Question 1

Cinno Company reported net income of $20,000 for the year ended December 31,2007.During the year,inventories decreased by $7,000,accounts payable decreased by $8,000,amortization expense was $10,000,and accounts receivable increased by $6,500.Net cash provided by operations in 2007,computed using the indirect method,was:

Accepted Answer

A)  $10,500.
B)  $22,500.
C)  $38,500.
D)  $51,500.E) All of the above
F) A) and D)

Question 2

The company would report a net cash inflow (outflow) from financing activities of:

Accepted Answer

A)  $7,000
B)  $2,000
C)  $5,000
D)  $6,000E) None of the above
F) B) and D)

Question 3

Consider the following information: The company would report a net cash inflow from operating activities of:

Accepted Answer

A)  $17,500.
B)  $18,500.
C)  $21,500.
D)  $23,300.E) B) and D)
F) B) and C)

Question 4

Fraudulent financial reporting is more likely to result in overstatements of net cash flow from operating activities than as overstatement of net income.
BT: Analysis

Accepted Answer

A) True 
 B)False

Question 5

A change in a company's cash account is equal to the:

Accepted Answer

A)  changes in liabilities and shareholders' equity minus the change in noncash assets.
B)  changes in liabilities minus the changes in shareholders' equity and noncash assets.
C)  sum of the changes in liabilities,shareholders' equity and noncash assets.
D)  change in noncash assets minus the changes in liabilities and shareholders' equity.E) B) and C)
F) A) and B)

Question 6

Corporation X has no short-term investments,carries only a minimal amount of cash,and has a capital acquisitions ratio of 0.7.Which of the following is suggested by these facts?

Accepted Answer

A)  The corporation probably needed external financing to fund property,plant,and equipment replacement this period.
B)  The corporation is efficient at managing debt; each $.70 of debt generates $1 of asset value.
C)  The corporation is efficient at generating cash; each $1 of assets acquired generates $.70 of cash.
D)  The corporation is likely to need to replace equipment at a rate of 70% of its net income.E) A) and B)
F) A) and C)

Question 7

If the calculation of net cash flows from operating activities starts with net income,the company:

Accepted Answer

A)  is using the net income method.
B)  will then remove all noncash items included in the calculation of net income.
C)  is using the direct method.
D)  will then add all additional noncash items not included in the calculation of net income.E) A) and D)
F) C) and D)

Question 8

The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413.Net income is $40,251.Which of the following statements is true?

Accepted Answer

A)  $5,813 would be subtracted when determining cash flows from financing activities.
B)  $40,251 would be added when determining cash flows from financing activities.
C)  $34,438 would be added when determining cash flows from financing activities.
D)  All of the above.E) A) and B)
F) B) and D)

Question 9

If a company uses the indirect method to determine net cash flows from operating activities:

Accepted Answer

A)  gains on the disposal of equipment must be added to net income and losses subtracted from net income.
B)  gains on the disposal of equipment must be added to net income but losses are adjusted against the original asset account.
C)  gains on the disposal of equipment must be subtracted from net income and losses added to net income.
D)  there is no entry for a gain or loss on the disposal of equipment as this is only an Investing activity.E) B) and C)
F) A) and B)

Question 10

The starting and ending balances for relevant asset and liability accounts that changed during the year are presented below.Net income was $650,000 for the year and dividends paid were $150,000.Amortization expense for 2007 was $7,000,and all other changes in accumulated amortization and property,plant,and equipment related to the sale of property at book value.No other non-cash transactions occurred.Use this information to calculate the net cash inflows (outflows)from investing and financing activities in 2007.

Accepted Answer

The answer of The starting and ending balances for relevant...

Question 11

Free cash flow is a positive cash flow:

Accepted Answer

A)  beyond what is needed to replace current property,plant,and equipment and pay dividends.
B)  across all three activity components of the statement of cash flows.
C)  beyond what has been allotted for future property,plant,and equipment replacement and expansion.
D)  across both financing and investing activities.E) B) and C)
F) A) and D)

Question 12

When the indirect method is used,if accounts receivable increases during the accounting period,the change in accounts receivable is:

Accepted Answer

A)  added to the change in the cash account.
B)  subtracted from net income.
C)  added to net income.
D)  subtracted from the change in the cash account.E) C) and D)
F) A) and B)

Question 13

When using the spreadsheet approach for the indirect method to calculate net cash flows from operating activities,net income would be found as:

Accepted Answer

A)  a debit to the Retained Earnings account.
B)  the difference between revenues and expenses.
C)  a credit to the Retained Earnings account.
D)  the difference between gains and losses.E) A) and D)
F) B) and D)

Question 14

The supplies account decreases and accounts payable increases during an accounting period.When the indirect method is used,what does the company do with the changes in these accounts to calculate net cash flows from operating activities?

Accepted Answer

A)  Both are added to net income.
B)  The change in accounts payable is added to net income; the change in supplies is subtracted.
C)  Both are subtracted from net income.
D)  The change in supplies is added to net income; the change in accounts payable is subtracted.E) B) and C)
F) A) and B)

Question 15

Which of the following would be included in calculating net cash flows from operating activities?

