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ch17 Cash Flow
ch17 Cash Flow
ch17 Cash Flow
Chapt
er17
“
HowWel
lAm IDoi
ng?”St
atementofCashFl
ows
True/False
2. In the statement of cash flows, increases in a companys capital stoc! accounts are generally
T treated as a "source" rather than as a "use" of cash.
Medium
&. ' change in deferred ta(es is considered to be a financing activity on the statement of cash
# flows.
Medium
). *nder the indirect method of determining the net cash flow from operating activities on the
T statement of cash flows, a gain on the sale of e+uipment would be subtracted from net income.
$ard
. 'n increase in ta(es payable between the beginning and the end of the year would be added to
T net income when determining the net cash provided by operating activities under the indirect
. If the income statement shows a loss for the period, then the net cash provided by operating
# activities on the statement of cash flows cannot be positive.
$ard
/. Transactions that involve ac+uiring or disposing of noncurrent assets are generally classified as
# financing activities on the statement of cash flows.
Medium
10. ash dividends paid to the owners of a company would be classified as part of financing
T activities on the statement of cash flows.
Medium
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7/17/2019 Test Bank - Chapter17 Cash Flows
11. 'ppendi(3 If accounts receivable increase during a period, then the amount of cash collected
# from customers will be greater than the amount of sales reported on the income statement for
Medium the period.
12. 'ppendi(3 *nder the direct method of determining net cash provided by operating activities
# on the statement of cash flows, the net income figure is ad4usted for changes in current assets
Medium and liabilities.
1. 'ppendi(3 *nder the direct method of determining the net cash provided by operating
# activities on the statement of cash flows, an increase in accounts payable would be added to
$ard cost of goods sold to convert cost of goods sold to a cash basis.
1&. The net cash provided by operating activities on the statement of cash flows will generally be
T different than net income.
Easy
1). #or e(ternal reporting purposes, the #'56 recommends that the direct method of determining
T the net cash provided by operating activities be used for the statement of cash flows.
Easy
Multiple hoice
1. 'n increase in the Inventory account of a company from 710,000 at the beginning of the year
6 to 71),000 at the end of the year would be shown on the companys statement of cash flows
Medium prepared under the indirect method as8
a. an addition to net income of 7),000 in order to arrive at cash flows from operating
activities.
b. a deduction from net income of 7),000 in order to arrive at cash flows from operating
activities.
c. an addition to net income of 71),000 in order to arrive at cash flows from operating
activities.
d. a deduction from net income of 710,000 in order to arrive at cash flows from
operating activities.
1-. *nder the indirect method of determining net cash provided by operating activities, which of
the following would be recorded as a deduction from net income9
$ard a. ' decrease in accounts receivable.
b. 'n increase in salaries payable.
c. ' decrease in accounts payable.
d. 'n increase in deferred ta( liability.
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7/17/2019 Test Bank - Chapter17 Cash Flows
1. 'n increase in the Interest :ayable account of a company from 70 at the beginning of the year,
' to 71,000 at the end of the year, would be shown on the companys statement of cash flows
Medium prepared under the indirect method as8
a. an addition to net income of 71,000 in order to arrive at cash flows from operating
activities.
b. a deduction from net income of 71,000 in order to arrive at cash flows from operating
activities.
c. a cash flow of 71,000 under the Investing 'ctivities heading.
d. a cash flow of 71,000 under the #inancing 'ctivities heading.
1/. ;hich of the following would be considered a "use" of cash for purpose of constructing a
statement of cash flows9
Medium a. selling the companys own common stoc! to investors.
b. issuing long<term debt.
c. purchasing e+uipment.
d. amorti=ing a patent.
20. ;hich of the following would be considered a "use" of cash for purposes of constructing a
' statement of cash flows9
Medium a. an increase in accounts receivable.
b. a decrease in prepaid e(penses.
c. an increase in bonds payable.
d. an increase in accumulated depreciation.
21. ;hich of the following would be considered a "use" of cash for purposes of constructing a
6 statement of cash flows9
Medium a. an increase in accounts payable.
b. an increase in prepaid e(penses.
c. an increase in accrued liabilities.
d. an increase in accumulated depreciation.
22. 'n increase in the prepaid e(penses account of 71,000 over the course of a year would be
6 shown on the companys statement of cash flows prepared under the indirect method as8
Medium a. an addition to net income of 71,000 in order to arrive at net cash provided by operating
activities.
b. a deduction from net income of 71,000 in order to arrive at net cash provided by operating
activities.
c. an addition of 71,000 under financing activities.
d. a deduction of 71,000 under financing activities.
2. ;hen using the indirect method to prepare the statement of cash flows, amorti=ation of
% goodwill should be presented as an38
Medium a. cash flow from investing activities.
M' adapted b. cash flow from financing activities.
c. deduction from net income.
d. addition toand
e. investing netfinancing
income. activity not affecting cash.
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7/17/2019 Test Bank - Chapter17 Cash Flows
2&. 'ppendi(3 %uring the year the balance in the accounts payable account decreased by 7,000.
% In order to ad4ust the companys net income to a cash basis using the direct method on the
$ard statement of cash flows, it would be necessary to8
a. deduct the 7,000 from the sales revenue reported on the income statement.
b. add the 7,000 to the sales revenue reported on the income statement.
c. deduct the 7,000 from the cost of goods sold reported on the income statement.
d. add the 7,000 to the cost of goods sold reported on the income statement.
2). 'ppendi(3 %uring the year the balance in the accrued liabilities account increased by
' 712,000. In order to ad4ust the companys net income to a cash basis using the direct method on
$ard the statement of cash flows, it would be necessary to8
a. deduct the 712,000 from the operating e(penses on the income statement.
b. add the 712,000 to the operating e(penses on the income statement.
c. deduct the 712,000 from the cost of goods sold reported on the income statement.
d. add the 712,000 to the cost of goods sold reported on the income statement.
2. In a statement of cash flows, a change in prepaid e(penses would be classified as8
' a. an operating activity.
Easy b. a financing activity.
c. an investing activity.
d. a noncash item that need not appear on the statement of cash flows.
2-. In a statement of cash flows, a change in the inventories account would be classified as8
' a. an operating activity.
Easy b. a financing activity.
c. an investing activity.
d. a noncash item that need not appear on the statement of cash flows.
2. 'll of the following should be classified under the operating section of the statement of cash
% flows E>E:T8
Medium a. a decrease in inventory.
M' adapted b. an increase in accumulated depreciation.
c. a decrease in prepaid insurance.
d. a purchase of land in e(change for a long<term note.
e. an increase in income ta( payable.
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7/17/2019 Test Bank - Chapter17 Cash Flows
2/. 'n increase in the plant and e+uipment account of 7100,000 over the course of a year would
% be shown on the companys statement of cash flows prepared under the indirect method as8
Medium a. an addition to net income of 7100,000 in order to arrive at net cash provided by operating
activities.
b. a deduction from net income of 7100,000 in order to arrive at net cash provided by
operating activities.
c. an addition of 7100,000 under investing activities.
d. a deduction of 7100,000 under investing activities.
