Question 1

Accounting standards require companies to include a statement of cash flows in a complete set of financial statements.

Accepted Answer

A) True 
 B)False

Question 2

When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?

Accepted Answer

A)   Decrease in income taxes payable.
B)   Depreciation expense.
C)   Amortization of intangible assets.
D)   Bad debts expense.
E)   Decrease in merchandise inventory.F) B) and E)
G) C) and D)

Question 3

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

Accepted Answer

A) True 
 B)False

Question 5

Trenton reports net income of $230,000 for the year ended December 31, Year 2. It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment. Its comparative balance sheet reveals a $35,500 decrease in accounts receivable, a $15,750 increase in accounts payable, and a $12,500 decrease in wages payable. Calculate the new cash provided (used)  in operating activities using the indirect method.

Accepted Answer

A)   $376,450.
B)   $351,450.
C)   $356,450.
D)   $319,950.
E)   $263,750.F) B) and C)
G) A) and E)

Question 6

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for:

Accepted Answer

A)   Gains and losses from nonoperating items.
B)   Revenues and expenses that did not provide or use cash.
C)   Changes in noncash current assets and current liabilities related to operating activities.
D)   Changes in current liabilities related to operating activities.
E)   All of these.F) C) and E)
G) C) and D)

Question 7

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Accepted Answer

A)   Operating activities.
B)   Financing activities.
C)   Investing activities.
D)   Schedule of noncash investing or financing activity.
E)   Reconciliation of cash balance.F) B) and E)
G) A) and B)

Exam 16: Reporting the Statement of Cash Flows

Correct Answer
verified

When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?

Correct Answer
verified

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

Correct Answer
verified

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Correct Answer
verified

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for:

Correct Answer
verified

Accounting standards require companies to include a statement of cash flows in a complete set of financial statements.

Correct Answer
verified

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

Correct Answer
verified

Exam 16: Reporting the Statement of Cash Flows

Correct AnswerverifiedShow Answer

When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?

Correct AnswerverifiedShow Answer

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

Correct AnswerverifiedShow Answer

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Correct AnswerverifiedShow Answer

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for:

Correct AnswerverifiedShow Answer

Accounting standards require companies to include a statement of cash flows in a complete set of financial statements.

Correct AnswerverifiedShow Answer

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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