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Exam 11: Statement of Cash Flows

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Question 31

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Laser World's income statement reported total revenues,$850,000 and total expenses (including $40,000 depreciation) of $720,000.The balance sheet reported the following: Accounts Receivable-beginning balance,$50,000 and ending balance,$60,000;Accounts Payable-beginning balance,$22,000 and ending balance,$28,000.Therefore,based only on this information,the net cash flows from operating activities were:

A) $126,000.
B) $166,000.
C) $174,000.

D) All of the above
E) B) and C)

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Question 32

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_________ is an investing cash flow and ________ is a financing cash flow,as reported on the Statement of Cash Flows.

A) Issuing bonds;selling investments
B) Purchasing land;repaying a bank loan
C) Receiving cash from the sale of inventory;paying cash dividends

D) A) and B)
E) A) and C)

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Question 33

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The payment of salaries is classified in the statement of cash flows as a(n) :

We calculate cash return on assets as the change in cash divided by average total assets.We calculate cash return on assets as net cash flows from operating activities divided by average total assets.

A statement of cash flows provides a summary of cash inflows and cash outflows during the reporting period.

The inflow of cash received from issuing common stock is reported as an investing activity.The inflow of cash received from issuing common stock is reported as a financing activity.

Under the indirect method,a decrease in accounts payable is added to net income to arrive at net cash flows from operating activities.We would subtract a decrease in accounts payable from net income to arrive at net cash flows from operating activities under the indirect method.

Which of the following transactions would not create a cash flow?

The balance of cash reported in the balance sheet this year minus the balance of cash reported in the balance sheet last year equals:

The purchase of long-term assets by issuing debt is recorded as both an investing activity and a financing activity.Purchase of long-term assets by issuing debt is reported as a noncash activity either directly after the cash flow statement or in a separate note to the financial statements.

Which of the following statements is not true relating to cash flow analysis?

Which of the following transactions would generally result in an investing cash inflow?

In the operating activities section of the statement of cash flows,we start with net income when using:

We report the payment of cash dividends as a cash outflow from investing activities.We report the payment of cash dividends as a cash outflow from financing activities.

The balance sheet of Computer World reports total assets of $350,000 and $450,000 at the beginning and end of the year,respectively.Sales revenues are $800,000,net income is $100,000,and net cash flows from operating activities are $150,000.What is Computer World's asset turnover?

Given the items below,which of the following is a subtraction from net income to arrive at operating cash flows using the indirect method? I.Loss on sale of assets II) Increase in Supplies III) Increase in Accounts Payable IV) Depreciation expense

Transactions that do not increase or decrease cash,but that result in significant investing and financing activities,are reported either directly after the cash flow statement or in a separate note to the financial statements as noncash activities.

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

During 2018,Victory Solutions had the following cash flows: (1) received cash of $5,000 billed to a customer in 2017; (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 Victory Solution's net cash flows from financing activities for 2018?

When preparing a statement of cash flows using the indirect method,a decrease in accounts payable is subtracted from net income.