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Exam 13: Statement of Cash Flows

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Question 31

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A building with a book value of $54,000 is sold for $63,000 cash Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

A) an increase of $54,000 from investing activities
B) an increase of $63,000 from investing activities and a deduction from net income of $9,000
C) an increase of $9,000 from investing activities
D) an increase of $54,000 from investing activities and an addition to net income of $9,000

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

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Question 32

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Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

A) depreciation expense
B) gain on sale of land
C) a loss on the sale of equipment
D) dividends declared and paid

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

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Question 33

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Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

On the statement of cash flows, the cash flows from operating activities section would include

Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity. What is the free cash flow for Master Designs?

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

Financing activities include

On the statement of cash flows, the cash flows from operating activities section would include

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method.

Which one of the following below would not be classified as an operating activity?

Cash flows from investing activities, as part of the statement of cash flows, include receipts from the issuance of bonds payable.

To determine cash payments for operating expenses for the cash flow statement using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Operating expenses other than depreciation for the year were $400,000. Prepaid expenses increased by $17,000 and accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be

Cash inflows and outflows are netted in the investing or financing sections of the statement of cash flows but are separately disclosed to give the reader full information.

Which of the following can be found on the statement of cash flows?

Cash flows from investing activities, as part of the statement of cash flows, include payments for the acquisition of fixed assets.

Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

Free cash flow is cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends.

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?