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Exam 11: Statement of Cash Flows

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Question 51

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Lense Laboratories' net income was $250,000.Given the account information below,what is the net operating cash flows for Lense Laboratories? $\begin{array} { | l | r | } \hline \text { Increase in Accounts Receivable } & \$ 60,000 \\\hline \text { Increase in Salaries Payable } & \$ 50,000 \\\hline \text { Decrease in Inventory } & \$ 30,000 \\\hline \text { Depreciation Expense } & \$ 45,000 \\\hline \text { Increase in Prepaid Insurance } & \$ 3,000 \\\hline\end{array}$

A) $152,000.
B) $278,000.
C) $312,000.

D) None of the above
E) All of the above

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Question 52

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During the year,Next Tec Corp.had the following cash flows: receipt from customers,$10,000;receipt from the bank for long-term borrowing,$6,000;payment to suppliers,$5,000;payment of dividends,$1,000,payment to workers,$2,000;and payment for machinery,$8,000.What amount would be reported for investing net cash flows on the Statement of Cash Flows?

A) $5,000.
B) $2,000.
C) $6,000.
D) ($8,000) .

E) C) and D)
F) B) and D)

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Question 53

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Arrow Printers paid $2,000 interest on short-term notes payable,$10,000 interest on long-term bonds,and $6,000 in dividends on its common stock.Arrow would report cash outflows from activities,as follows:

The three primary categories of cash flows are cash flows from operating activities,cash flows from investing activities,and cash flows from financing activities.

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

The balance sheet of Sound Designs reports total assets of $750,000 and $800,000 at the beginning and end of the year,respectively.Sales revenues are $1.5 million ($1.2 million in the previous year) ,net income is $150,000,and net cash flows from operating activities are $175,000.What is Sound Designs' asset turnover?

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

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.

Data Solutions reports operating expenses of $5 million.Operating expenses include rent expense.Prepaid rent at the beginning and end of the year are $120,000 and $80,000,respectively.All other operating expenses were paid in cash as incurred.What is the amount of cash paid for operating expenses?

The balance sheet of Orion Medical Equipment reports total assets of $450,000 and $550,000 at the beginning and end of the year,respectively.The cash return on assets for the year is 10%.What is Orion's net operating cash flows for the year?

Rachel's Recordings reported net income of $200,000.Beginning balances in Accounts Receivable and Accounts Payable were $15,000 and $20,000,respectively.Ending balances in these accounts were $12,000 and $22,000,respectively.Assuming that all relevant information has been presented,Rachel's net cash flows from operating activities would be:

The indirect and direct methods:

Which of the following is an example of a noncash activity?

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.If cost of goods sold was $440 million,its cash outflows to inventory suppliers totaled:

A company had the following cash flows for the year: (a) Purchased inventory,$60,000 (b) Sold goods to customers,$90,000 (c) Received loan from a local bank,$150,000 (d) Purchased land,$180,000 (e) Purchased treasury stock,$40,000 (f) Paid dividends,$10,000 (g) Sold delivery truck,$30,000 What amount would be reported for net investing cash flows on the Statement of Cash Flows?

Income statement items that have no cash effect are still reported under the direct method.Income statement items that have no cash effect are simply not reported under the direct method.

Cash flows from financing activities do not include:

The issuance of notes payable for borrowing is classified in the statement of cash flows as a(n) :

All classifications on the Balance Sheet have a general relationship with sections identified on the Statement of Cash Flows.Indicate which relationships are correctly identified in the table below. $\begin{array} { | c | c | c | } \hline \# & \begin{array} { c } \text { Classification on the } \\\text { Balance Sheet }\end{array} & \begin{array} { c } \text { Section on Statement of } \\\text { Cash Flows }\end{array} \\\hline \text { I } & \text { Bonds Payable } & \text { Financing } \\\hline \text { II } & \text { Equipment } & \text { Operating } \\\hline \text { III } & \text { Common Stock } & \text { Financing } \\\hline \text { N } & \text { Accounts Payable } & \text { Operating } \\\hline \text { V } & \text { Accounts Receivable } & \text { Operating } \\\hline\end{array}$

We report interest and dividends received from investments with investing activities.We report interest and dividends received from investments with operating activities.