Accepted Answer

A)  Cash proceeds from sales.
B)  Cash received from an issuance of bonds.
C)  Dividends paid to shareholders.
D)  Cash used for purchases of equipment.E) A) and C)
F) A) and D)

Question 16

At certain times of the year,many retail companies experience a rapid rise in inventory as they prepare for a period of high sales.All other things equal,this would cause:

Accepted Answer

A)  the quality of income,and the capital acquisitions ratios to fall.
B)  the quality of income ratios to fall while the capital acquisitions ratio remains the same.
C)  the quality of income ratio to fall while the capital acquisitions ratios remain the same.
D)  the quality of income,and the capital acquisitions ratios to rise.E) A) and D)
F) None of the above

Question 17

While dividends paid to a company's shareholders are reported as cash flows from financing activities,dividends received from investments in the shares of other companies are reported as cash flows from investing activities.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 18

Which of the following represent cash outflows from financing activities?

Accepted Answer

A)  Distributing a stock dividend.
B)  Paying a bond's face value at maturity.
C)  Issuing long-term bonds at a discount.
D)  Paying interest on promissory notes.E) A) and D)
F) B) and C)

Question 19

Which of the following is not provided by the statement of cash flows?

Accepted Answer

A)  Company management of current assets and liabilities.
B)  Expenditures on long-term assets.
C)  Current profitability as measured by specific revenues and expenses.
D)  Reliance on external financing.E) All of the above
F) A) and B)

Question 20

When the indirect method is used,if prepaid expenses decreases during the accounting period,the change in prepaid expenses is:

Accepted Answer

A)  added to the change in the cash account.
B)  subtracted from net income.
C)  added to net income.
D)  subtracted from the change in the cash account.E) A) and B)
F) A) and C)

Exam 12: Statement Cash Flows

If a company uses the indirect method to determine net cash flows from operating activities:

Correct Answer
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Which of the following would be included in calculating net cash flows from operating activities?

Correct Answer
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Which of the following represent cash outflows from financing activities?

Correct Answer
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The company would report a net cash inflow (outflow) from financing activities of:

Correct Answer
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While dividends paid to a company's shareholders are reported as cash flows from financing activities,dividends received from investments in the shares of other companies are reported as cash flows from investing activities. BT: Comprehension

Correct Answer
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Corporation X has no short-term investments,carries only a minimal amount of cash,and has a capital acquisitions ratio of 0.7.Which of the following is suggested by these facts?

Correct Answer
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Fraudulent financial reporting is more likely to result in overstatements of net cash flow from operating activities than as overstatement of net income. BT: Analysis

Correct Answer
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When using the spreadsheet approach for the indirect method to calculate net cash flows from operating activities,net income would be found as:

Correct Answer
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Correct Answer
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The supplies account decreases and accounts payable increases during an accounting period.When the indirect method is used,what does the company do with the changes in these accounts to calculate net cash flows from operating activities?

Correct Answer
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When the indirect method is used,if accounts receivable increases during the accounting period,the change in accounts receivable is:

Correct Answer
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The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413.Net income is $40,251.Which of the following statements is true?

Correct Answer
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Which of the following is not provided by the statement of cash flows?

Correct Answer
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At certain times of the year,many retail companies experience a rapid rise in inventory as they prepare for a period of high sales.All other things equal,this would cause:

Correct Answer
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Free cash flow is a positive cash flow:

Correct Answer
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If the calculation of net cash flows from operating activities starts with net income,the company:

Correct Answer
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When the indirect method is used,if prepaid expenses decreases during the accounting period,the change in prepaid expenses is:

Correct Answer
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Consider the following information: The company would report a net cash inflow from operating activities of:

Correct Answer
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A change in a company's cash account is equal to the:

Correct Answer
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Exam 12: Statement Cash Flows

If a company uses the indirect method to determine net cash flows from operating activities:

Correct AnswerverifiedShow Answer

Which of the following would be included in calculating net cash flows from operating activities?

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Which of the following represent cash outflows from financing activities?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The company would report a net cash inflow (outflow) from financing activities of:

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While dividends paid to a company's shareholders are reported as cash flows from financing activities,dividends received from investments in the shares of other companies are reported as cash flows from investing activities. BT: Comprehension

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Corporation X has no short-term investments,carries only a minimal amount of cash,and has a capital acquisitions ratio of 0.7.Which of the following is suggested by these facts?

Correct AnswerverifiedShow Answer

Fraudulent financial reporting is more likely to result in overstatements of net cash flow from operating activities than as overstatement of net income. BT: Analysis

Correct AnswerverifiedShow Answer

When using the spreadsheet approach for the indirect method to calculate net cash flows from operating activities,net income would be found as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The supplies account decreases and accounts payable increases during an accounting period.When the indirect method is used,what does the company do with the changes in these accounts to calculate net cash flows from operating activities?

Correct AnswerverifiedShow Answer

When the indirect method is used,if accounts receivable increases during the accounting period,the change in accounts receivable is:

Correct AnswerverifiedShow Answer

The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413.Net income is $40,251.Which of the following statements is true?

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Which of the following is not provided by the statement of cash flows?

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At certain times of the year,many retail companies experience a rapid rise in inventory as they prepare for a period of high sales.All other things equal,this would cause:

Correct AnswerverifiedShow Answer

Free cash flow is a positive cash flow:

Correct AnswerverifiedShow Answer

If the calculation of net cash flows from operating activities starts with net income,the company:

Correct AnswerverifiedShow Answer

When the indirect method is used,if prepaid expenses decreases during the accounting period,the change in prepaid expenses is:

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Consider the following information: The company would report a net cash inflow from operating activities of:

Correct AnswerverifiedShow Answer

A change in a company's cash account is equal to the:

Correct AnswerverifiedShow Answer

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