0. 'n increase in the bonds payable account of 7200,000 over the course of a year would be
shown on the companys statement of cash flows prepared under the indirect method as8
Medium a. an addition of 7200,000 under investing activities.
b. a deduction of 7200,000 under investing activities.
c. an addition of 7200,000 under financing activities.
d. a deduction of 7200,000 under financing activities.
1. 'n decrease in the bonds payable account of 7200,000 over the course of a year would be
% shown on the companys statement of cash flows prepared under the indirect method as8
Medium a. an addition of 7200,000 under investing activities.
b. a deduction of 7200,000 under investing activities.
c. an addition of 7200,000 under financing activities.
d. a deduction of 7200,000 under financing activities.
2. ;hich one of the following transactions should be classified as a financing activity on the
6 statement of cash flows9
$ard a. :urchase of e+uipment.
M' adapted b. :urchase of the companys own stoc!.
c. 5ale of a patent.
d. :ayment of interest on a note.
e. ?eceipt of an income ta( refund.
. ;hich of the following would be classified as a #inancing 'ctivity on the statement of cash
6 flows9
$ard a. Interest paid on bonds issued by the reporting company.
b. %ividends paid to shareholders of the company on the companys common stoc!.
c. Interest received on investments in another companys bonds.
d. %ividends received on investments in another companys common stoc!.
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&. The sale of e+uipment at a gain would be shown on the statement of cash flows prepared under
' the indirect method in which of the following manners9
$ard a. ash received would be shown under Investing 'ctivities and the gain would be
deducted from net income.
b. ash received would be shown under Investing 'ctivities and the gain would be
added to net income.
c. ash received would be shown under Investing 'ctivities and the gain would not
appear on the statement of cash flows.
d. ash received would be shown as an ad4ustment to net income and the gain would not
appear on the statement of cash flows.
). ;hich of the following presentations on the statement of cash flows of the transactions
described is correct9
$ard a. ' company that purchases 700,000 in property during a year, and sells other
property for 7&00,000, shows a 7200,000 net investment in property for the year as an
Investing 'ctivity.
b. ' company that receives 7-00,000 from the issuance of bonds, and pays 700,000 to
retire other bonds, shows a 7100,000 net amount from #inancing 'ctivities.
c. ' company has an increase of 7&00,000 in accounts receivable as a result of sales for
the year, and a decrease of 700,000 in accounts receivable as a result of collections
during the year, shows a 7100,000 net difference in determining the cash flow from
operating activities during the year.
d. @one of the above presentations is correct.
. The data given below are from the accounting records of the Auhn ompany8
$ard @et Income accrual basis3 ............... 7&),000
%epreciation E(pense ..................... 7 /,000
%ecrease in 'ccounts :ayable ............. 7 2,)00
%ecrease in Merchandise Inventory ........ 7 ,000
Increase in Bong<term Biabilities ........ 710,000
5ale of apital 5toc! for cash ........... 70,000
Increase in 'ccounts ?eceivable .......... 7 &,)00
6ased on this information, the cash provided by operating activities using the indirect method
would be8
a. 7)),000.
b. 7),000.
c. 7)0,000.
d. 70,000.
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-. Morey ompanys net income last year was 72-,000 and cash dividends declared and paid to
the companys stoc!holders totaled 71,000. hanges in selected balance sheet accounts for
$ard the year appear below8
Increases
%ecreases3
%ebit balances8
'ccounts receivable ......... 7 ,000
Inventory ................... ,0003
:repaid e(penses ............ &,000
redit balances8
'ccumulated depreciation .... 1,000
'ccounts payable ............ ,000
Ta(es payable ............... &,0003
6onds payable ............... 10,000
6ased solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be8
a. 71,000.
b. 7&),000.
c. 7,000.
d. 72),000.
. Moravec ompanys net income last year was 7&,000 and cash dividends declared and paid to
6 the companys stoc!holders totaled 71,000. hanges in selected balance sheet accounts for
$ard the year appear below8
Increases
%ecreases3
%ebit balances8
'ccounts receivable ......... 7 ,000
Inventory ................... ),0003
redit balances8
'ccumulated depreciation .... 2,000
'ccounts payable ............ 10,000
'ccrued liabilities ......... /,0003
Ta(es payable ............... &,000
6onds payable ............... 0,000
6ased solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be8
a. 712,000.
b. 7-&,000.
c. 7-2,000.
d. 71,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
/. Morera ompanys net income last year was 7-,000 and cash dividends declared and paid to
% the companys stoc!holders totaled 71&,000. hanges in selected balance sheet accounts for
$ard the year appear below8
Increases
%ecreases3
%ebit balances8
'ccounts receivable ......... 7 ,000
Inventory ................... ),000
:repaid e(penses ............ ,0003
Bong term investments ....... 20,000
redit balances8
'ccumulated depreciation .... 2,000
'ccounts payable ............ -,0003
Ta(es payable ............... ,000
6ased solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be8
a. 7,000.
b. 72,000.
c. 71,000.
d. 7),000.
&0. @ordstrand ompanys net income last year was 7,000. hanges in selected balance sheet
6 accounts for the year appear below8
Medium
Increases
%ecreases3
%ebit balances8
'ccounts receivable ......... 7-,0003
Inventory ................... ),0003
:repaid e(penses ............ ,000
redit balances8
'ccumulated depreciation .... 1,000
'ccounts payable ............ 1,000
'ccrued liabilities ......... /,0003
Ta(es payable ............... <0<
%eferred ta(es .............. 1,000
6ased solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be8
a. 7&,000.
b. 7,000.
c. 7)0,000.
d. 7)&,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
&1. @ord+uist ompanys net income last year was 7,000. hanges in selected balance sheet
accounts for the year appear below8
Medium
Increases
%ecreases3
%ebit balances8
'ccounts receivable ......... 712,000
Inventory ................... &,0003
:repaid e(penses ............ ,000
redit balances8
'ccumulated depreciation .... 2,000
'ccounts payable ............ 1&,000
'ccrued liabilities ......... /,0003
Ta(es payable ............... <0<
%eferred ta(es .............. ,000
6ased solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be8
a. 70,000.
b. 71,000.
c. 7&,000.
d. 7),000.
