14:23 03/04/2023 3.

Practice MCQs Chapter 17

3. Practice MCQs Chapter 17 Total points 15/16

The payment of interest on bonds payable is classified as a cash outflow 1/1

from operating activities.

True

False

Cash provided by operations is generally equal to operating income. 1/1

True

False

Using the indirect method, an increase in accounts receivable during a 1/1

period is deducted from net income in calculating cash provided by
operations.

True

False

The statement of cash flows classifies cash receipts and cash payments 1/1
into two categories: operating activities and nonoperating activities.

True

False

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Free cash flow equals cash provided by operations less capital 1/1
expenditures and cash dividends.

True

False

Cash receipts from interest and dividends are classified as 1/1

financing activities.

investing activities.

operating activities.

either financing or investing activities.

Each of the following is an example of a significant noncash activity except 1/1

conversion of bonds into common stock.

exchanges of plant assets.

issuance of debt to purchase assets.

stock dividends.

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Purchased land for cash are categorized in 1/1

Operating activities section

Investing activities section

Financing activities section

Does not represent a cash flow

Joy Elle’s Vegetable Market had the following transactions during 2008: 1/1

1. Issued $25,000 of par value common stock for cash.

2. Repaid a 6 year note payable in the amount of $11,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash dividend of $1,000.
5. Sold a long-term investment (cost $3,000) for cash of $3,000.
6. Acquired an investment in IBM stock for cash of $6,000.

What is the net cash provided by financing activities?

$13,000

$25,000

$14,000

$9,000

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14:23 03/04/2023 3. Practice MCQs Chapter 17

Joy Elle’s Vegetable Market had the following transactions during 2008: 0/1

1. Issued $25,000 of par value common stock for cash.

2. Repaid a 6 year note payable in the amount of $11,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash dividend of $1,000.
5. Sold a long-term investment (cost $3,000) for cash of $3,000.
6. Acquired an investment in IBM stock for cash of $6,000.

What is the net cash provided by investing activities?

$6,000

$16,000

($3,000)

$3,000

Correct answer

($3,000)

Miller Company purchased treasury stock with a cost of $15,000 during 1/1
2008. During the year, the company paid dividends of $20,000 and issued
bonds payable for proceeds of $816,000. Cash flows from financing
activities for 2008 total

$796,000 net cash inflow.

$811,000 net cash inflow.

$5,000 net cash outflow.

$781,000 net cash inflow.

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Cline Company issued common stock for proceeds of $186,000 during 1/1
2008. The company paid dividends of $33,000 and issued a long-term note
payable for $45,000 in exchange for equipment during the year. The
company also purchased treasury stock that had a cost of $7,000. The
financing section of the statement of cash flows will report net cash
inflows of

$146,000.

$202,000.

$153,000.

$179,000.

In Gentry Company, land decreased $120,000 because of a cash sale for 1/1
$120,000, the equipment account increased $40,000 as a result of a cash
purchase, and Bonds Payable increased $130,000 from issuance for cash
at face value. The net cash provided by investing activities is

$120,000.

$210,000.

$80,000.

$90,000.

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Accounts receivable arising from sales to customers amounted to $80,000 1/1

and $70,000 at the beginning and end of the year, respectively. Income
reported on the income statement for the year was $240,000. Exclusive of
the effect of other adjustments, the cash flows from operating activities to
be reported on the statement of cash flows is

$240,000.

$250,000.

$310,000.

$230,000.

Wilton Company reported net income of $40,000 for the year. During the 1/1
year, accounts receivable decreased by $7,000, accounts payable
increased by $3,000 and depreciation expense of $5,000 was recorded. Net
cash provided by operating activities for the year is

$30,000.

$55,000.

$39,000.

$35,000.

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The net income reported on the income statement for the current year was 1/1
$205,000. Depreciation recorded on plant assets was $38,000. Accounts
receivable and inventories increased by $2,000 and $8,000, respectively.
Prepaid expenses and accounts payable decreased by $1,000 and $11,000
respectively. How much cash was provided by operating activities?

$185,000

$223,000

$205,000

$239,000

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