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Exam 11: Statement of Cash Flows

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Question 61

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The collection of cash from customers would be classified as which type of cash flow on the Statement of Cash Flows?

A) Financing.
B) Investing.
C) Operating.
D) Not reported on the statement of cash flows.

E) A) and B)
F) B) and C)

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Question 62

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We calculate cash return on assets as

A) The change in cash divided by average total assets.
B) Net cash flows from operating activities divided by average total assets.
C) The change in cash divided by ending total assets.
D) Met cash flows from operating activities divided by ending total assets.

E) B) and D)
F) None of the above

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Question 63

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Which of the following is not true regarding cash flows?

Under the indirect method,an increase in accounts payable is added to net income to arrive at net cash flows from operating activities.

Cash received from issuing common stock would be classified in which section of the Statement of Cash Flows?

We can identify operating activities from income statement information and changes in

Operating activities are both inflows and outflows of cash resulting from the external financing of a business.

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

For each of the following five transactions,indicate by letter whether the cash effect of each transaction is reported in a statement of cash flows as an operating (O),investing (I),financing (F),or noncash (NC)activity. $\begin{array}{ll}\text { type of Activity } & \text { Transaction } \\\hline & \text { 1. Issuance of common stock } \\&\text { 2. Sale of land for cash } \\& \text {3. Purchase of treasury stock } \\&\text { 4. Collection of an account receivable } \\&\text { 5. Issuance of a note payable }\end{array}$

To maximize cash flow from operations,a company strives to increase both cash flows per dollar of sales and sales per dollar of assets invested.

Which of the following is deducted from net income as an adjustment under the indirect method of preparing the statement of cash flows?

If there are no current assets or liabilities associated with operating expenses,the amounts we report for these expenses in the income statement must equal the amount of cash we paid for these items.

The purchase of land is classified in the statement of cash flows as a(n) :

For each of the following ten transactions,indicate by letter whether the cash effect of each transaction is reported in a statement of cash flows as an operating (O),investing (I),financing (F),or noncash (NC)activity.Also,indicate whether the transaction is a cash inflow (CI),cash outflow (CO),or no effect on cash (NE).The first answer is provided as an example.

Assuming Net Income for the year is $115,000,what is the Operating Cash Flows given the following information: $\begin{array} { l r } \text { Increase in Salaries Payable } & \$ 15,000 \\\text { Depreciation Expense } & \$ 6,000 \\\text { Increase in Prepaid Rent } & \$ 24,000 \\\text { Loss on sale of asset } & \$ 1,000 \\\text { Increase in Accounts Payable } & \$ 25,000 \\\text { Increase in Inventory } & \$ 50,000\end{array}$

Under the indirect method,an increase in prepaid rent is added to net income to arrive at net cash flows from operating activities.

Assume net income was $100,000,depreciation expense was $8,000,accounts receivable decreased by $7,500,and accounts payable decreased by $2,500.The amount of cash flows from operating activities is:

Schneider Inc.purchases its inventory from suppliers on account.During the year,its Inventory account increased by $10 million and its accounts payable to suppliers decreased by $3 million.Cost of goods sold was $440 million,its cash outflows to inventory suppliers totaled:

Under what section of the Statement of Cash Flows would you classify dividends paid on common stock?

For each of the following five transactions,indicate by letter whether the cash effect of each transaction is reported in a statement of cash flows as an operating (O),investing (I),financing (F),or noncash (NC)activity. $\begin{array}{ll}\text { type of Activity } & \text { Transaction } \\\hline & \text { 1. Investment in bonds } \\&\text { 2. Payment of interest on bonds payable } \\& \text { 3. Payment of a cash dividend } \\&\text { 4. Purchase of a building } \\&\text { 5. Collection of a note receivable }\end{array}$