&2. @orbury ompanys net income last year was 7&,000. hanges in selected balance sheet
' accounts for the year appear below8
Medium
Increases
%ecreases3
%ebit balances8
'ccounts receivable ......... 712,000
Inventory ................... /,0003
:repaid e(penses ............ &,000
redit balances8
'ccumulated depreciation .... 1/,000
'ccounts payable ............ ),000
'ccrued liabilities ......... -,000
Ta(es payable ............... ,0003
%eferred ta(es .............. <0<
6ased solely on this information, the net cash provided by operations under the indirect
method on the statement of cash flows would be8
a. 7)2,000.
b. 7,000.
c. 7),000.
d. 71,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
&. Bino ompanys records reveal the following account balances at the close and beginning of
' last year8
Medium
:' adapted %ecember 1 Canuary 1
'ccounts receivable 72/,000 72,000
'ccumulated depreciation 1,000 00
:repaid e(penses ,200 12,&00
'ccounts payable 22,&00 1/,&00
Binos net income last year was 71)0,000. The company uses the indirect method to determine
the net cash provided by operating activities. 6ased solely upon this data, what amount should
Bino include as net cash provided by operating activities in its statement of cash flows for the
year9
a. 71)1,&00
b. 71)-,000
c. 71&,00
d. 71&),&00
&&. 'ppendi(3 Bast year umley ompany reported a cost of goods sold of 7/0,000. Inventories
increased by 721,000 during the year, and accounts payable decreased by 71&,000. The
Medium company uses the direct method to determine the net cash provided by operating activities on
the statement of cash flows. The cost of goods sold ad4usted to a cash basis would be8
a. 7)),000.
b. 7111,000.
c. 712),000.
d. 710&,000.
&). 'ppendi(3 Bast year umber ompany reported a cost of goods sold of 7-0,000. Inventories
% decreased by 712,000 during the year, and accounts payable increased by 7,000. The
Medium company uses the direct method to determine the net cash provided by operating activities on
the statement of cash flows. The cost of goods sold ad4usted to a cash basis would be8
a. 7/0,000.
b. 72,000.
c. 7),000.
d. 7)0,000.
&. 'ppendi(3 Bast year umberland ompany reported a cost of goods sold of 7120,000.
' Inventories increased by 7),000 during the year, and accounts payable increased by 720,000.
Medium The company uses the direct method to determine the net cash provided by operating activities
on the statement of cash flows. The cost of goods sold ad4usted to a cash basis would be8
a. 71),000.
b. 7100,000.
c. 71)),000.
d. 710),000.
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&-. 'ppendi(3 Bast year Bawton ompany reported sales of 7110,000 on its income statement.
6 %uring the year, accounts receivable decreased by 710,000 and accounts payable decreased by
$ard 71),000. The company uses the direct method to determine the net cash provided by operating
activities on the statement of cash flows. The sales revenue ad4usted to a cash basis for the year
would be8
a. 712),000.
b. 7120,000.
c. 711),000.
d. 710),000.
&. 'ppendi(3 Bast year Bawsby ompany reported sales of 7120,000 on its income statement.
%uring the year, accounts receivable increased by 710,000 and accounts payable increased by
$ard 71),000. The company uses the direct method to determine the net cash provided by operating
activities on the statement of cash flows. The sales revenue ad4usted to a cash basis for the year
would be8
a. 710),000.
b. 712),000.
c. 7110,000.
d. 711),000.
&/. 'ppendi(3 Bast year Bawn ompany reported sales of 711),000 on its income statement.
' %uring the year, accounts receivable decreased by 710,000 and accounts payable increased by
$ard 71),000. The company uses the direct method to determine the net cash provided by operating
activities on the statement of cash flows. The sales revenue ad4usted to a cash basis for the year
would be8
a. 712),000.
b. 7/0,000.
c. 71&0,000.
d. 7100,000.
)0. 'ppendi(3 Bast year %arrow ompany reported sales of 700,000 on its income statement.
6 %uring the year, accounts receivable increased by 70,000 and accounts payable decreased by
Medium 720,000. The company uses the direct method to determine the net cash provided by operating
activities on the statement of cash flows. The sales revenue ad4usted to a cash basis for the year
would be8
a. 70,000.
b. 7)-0,000.
c. 710,000.
d. 7)/0,000.
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)1. 'ppendi(3 Bast year Madson company reported a cost of goods sold of 700,000 on its income
' statement. The following additional data were ta!en from the companys comparative balance
Medium sheet for the year8
Ending 6eginning
Inventory ............. 7120,000 7100,000
'ccounts payable ...... 7 -0,000 7 0,000
The company uses the direct method to determine the net cash provided by operating activities
on the statement of cash flows. The cost of goods sold ad4usted to a cash basis would be8
a. 70,000.
b. 710,000.
c. 7--0,000.
d. 7-/0,000.
)2. 'ppendi(3 ridge ompanys operating e(penses for last year totaled 71-0,000. %uring the
' year the companys prepaid e(pense account balance increased by 7/,000 and accrued
Medium liabilities decreased by 71,000. %epreciation charges for the year were 71),000. 6ased on this
information, operating e(penses ad4usted to a cash basis under the direct method on the
statement of cash flows would be8
a. 71--,000.
b. 720-,000.
c. 71,000.
d. 71,000.
). 'ppendi(3 ridwell ompanys operating e(penses for last year totaled 7210,000. %uring the
6 year the companys prepaid e(pense account balance increased by 71,000 and accrued
Medium liabilities increased by 712,000. %epreciation charges for the year were 72&,000. 6ased on this
information, operating e(penses ad4usted to a cash basis under the direct method on the
statement of cash flows would be8
a. 710,000.
b. 71/2,000.
c. 722,000.
d. 72&0,000.
)&. 'ppendi(3 ridman ompanys operating e(penses for last year totaled 710,000. %uring the
year the companys prepaid e(pense account balance decreased by 7),000 and accrued
Medium liabilities increased by 7,000. %epreciation charges for the year were 712,000. 6ased on this
information, operating e(penses ad4usted to a cash basis under the direct method on the
statement of cash flows would be8
a. 720),000.
b. 711,000.
c. 71)),000.
d. 71-/,000.
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)). 'ppendi(3 The ending balance of accounts receivable was 7)2,)00. 5ales, ad4usted to a cash
' basis using the direct method on the statement of cash flows, were 7&2),000. 5ales reported on
$ard the income statement were 7&&&,000. 6ased on this information, the beginning balance in
accounts receivable was8
a. 7,)00.
b. 7,)00.
c. 7-1,)00.
d. 7/,)00.
). 'ppendi(3 %uring the year 4ust completed, 'nderson ompany reported a cost of goods sold
of 7100,000. The companys inventory at the beginning of the year was 711,000, and its
$ard inventory at the end of the year was 71/,000. The :repaid E(pense account increased by
72,000 between the beginning and end of the year, and the 'ccounts :ayable account
decreased by 7&,000. ost of goods sold ad4usted to the cash basis under the direct method
would be8
a. 7/&,000.
b. 710,000.
c. 7112,000.
d. 7110,000.
)-. 'ppendi(3 arlton ompany reported on its income statement sales for the year 4ust ended of
' 7&),000. 5ales during the year ad4usted to the cash basis on its statement of cash flows
$ard constructed using the direct method were 7&0,000. arlton ompany recorded the following
account balances8
6alance o
'ccount o 6eginning of the Dear End of the Dear
'ccounts ?eceivable ...... 9 7),000
:repaid E(penses ......... 712,000 71,000
Inventory ................ 722,000 71/,000
6ased on this information, the balance in 'ccounts ?eceivable at the beginning of the year was8
a. 70,000.
b. 7,000.
c. 7)/,000.
d. 710,000.
