Question 1

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

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Question 2

Purchasing equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section.

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Question 3

Rarely would the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.

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Question 4

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

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Question 5

Using the indirect method, if land costing $85,000 was sold for $145,000, the amount reported in the financing activities section of the statement of cash flows would be $85,000.

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Question 6

Cash paid to acquire treasury stock should be shown on the statement of cash flows from investing activities.

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Question 7

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the net decrease in inventories from the beginning to the end of the period is added to net income for the period.

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Question 8

Under the indirect method, expenses that do not affect cash are added to net income in the operating activities section of the statement of cash flows.

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Question 9

If land costing $145,000 was sold for $205,000, the $60,000 gain on the sale would be added to net income in of the operating activities section of the statement of cash flows (prepared by the indirect method).

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Question 10

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the amortization of bond discount for the period is deducted from the net income for the period.

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Question 11

The declaration and issuance of a stock dividend would be reported on the statement of cash flows.

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Question 12

A building with a cost of $153,000 and accumulated depreciation of $42,000 was sold for a $11,000 gain. When using the indirect method, the cash generated from this investing activity was $121,000.

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Question 13

Net income for the year was $29,500. Accounts receivable increased $2,500, and accounts payable increased $5,400. Under the indirect method, the cash flow from operations is $32,400.

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Question 14

In determining the cash flows from operating activities for the statement of cash flows by the indirect method, the depreciation expense for the period is added to the net income for the period.

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Question 15

In preparing the statement of cash flows, the correct order of reporting cash activities is Financing, Operating, Investing.

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Question 16

A cash flow per share amount should be reported on the statement of cash flows.

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Question 17

Net income was $51,000 for the year. The accumulated depreciation balance increased by $14,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. Under the indirect method, the cash flow from operations is $37,000.

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Question 18

When using the worksheet method to analyzing noncash accounts , no order of analysis is required, but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

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Question 19

If 800 shares of $40 par common stock are sold for $43,000, the $43,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

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Question 20

If $475,000 of bonds payable are sold at 101, $475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

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Quiz 14: Statement of Cash Flows