Exclusive of the effect of other adjustments,the cash flows from operating activities,prepared using the indirect method,is

Which one of the following items is not generally used in preparing a statement of cash flows?

Depreciation expense has the immediate effect of increasing the cash account.

The comparative statements of financial position for Hirj Inc.appear below: Additional information: 1.Profit for the year ending December 31,2012 was $27,000. 2.Cash dividends of $13,000 were declared and paid during the year ended December 31,2012. 3.Long-term investments that had a carrying amount of $23,000 were sold for $18,000 in 2012. Required: Prepare a statement of cash flows for the year ended December 31,2012,using the indirect method.

Which of the following items about the statement of cash flows is correct?

In 2012,C Co.reported a quality of earnings ratio of 1.60.In 2011 and 2010 the ratio was .97 and .98 respectively.Which of the following was the most likely cause of the large increase in the ratio?

When the statement of cash flows is prepared in conformity with IFRS there is only one acceptable way to measure and report cash flows from operating activities.