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). 'ppendi(3 B#M ompany reported ost of oods 5old on its income statement of 71),000 for
6 the year 4ust ended, as well as the balances shown in the following accounts at the respective year<
$ard ends8
*sing the direct method of constructing the statement of cash flows, the cost of goods sold
ad4usted to a cash basis would be8
a. 71&,000.
b. 71,000.
c. 710,000.
d. 71),000.
)/. 'ppendi(3 %uring the year 4ust completed, 6lume ompany reported total cost of goods sold
on the income statement as 71&0,000. %uring the year, the balance in 'ccounts :ayable
$ard decreased 72),000 and the balance in Inventory increased 710,000. *nder the direct method,
cost of goods sold ad4usted to the cash basis would be8
a. 710),000.
b. 712),000.
c. 71-),000.
d. 71)),000.
0. Bast year Marmin ompany sold e+uipment with a net boo! value of 7120,000 for 710,000 in
cash. This e+uipment was originally purchased for 720,000. ;hat will be the net effect of this
$ard transaction on the net cash provided by investing activities on the statement of cash flows9
a. ' net deduction of 7&0,000 from cash.
b. ' net addition of 7&0,000 to cash.
c. ' net deduction of 7-0,000 from cash.
d. ' net addition of 7-0,000 to cash.
1. Bast year Marlstrom ompany sold e+uipment with a net boo! value of 7110,000 for 7/0,000
6 in cash. This e+uipment was originally purchased for 720,000. ;hat will be the net effect of
$ard this transaction on the net cash provided by investing activities on the statement of cash flows9
a. ' net addition of 71/0,000 to cash.
b. ' net deduction of 71/0,000 from cash.
c. ' net addition of 720,000 to cash.
d. ' net deduction of 720,000 from cash.
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2. Bast year Marty ompany sold e+uipment with a net boo! value of 712),000 for 7110,000 in
% cash. This e+uipment was originally purchased for 72-),000. ;hat will be the net effect of this
$ard transaction on the net cash provided by investing activities on the statement of cash flows9
a. ' net addition of 71),000 to cash.
b. ' net deduction of 71),000 from cash.
c. ' net addition of 71),000 to cash.
d. ' net deduction of 71),000 from cash.
. The following events occurred last year for the ashbac! ompany8
$ard Issuance of ommon 5toc! ................ 7&,000
%ividends paid to shareholders .......... 11,000
%ividends received from investments ..... &,000
Interest paid on 6onds :ayable .......... 1&,000
:roceeds from sale of used e+uipment .... 1/,000
?epurchase of preferred stoc! ........... 10,000
6ased solely on the above information, the net cash provided by financing activities for the
year on the statement of cash flows was8
a. 7&&,000.
b. 7&,000.
c. 72),000.
d. 71),000.
6ased solely on the above information, the net cash provided by financing activities for the
year on the statement of cash flows would be8
a. 711,0003.
b. 72-/,000.
c. 7,0003.
d. 7),0003.
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6ased solely on the above information, the net cash provided by financing activities for the
year on the statement of cash flows would be8
a. 7&2&,000.
b. 71,0003.
c. 71,0003.
d. 7-,000.
6ased solely on the above information, the net cash provided by financing activities for the
year on the statement of cash flows would be8
a. 7-/,000.
b. 7)/,000.
c. 710/,0003.
d. 7&,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
-. rading ompanys cash and cash e+uivalents consist of cash and mar!etable securities. Bast
% year the companys cash account decreased by 71&,000 and its mar!etable securities account
$ard increased by 71,000. ash provided by operating activities was 721,000. @et cash used for
financing activities was 722,000. 6ased on this information, the net cash flow from investing
activities on the statement of cash flows was8
a. a net 71,000 decrease.
b. a net 71,000 increase.
c. a net 7,000 decrease.
d. a net 7),000 increase.
. Bast year 6urbach ompanys cash account increased by 710,000. @et cash provided by
' investing activities was 71,000. @et cash used in financing activities was 7&,000. Fn the
Medium statement of cash flows, the net cash flow provided by used in3 operating activities was8
a. 72,000.
b. 7,0003.
c. 710,000.
d. 71,0003.
/. Bast year 6urford ompanys cash account decreased by 71/,000. @et cash used in investing
6 activities was 7/,000. @et cash provided by financing activities was 71,000. Fn the statement
Medium of cash flows, the net cash flow provided by used in3 operating activities was8
a. 71/,0003.
b. 72,0003.
c. 712,0003.
d. 7-,000.
-0. Bast year 6urch ompanys cash account decreased by 7,000. @et cash provided by investing
% activities was 71,000. @et cash used in financing activities was 70,000. Fn the statement of
Medium cash flows, the net cash flow provided by used in3 operating activities was8
a. 72,0003.
b. 71-,0003.
c. 7,0003.
d. 711,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
?eference8 1-<1
'ppendi(3 6alance sheet accounts for $ollis, Inc. contained the following amounts at the ends of years 1 and 28
Dear 2 Dear 1
%ebit balances
ash .......................... 7 -,)00 7 ),000
'ccounts ?eceivable ........... 21,000 1),000
Inventory ..................... -,000 2,000
:repaid E(penses .............. 2,)00 2,000
Bong<term Investments ......... 21,000 2),000
:lant and E+uipment ........... 1/,000 1-),000
Totals .............. 72),000 72)0,000
redit balances
'ccumulated %epreciation ...... 7 &1,000 7 2,000
'ccounts :ayable .............. 2&,000 2,000
'ccrued Biabilities ........... /,000 ),000
6onds :ayable ................. 0,000 ),000
ommon 5toc! .................. -),000 0,000
?etained Earnings ............. 10,000 /0,000
Totals .............. 72),000 72)0,000
There were no sales or retirements of plant and e+uipment in Dear 2. ash dividends of 7),000 were paid during
Dear 2. The company pays no income ta(es. The company uses the direct method to determine the net cash
provided by operating activities on the statement of cash flows.
-1. #or Dear 2, sales ad4usted to a cash basis would be8
6 a. 7111,000.
Medium b. 7120,000.
?efer To8 1-< c. 712,000.
1 d. 712,000.
-2. ost of goods sold ad4usted to a cash basis for Dear 2 would be8
% a. 7&,000.
Medium b. 7-2,000.
?efer To8 1-< c. 72,000.
1 d. 7/0,000.
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-. The net cash provided by operating activities for Dear 2 would be8
' a. 71&,)00.
Medium b. 70,000.
?efer To8 1-< c. 71,)00.
1 d. 72-,)00.
-&. @et cash used for investing activities for Dear 2 would be8
a. 712,000.
Medium b. 721,000.
?efer To8 1-< c. 71-,000.
