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Exam 11: Statement of Cash Flows

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Question 41

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Shively Mfg.Co.sold land costing $10,000 for $12,000.Shively would report:

A) Operating cash inflows of $12,000.
B) Investing cash inflows of $12,000.
C) Financing cash inflows of $12,000.
D) Financing cash inflows of $2,000.

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

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Question 42

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We can find most financing activities by examining changes in long-term liabilities and stockholders' equity accounts.

A) True
B) False

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Question 43

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In 2012,Hope Company incurred sales on account of $100,000.The company also has the following information: $\begin{array} { | l | c | c | } \hline & \text { December 31, 2011 } & \text { December 31, 2012 } \\\hline \text { Accounts Receivable } & \$ 50,000 & \$ 20,000 \\\hline \text { Accounts Payable } & \$ 65,000 & \$ 40,000 \\\hline\end{array}$ What is the amount of cash received from customers for Hope Company in 2012?

Wireless Technologies reports income tax expense of $800,000.Income tax payable at the beginning and end of the year are $50,000 and $70,000,respectively.What is the amount of cash paid for income taxes?

The balance sheet of Integrated Systems reports total assets of $890,000 and $950,000 at the beginning and end of the year,respectively.Sales revenues are $1.6 million,net income is $185,000,and net cash flows from operating activities are $155,000.Calculate the cash return on assets,cash flow to sales,and asset turnover for Integrated Systems.

Under what section of the Statement of Cash Flows would you classify the purchase of equipment by issuing a long-term note payable?

Income statement items that have no cash effect are still reported under the direct method.

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

Kela Corporation reports net income of $450,000 that includes depreciation expense of $70,000.Also,cash of $50,000 was borrowed on a 5-year note payable.Based on this data,total cash inflows from operating activities are:

Nathan Herrmann has completed the basic format to be used in preparing the statement of cash flows (indirect method)for CEO Consultants. Listed below in random order are line items to be included in the statement of cash flows. $\begin{array} { l r } \text { Purchase of equipment } & \$ 220,000 \\\text { Increase in inventory } & 30,000 \\\text { Increase in prepaid rent } & 10,000 \\\text { Payment of dividends } & 40,000 \\\text { Depreciation expense } & 20,000 \\\text { Increase in accounts receivable } & 60,000 \\\text { Increase in accounts payable } & 10,000 \\\text { Loss on sale of land } & 7,000 \\\text { Net income } & 70,000 \\\text { Repayment of notes payable } & 50,000 \\\text { Cash received from the sale of land } & 3,000 \\\text { Issuance of common stock } & 250,000\end{array}$ Prepare the statement of cash flows for CEO Consultants using the indirect method.

In preparing a statement of cash flows under the indirect method,a decrease in accounts receivable would be reported or included as a(n) :

The Statement of Cash Flows:

We need to add back to net income any loss on sale of long-term assets in the operating section of the statement of cash flows in order to eliminate the noncash component of net income.

The balance sheet of Tech Track reports total assets of $400,000 and $500,000 at the beginning and end of the year,respectively.Sales revenues are $1.1 million ($0.8 million in the previous year) ,net income is $40,000,and net cash flows from operating activities are $50,000.How does Tech Track's asset turnover compare to the industry average of 2.4 times?

Cash paid for financing activities would include cash paid for:

The purchase of long-term assets by issuing debt is recorded as both an investing activity and a financing activity.

Wireless Technologies reports cost of goods sold of $40 million.Inventory at the beginning and end of the year are $4 million and $3 million,respectively.Accounts payable at the beginning and end of the year are $3 million and $6 million,respectively.What is the amount of cash paid to suppliers?

We record dividends received as a financing activity.

Dividends received from an investment is classified as a(an) __________ cash flow,and paying dividends on stock issued is classified as a(an) ____________ cash flow on the Statement of Cash Flows.

The following information pertains to Alpha Computing at the end of 2012: $\begin{array} { | l | r | } \hline \text { Assets } & \$ 970,000 \\\hline \text { Liabilities } & \$ 560,000 \\\hline \text { Net Income } & \$ 90,000 \\\hline \text { Common Stock } & \$ 350,000 \\\hline\end{array}$ Alpha Computing's Retained Earnings account had a zero balance at the beginning of 2012. What amount of dividends did the company pay in 2012?