1 d. 722,000.
-). @et cash provided by financing activities for Dear 2 would be8
a. 7,000.
Medium b. 710,000.
?efer To8 1-< c. 7),000.
1 d. 711,000.
?eference8 1-<2
;atley ompanys comparative balance sheet and income statement for last year appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 2-,000 7 21,000
'ccounts receivable ........ 2,000 ),000
Inventory .................. &,000 ,000
:repaid e(penses ........... ,000 1,000
Bong<term investments ...... 2/0,000 20,000
:lant and e+uipment ........ &&0,000 &&0,000
'ccumulated depreciation ... 2-,0003 202,0003
Total assets ............. 70&,000 7)-,000
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Income 5tatement
The company declared and paid 7)),000 in cash dividends during the year. The following +uestions pertain to the
companys statement of cash flows.
-. The net cash provided by used in3 operating activities last year was8
' a. 71-1,000.
Medium b. 71&,000.
?efer To8 1-< c. 7),000.
2 d. 7112,000.
--. The net cash provided by used in3 investing activities last year was8
% a. 70,000.
Medium b. 70,0003.
?efer To8 1-< c. 70,000.
2 d. 70,0003.
-. The net cash provided by used in3 financing activities last year was8
6 a. 710),000.
Medium b. 710),0003.
?efer To8 1-< c. 7)0,0003.
2 d. 7)0,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
?eference8 1-<
;abash ompanys comparative balance sheet and income statement for last year appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 0,000 7 ,000
'ccounts receivable ........ -,000 &,000
Inventory .................. ,000 &&,000
:repaid e(penses ........... 1,000 /,000
Bong<term investments ...... 2&0,000 200,000
:lant and e+uipment ........ &0,000 &0,000
'ccumulated depreciation ... 220,0003 1/0,0003
Total assets ............. 712,000 7)/),000
Income 5tatement
The company declared and paid 7&,000 in cash dividends during the year. The following +uestions pertain to the
companys statement of cash flows.
-/. The net cash provided by used in3 operating activities last year was8
a. 710-,000.
Medium b. 7&/,000.
?efer To8 1-< c. 710),000.
d. 7--,000.
0.
% The net cash provided by used in3 investing activities last year was8
a. 720,0003.
Medium b. 720,000.
?efer To8 1-< c. 7&0,003.
d. 7&0,0003.
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7/17/2019 Test Bank - Chapter17 Cash Flows
1. The net cash provided by used in3 financing activities last year was8
6 a. 7-,000.
Medium b. 7-,0003.
?efer To8 1-< c. 70,000.
d. 70,0003.
?eference8 1-<&
Megan ompanys net income last year was 7/,000. hanges in the companys balance sheet accounts for the
year appear below8
Increases
%ecreases3
%ebit balances8
ash ........................ 7 ,0003
'ccounts receivable ......... 1&,0003
Inventory ................... ,000
:repaid e(penses ............ -,0003
Bong<term investments ....... 0,000
:lant and e+uipment ......... )),000
redit balances8
'ccumulated depreciation .... ),000
'ccounts payable ............ <0<
'ccrued liabilities ......... 1),000
Ta(es payable ............... 1,0003
6onds payable ............... 0,0003
%eferred ta(es .............. 2,000
ommon stoc! ................ 20,000
?etained earnings ........... 2,000
The company declared and paid cash dividends of 7,000 last year. The following +uestions pertain to the
companys statement of cash flows.
2. The net cash provided by used in3 operating activities last year was8
6 a. 7/,000.
Medium b. 71-,000.
?efer To8 1-< c. 71),000.
& d. 7120,000.
. The net cash provided by used in3 investing activities last year was8
% a. 7,000.
Medium b. 711),0003.
?efer To8 1-< c. 71),000.
& d. 71),0003.
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&. The net cash provided by used in3 financing activities last year was8
' a. 7&,0003.
Medium b. 7&,000.
?efer To8 1-< c. 710,0003.
& d. 710,000.
?eference8 1-<)
'ppendi(3 Gan 'rdhom ompanys comparative balance sheet and income statement for last year appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 2),000 7 &0,000
'ccounts receivable ........ ),000 &,000
Inventory .................. -1,000 )2,000
:repaid e(penses ........... -,000 1,000
Bong<term investments ...... 10,000 2&0,000
:lant and e+uipment ........ &20,000 &20,000
'ccumulated depreciation ... 2,0003 20,0003
Total assets ............. 7),000 7)/1,000
Income 5tatement
The company declared and paid 7&,000 in cash dividends during the year. The company uses the direct method
to determine the net cash provided by operating activities.
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). Fn the statement of cash flows, the sales revenue ad4usted to a cash basis would be8
' a. 7&,000.
$ard b. 7-,000.
?efer To8 1-< c. 7-0,000.
) d. 7/2,000.
. Fn the statement of cash flows, the cost of goods sold ad4usted to a cash basis would be8
6 a. 72/,000.
$ard b. 70,000.
?efer To8 1-< c. 710,000.
) d. 712,000.
-. Fn the statement of cash flows, the operating e(penses ad4usted to a cash basis would be8
6 a. 72/,000.
$ard b. 7211,000.
?efer To8 1-< c. 720,000.
) d. 72&/,000.
. Fn the statement of cash flows, the income ta( e(pense ad4usted to a cash basis would be8
% a. 7/,000.
$ard b. 72,000.
?efer To8 1-< c. 72,000.
) d. 71,000.
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?eference8 1-<
'ppendi(3 Gan 6roder ompanys comparative balance sheet and income statement for last year appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 &,000 7 2-,000
'ccounts receivable ........ ),000 &,000
Inventory .................. ),000 ,000
:repaid e(penses ........... ,000 1,000
Bong<term investments ...... 20,000 210,000
:lant and e+uipment ........ )10,000 )10,000
'ccumulated depreciation ... 2-,0003 2),0003
Total assets ............. 7,000 7-,000
Income 5tatement
The company declared and paid 720,000 in cash dividends during the year. The company uses the direct method
to determine the net cash provided by operating activities.
/. Fn the statement of cash flows, the sales revenue ad4usted to a cash basis would be8
% a. 7&0,000.
$ard b. 7)0,000.
?efer To8 1-< c. 71-,000.
d. 70,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
/0. Fn the statement of cash flows, the cost of goods sold ad4usted to a cash basis would be8
6 a. 71),000.
$ard b. 702,000.
?efer To8 1-< c. 700,000.
d. 72/,000.
/1. Fn the statement of cash flows, the operating e(penses ad4usted to a cash basis would be8
a. 721,000.
$ard b. 7211,000.
?efer To8 1-< c. 71-/,000.
d. 720,000.
/2. Fn the statement of cash flows, the income ta( e(pense ad4usted to a cash basis would be8
' a. 710,000.
$ard b. 7,000.
?efer To8 1-< c. 7),000.
d. 71),000.
?eference8 1-<-
The changes in @orthrup ompanys balance sheet account balances for last year appear below8
Increases
%ecreases3
%ebit balances8
ash ........................ 7 &,000
'ccounts receivable ......... &,0003
Inventory ................... 2,0003
:repaid e(penses ............ 2,000
Bong<term investments ....... &0,000
:lant and e+uipment ......... 2),000
redit balances8
'ccumulated depreciation .... ,000
'ccounts payable ............ ,0003
'ccrued liabilities ......... ,000
Ta(es payable ............... 10,0003
6onds payable ............... -0,0003
%eferred ta(es .............. 2,000
ommon stoc! ................ 10,000
?etained earnings ........... ,000
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Income 5tatement
The company declared and paid 72,000 in cash dividends during the year. The company uses the direct method
to determine the net cash provided by operating activities.
/. Fn the statement of cash flows, the sales revenue ad4usted to a cash basis would be8
a. 7/-,000.
$ard b. 7/2,000.
?efer To8 1-< c. 7/&,000.
- d. 7/0,000.
/&. Fn the statement of cash flows, the cost of goods sold ad4usted to a cash basis would be8
a. 7)&,000.
$ard b. 7),000.
?efer To8 1-< c. 7)&&,000.
- d. 7)&0,000.
/). Fn the statement of cash flows, the operating e(penses ad4usted to a cash basis would be8
% a. 70&,000.
$ard b. 7&,000.
?efer To8 1-< c. 710,000.
- d. 72,000.
/. Fn the statement of cash flows, the income ta( e(pense ad4usted to a cash basis would be8
' a. 7&-,000.
$ard b. 7/,000.
?efer To8 1-< c. 71,000.
- d. 7&/,000.
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?eference8 1-<
5pats ompany recorded the following events last year8
Fn the statement of cash flows, some of these events are classified as operating activities, some are classified as
investing activities, and some are classified as financing activities.
/-. 6ased solely on the information above, the net cash provided by used in3 financing activities
6 on the statement of cash flows would be8
$ard a. 71,0-1,000.
?efer To8 1-< b. 71/0,0003.
c. 71,000.
d. 720/,0003.
/. 6ased solely on the information above, the net cash provided by used in3 investing activities
on the statement of cash flows would be8
$ard a. 71,0-1,0003.
?efer To8 1-< b. 7/0,0003.
c. 71-0,0003.
d. 7/0,0003.
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7/17/2019 Test Bank - Chapter17 Cash Flows
?eference8 1-</
5pawle ompany recorded the following events last year8
Fn the statement of cash flows, some of these events are classified as operating activities, some are classified as
investing activities, and some are classified as financing activities.
//. 6ased solely on the information above, the net cash provided by used in3 financing activities
on the statement of cash flows would be8
$ard a. 71),0003.
?efer To8 1-< b. 7/&1,000.
/ c. 710/,0003.
d. 712-,0003.
100. 6ased solely on the information above, the net cash provided by used in3 investing activities
% on the statement of cash flows would be8
$ard a. 7/&1,0003.
?efer To8 1-< b. 720,0003.
/ c. 700,0003.
d. 720,0003.
?eference8 1-<10
Bucas ompany recorded the following events for the year 4ust ended8
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101. The net decrease in cash resulting from financing activities for the year was8
% a. 7&),000.
Medium b. 7),000.
?efer To8 1-< c. 7),000.
10 d. 71&0,000.
102. The net change in cash resulting from investing activities for the year was8
' a. 710,000.
Medium b. 7&0,000.
?efer To8 1-< c. 7),0003.
10 d. 710,000.
?eference8 1-<11
randall ompany recorded the following activity for the year 4ust ended8
10. The net cash provided by financing activities for the year was8
% a. 720,000.
Medium b. 7200,000.
?efer To8 1-< c. 700,000.
11 d. 720,000.
10&. The net cash provided by investing activities for the year was8
a. 7&00,000.
$ard b. 7&10,000.
?efer To8 1-< c. 720,000.
11 d. 70,000.
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7/17/2019 Test Bank - Chapter17 Cash Flows
Essay
10). ?ecent balance sheets of ;arnic! o. appear below, together with an income statement for the
Medium latest year.
;'?@IA F.
6alance 5heets
May 1, 1/(2 and 1/(1
1/(2 1/(1
ash ............................... 722,00 72&,000
'ccounts receivable ................ ,&00 -,)00
Inventories......................... /,/00 0,100
Bong<term investments .............. << ,000
:lant and e+uipment ................ 12,)00 120,000
Bess accumulated depreciation ...... )0,003 &,003
Total assets .................... 71)0,00 71&2,00
;'?@IA F.
Income 5tatement and
#or the Dear Ended May 1, 1/(2
@ote8 5toc! in 6owen o., held as a long<term investment, was sold for 7,000 cash.
%ividends of 710,)00 were declared and paid during the year.
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7/17/2019 Test Bank - Chapter17 Cash Flows
?e+uired8
:repare a statement of cash flows for ;arnic! o. for the year ended May 1, 1/(2. *se the
indirect method.
'nswer8
Fperating activities8
@et income ................................ 710,)00
'd4ustments to convert to cash basis8
%epreciation charges .................... &,000
%ecrease in accounts receivable ......... 1,100
Increase in inventories ................. /,003
%ecrease in accounts payable ............ 003
Increase in accrued liabilities ......... 00
@et cash provided by operating activities 7),00
Investing activities8
5ale of long<term investment ............. ,000
:urchase of e+uipment .................... 12,)003
@et cash used for investing activities ... &,)003
#inancing activities8
ash dividends ........................... 10,)003
Increase in common stoc! ................. ,000
@et cash used for financing activities ... 2,)003
10. 6urg ompanys net income last year was 7/1,000. hanges in the companys balance sheet
Medium accounts for the year appear below8
Increases
%ecreases3
%ebit balances8
ash ........................ 71,0003
'ccounts receivable ......... 1,000
Inventory ................... 21,000
:repaid e(penses ............ ,0003
Bong<term investments ....... 0,000
:lant and e+uipment ......... 0,000
redit balances8
'ccumulated depreciation .... ,000
'ccounts payable ............ 21,0003
'ccrued liabilities ......... 1&,000
Ta(es payable ............... 2&,000
6onds payable
%eferred ............... 1,000
ta(es .............. )0,0003
ommon stoc! ................ 20,000
?etained earnings ........... ),000
The company declared and paid cash dividends of 72,000 last year.
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?e+uired8
a. onstruct in good form the operating activities section of the companys statement of cash
flows for the year. *se the indirect method.3
b. onstruct in good form the investing activities section of the companys statement of cash
flows for the year.
c. onstruct in good form the financing activities section of the companys statement of cash
flows for the year.
'nswer8
a. Fperating activities
c. #inancing activities8
%ecrease in bonds payable ................. 7)0,0003
Increase in common stoc! .................. 20,000
ash dividends ............................ 2,0003
@et cash used in financing activities ..... 7),0003
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10-. 6urdge ompanys net income last year was 7--,000. hanges in the companys balance sheet
Medium accounts for the year appear below8
Increases
%ecreases3
%ebit balances8
ash ........................ 7 11,000
'ccounts receivable ......... 1,0003
Inventory ................... 1/,000
:repaid e(penses ............ &,0003
Bong<term investments ....... &0,000
:lant and e+uipment ......... 0,000
redit balances8
'ccumulated depreciation .... ,000
'ccounts payable ............ 2,000
'ccrued liabilities ......... ,000
Ta(es payable ............... 11,0003
6onds payable ............... &0,0003
%eferred ta(es .............. 1&,000
ommon stoc! ................ 0,000
?etained earnings ........... -1,000
The company declared and paid cash dividends of 7,000 last year.
?e+uired8
a. onstruct in good form the operating activities section of the companys statement of cash
flows for the year. *se the indirect method.3
b. onstruct in good form the investing activities section of the companys statement of cash
flows for the year.
c. onstruct in good form the financing activities section of the companys statement of cash
flows for the year.
'nswer8
a. Fperating activities
Increase
Increase in
in accounts payable ............
accrued liabilities 2,000
......... ,000
%ecrease in ta(es payable ............... 11,0003
Increase in deferred ta(es .............. 1&,000
@et cash provided by operating activities 71&-,000
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c. #inancing activities8
%ecrease in bonds payable ................. 7 &0,0003
Increase in common stoc! .................. 0,000
ash dividends ............................ ,0003
@et cash used in financing activities ..... 7 1,0003
10. 'ppendi(3 avett ompanys comparative balance sheet and income statement for last year
$ard appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 &),000 7 0,000
'ccounts receivable ........ ,000 &0,000
Inventory .................. -,000 0,000
Bong<term investments ...... 12,000 200,000
:lant and e+uipment ........ 2-,000 1)0,000
'ccumulated depreciation ... )2,0003 )0,0003
Total assets ............. 7),000 7&0,000
Income 5tatement
5ales .......................................... 72)0,000
Bess costs of goods sold ....................... 100,000
ross margin ................................... 71)0,000
Bess operating e(penses including depreciation3 /0,000
@et operating income before ta(es .............. 7 0,000
Boss on sale of investments .................... ),000
Income before ta(es ............................ 7 )),000
Bess income ta(es .............................. 22,000
a. %uring the year, the company sold long<term investments with a cost of 7,000 when
purchased for 7,000 in cash.
b. 'll sales were on credit.
c. The company paid a cash dividend of 72),000.
d. 6onds payable of 72),000 were retired by issuing common stoc! for 72),000.
e. 'n addition to one of the companys buildings was completed on %ecember 1, at a
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7/17/2019 Test Bank - Chapter17 Cash Flows
cost of 712,000. The company paid for the addition with a 7100,000 mortgage and
72,000 in cash.
f. The company raised 71),000 in cash by issuing additional bonds payable.
?e+uired8
a. *sing the direct method, determine the net cash provided by operating activities for
the year.
b. *sing the indirect method, determine the net cash provided by operating activities for the
year.
c. *sing the net cash provided by operating activities figure from either part a or b, prepare
a statement of cash flows for the year.
'nswer8
a.
5ales ..................................... 72)0,000
'd4ustment to a cash basis8
%ecrease in accounts receivable ......... 2,000 72)2,000
b.
Fperating activities8
@et income .............................. 7,000
'd4ustments to convert to cash basis8
%epreciation charges .................. 2,000
%ecrease in accounts receivable ....... 2,000
Increase in inventories ............... -,0003
%ecrease in accounts payable .......... &,0003
%ecrease in accrued liabilities ....... ,0003
Boss on sale of investments ........... ),000
%ecrease in deferred ta(es ............ ),0003
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c.
Investing activities8
5ale of long<term investment ........... ,000
:urchase of e+uipment .................. 2,0003
@et cash used for investing activities ),000
#inancing activities8
ash dividends ......................... 2),0003
5ale of bonds payable .................. 1),000
@et cash used for financing activities 10,0003
Ending 6eginning
6alance 6alance
ash ............................. 7 1),000 7 1,000
'ccounts receivable .............. 22,000 2),000
Inventory ........................ 20,000 22,000
:repaid e(penses ................. 1&,000 10,000
Bong<term investments ............ -,000 2),000
:lant and e+uipment .............. --,000 0,000
'ccumulated depreciation ......... 1,0003 &,0003
Total assets ................... 7 /&,000 711,000
Income 5tatement
5ales .......................................... 7),000
Bess costs of goods sold ....................... &),000
ross margin ................................... 7&0,000
Bess operating e(penses including depreciation3 0,000
@et
ainoperating
on sale ofincome before ta(es...............&,000
investments..................... 710,000
Income before ta(es............................. 7 ,000
Bess income ta(es .............................. 2,&00
@et income ..................................... 7 ,00
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7/17/2019 Test Bank - Chapter17 Cash Flows
a. %uring the year, :arr ompany sold e+uipment for 7,000 that had cost 71),000 and
on which there was accumulated depreciation of 7,000.
b. E+uipment was purchased for 712,000 cash.
c. ash dividends totaling 7,000 were paid.
d. Bong<term investments that cost 71,000 when purchased were sold for 722,000.
e. ommon stoc! was issued for 710,000.
f. %epreciation e(pense for the year was 7),000.
?e+uired8
:repare a statement of cash flows using the direct method.
'nswer8
:arr ompany
5tatement of ash #lows
Investing activities8
5ale of long<term investment ........... 71,000
5ale of e+uipment ...................... ,000
:urchase of e+uipment .................. 12,0003
@et cash provided by investing activities /,000
#inancing activities8
5ale of common stoc! ................... 10,000
ash dividends ......................... ,0003
:ayment of bonds ....................... ,0003
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7/17/2019 Test Bank - Chapter17 Cash Flows
110. 'ppendi(3 The changes in each balance sheet account for arver ompany during the year
Medium 4ust completed are as follows8
Increase %ecrease
ash ....................... 7 ,000 7
'ccounts receivable ........ ),000
Inventory .................. ,000
:repaid e(penses ........... ,000
Bong<term investments ...... 1-,000
:lant and e+uipment ........ 11,000
'ccumulated depreciation ... /,000
'ccounts payable ........... ,000
'ccrued liabilities......... ),000
6onds payable...... ........ 12,000
ommon stoc! ............... ,000
?etained earnings .......... 2,000
arver ompanys income statement for the year 4ust ended shows the following8
There were no sales or retirements of e+uipment and no dividends paid during the year. arver
ompany uses the direct method to construct its statement of cash flows.
?e+uired8
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7/17/2019 Test Bank - Chapter17 Cash Flows
'nswer8
?e+uirements a through d8
e. Investing activities8
5ale of long<term investment ......... 71-,000
:urchase of e+uipment ................ 11,0003
@et cash provided by investing activities 7,000
f. #inancing activities8
5ale of common stoc! ................. 7 ,000
:ayment of bonds ..................... 12,0003
@et cash used for financing activities 7/,0003
111. 'ppendi(3 The changes in each balance sheet account for 6ryan ompany during the year
Medium 4ust completed are as follows8
Increase %ecrease
ash ....................... 7 7 ,000
'ccounts receivable ........ 2,000
Inventory .................. ,000
:repaid e(penses ........... ),000
Bong<term investments ...... 1),000
:lant and e+uipment ........ 1&,000
'ccumulated depreciation ... ,000
'ccounts payable ........... 10,000
'ccrued liabilities......... ,000
6onds payable...... ........ 1,000
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7/17/2019 Test Bank - Chapter17 Cash Flows
6ryan ompanys income statement for the year 4ust ended shows the following8
There were no sales or retirements of e+uipment and no dividends paid during the year. 6ryan
ompany uses the direct method to construct its statement of cash flows.
?e+uired8
'nswer8
?e+uirements a through d8
e. Investing activities8
5ale of long<term investment ........... 71),000
:urchase of e+uipment .................. 1&,0003
@et cash provided by investing activities 71,000
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7/17/2019 Test Bank - Chapter17 Cash Flows
f. #inancing activities8
5ale of common stoc! ................... 7 ),000
:ayment of bonds ....................... 1,0003
@et cash used for financing activities 7,0003
%abney ompanys comparative balance sheet and income statement for last year appear
below8
Ending 6eginning
6alance 6alance
ash ....................... 7 &,000 7 2,000
'ccounts receivable ........ 2&,000 &,000
Inventory .................. )2,000 -0,000
:repaid e(penses ........... 1&,000 &,000
Bong<term investments ...... 10,000 220,000
:lant and e+uipment ........ )0,000 )0,000
'ccumulated depreciation ... &2&,0003 -,0003
Total assets ............. 700,000 7))0,000
Income 5tatement
Bess8 income...................
@et income ta(es ........... 2&,000
7 ),000
The company declared and paid 7-,000 in cash dividends during the year.
?e+uired8
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7/17/2019 Test Bank - Chapter17 Cash Flows
a. onstruct in good form the operating activities section of the companys statement of cash
flows for the year.
b. onstruct in good form the investing activities section of the companys statement of cash
flows for the year.
c. onstruct in good form the financing activities section of the companys statement of cash
flows for the year.
'nswer8
a. Fperating activities
I@%I?ET MET$F%
%I?ET MET$F%
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7/17/2019 Test Bank - Chapter17 Cash Flows
c. #inancing activities8
%ecrease in bonds payable ................. 7)0,0003
Increase in common stoc! .................. 20,000
ash dividends ............................ -,0003
@et cash used in financing activities ..... 7-,0003
%auber ompanys comparative balance sheet and income statement for last year appear
below8
Ending 6eginning
6alance 6alance
ash ....................... 7 &,000 7 /,000
'ccounts receivable ........ )-,000 &&,000
Inventory .................. ),000 -0,000
:repaid e(penses ........... 1,000 10,000
Bong<term investments ...... 2/0,000 20,000
:lant and e+uipment ........ )20,000 )20,000
'ccumulated depreciation ... /0,0003 ),0003
Total assets ............. 71-,000 7))),000
http://slidepdf.com/reader/full/test-bank-chapter17-cash-flows 44/51
7/17/2019 Test Bank - Chapter17 Cash Flows
Income 5tatement
The company declared and paid 7)),000 in cash dividends during the year.
?e+uired8
a. onstruct in good form the operating activities section of the companys statement of cash
flows for the year.
b. onstruct in good form the investing activities section of the companys statement of cash
flows for the year.
c. onstruct in good form the financing activities section of the companys statement of cash
flows for the year.
'nswer8
a. Fperating activities
I@%I?ET MET$F%
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7/17/2019 Test Bank - Chapter17 Cash Flows
%I?ET MET$F%
c. #inancing activities8
%ecrease in bonds payable ................. 720,0003
Increase in common stoc! .................. 0,000
ash dividends ............................ )),0003
@et cash used in financing activities ..... 7&),0003
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7/17/2019 Test Bank - Chapter17 Cash Flows
11&. 'ppendi(3 arson ompanys comparative balance sheet and income statement for last year
$ard appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 20,000 7 1),000
'ccounts receivable ........ 2-,000 2),000
Inventory .................. 2,000 ),000
:repaid e(penses ........... ,000 ),000
Bong<term investments ...... ,000 ,000
:lant and e+uipment ........ 10,000 /2,000
'ccumulated depreciation ... &/,0003 0,0003
Total assets ............. 712,000 710,000
Income 5tatement
5ales .......................................... 7200,000
Bess costs of goods sold ....................... 100,000
ross margin ................................... 100,000
Bess operating e(penses including depreciation3 )2,000
@et operating income before ta(es............... &,000
ain on sale of investments..................... 2,000
Income before ta(es............................. )0,000
Bess income ta(es .............................. 20,000
@et income ..................................... 7 0,000
arson ompany constructs its statement of cash flows using the direct method.
?e+uired8
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7/17/2019 Test Bank - Chapter17 Cash Flows
'nswer8
11). 'ppendi(3 arston ompanys comparative balance sheet and income statement for last year
$ard appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 ),000 7 2&,000
'ccounts receivable ........ )),000 /,000
Inventory .................. )1,000 &2,000
:repaid e(penses ........... ),000 10,000
Bong<term investments ...... 2-0,000 210,000
:lant and e+uipment ........ )0,000 )00,000
'ccumulated depreciation ... 2//,0003 2,0003
Total assets ............. 7-0,000 7)/2,000
Total liabilities
owners e+uityand
........ 7-0,000 7)/2,000
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7/17/2019 Test Bank - Chapter17 Cash Flows
Income 5tatement
The company declared and paid 72-,000 in cash dividends during the year.
?e+uired8
onstruct in good form the operating activities section of the companys statement of cash
flows for the year using the direct method.
'nswer8
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7/17/2019 Test Bank - Chapter17 Cash Flows
11. 'ppendi(3 arpp ompanys comparative balance sheet and income statement for last year
$ard appear below8
Ending 6eginning
6alance 6alance
ash ....................... 7 ),000 7 ,000
'ccounts receivable ........ /,000 )1,000
Inventory .................. )-,000 &,000
:repaid e(penses ........... 22,000 1-,000
Bong<term investments ...... 2/0,000 20,000
:lant and e+uipment ........ &-0,000 &0,000
'ccumulated depreciation ... 2),0003 2)-,0003
Total assets ............. 7)1,000 7)),000
Income 5tatement
The company declared and paid 7)0,000 in cash dividends during the year.
?e+uired8
onstruct in good form the operating activities section of the companys statement of cash
flows for the year using the direct method.
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7/17/2019 Test Bank - Chapter17 Cash Flows
'nswer8
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