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If a company uses the indirect method to prepare the statement of cash flows,how would the adjustment to reflect the amount of cash payments to employees be presented on the statement of cash flows?


A) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section in the statement of cash flows.
B) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section in the statement of cash flows.
C) The adjustment will be for the increase or decrease in inventory during the period and will adjust net income in the operating activities section in the statement of cash flows.
D) The adjustment will be for the increase or decrease in wages payable during the period and will adjust net income in the operating activities section in the statement of cash flows.

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

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The income statement and a partial balance sheet for Jetson Company is presented below.Prepare the operating activities section of the statement of cash flows using the direct method. The income statement and a partial balance sheet for Jetson Company is presented below.Prepare the operating activities section of the statement of cash flows using the direct method. The income statement and a partial balance sheet for Jetson Company is presented below.Prepare the operating activities section of the statement of cash flows using the direct method.

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When a company uses the indirect method to present the statement of cash flows,a gain on the sale of a long-term asset must be added to net income to reconcile to net cash provided by operating activities.

A) True
B) False

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A company sells equipment at a loss.If the company prepares the statement of cash flows using the indirect method or the direct method,where would this transaction appear?


A) The sale of equipment at a loss would be presented in the investing activities section as a cash payment under both methods.
B) The sale of equipment at a loss would be presented in the investing activities section as a cash receipt under both methods.
C) The sale of equipment at a loss would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.
D) The sale of equipment at a loss would be presented in the financing activities section as a cash receipt under both methods.

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

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A company uses the indirect method to prepare the statement of cash flows.How would a gain from the sale of equipment be presented on the statement?


A) A gain from the sale of equipment would be an addition in the investing activities section.
B) A gain from the sale of equipment would be added to net income in the operating activities section.
C) A gain from the sale of equipment would be a deduction in the financing activities section.
D) A gain from the sale of equipment would be deducted from net income in the operating activities section.

E) All of the above
F) C) and D)

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Paying cash dividends would be


A) a cash outflow from operations.
B) a cash outflow from financing.
C) a cash outflow from investing.
D) none of the above.

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

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The following data relate to Sorrentino Corporation for last year: The following data relate to Sorrentino Corporation for last year: What is the net cash provided by operating activities for last year on the statement of cash flows for Sorrentino Corporation? A) $130,000 B) $142,000 C) $173,000 D) $177,000 What is the net cash provided by operating activities for last year on the statement of cash flows for Sorrentino Corporation?


A) $130,000
B) $142,000
C) $173,000
D) $177,000

E) A) and D)
F) A) and C)

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Which of the following items would be reported in the financing activities section on the statement of cash flows?


A) Cash paid for rent
B) Cash received from sale of inventory
C) Cash received from issuance of long-term debt
D) Cash paid for land

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

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The statement of cash flows shows not only the amount of cash used during a particular time,but also how the cash was used.

A) True
B) False

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An outflow of cash from an investing activity would be


A) making loans to third parties.
B) issuing notes payable.
C) paying cash dividends to stockholders.
D) purchasing treasury stock.

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

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The income statement and a partial balance sheet for Regovich Company is presented below.Prepare the operating activities section of the statement of cash flows using the indirect method. The income statement and a partial balance sheet for Regovich Company is presented below.Prepare the operating activities section of the statement of cash flows using the indirect method. The income statement and a partial balance sheet for Regovich Company is presented below.Prepare the operating activities section of the statement of cash flows using the indirect method.

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Which of the following statements is true about the information in a statement of cash flows?


A) The statement of cash flows contains information about stock splits and stock dividends distributed by the company.
B) The statement of cash flows contains information about the business's ability to generate positive cash flows in future periods.
C) The statement of cash flows contains information about the business's percentage change in each item of revenue and expense.
D) The statement of cash flows contains information about the differences between net income and additions to retained earnings.

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

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Under the direct method of cash flow,which of the following is not included in the statement of cash flows?


A) Changes in accounts receivable
B) Changes in accounts payable
C) Changes in inventories
D) Changes in amortization

E) C) and D)
F) A) and C)

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Operating activities on the statement of cash flows include activities that affect net income,current liabilities and current assets.

A) True
B) False

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Which of the following statements is true about information in a statement of cash flows?


A) The statement of cash flows is one of the required financial statements for publicly-held companies.
B) The statement of cash flows is prepared at the option of management.
C) The statement of cash flows is combined with the income statement.
D) The statement of cash flows is not completed when an income statement is prepared.

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

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A company's income statement reports $30,000 depreciation expenses during the period.Using the direct method to prepare the statement of cash flows,how would the depreciation expense be reported on the statement of cash flows?


A) Depreciation expense would be an addition under investing activities.
B) Depreciation expense would be an addition under financing activities.
C) Depreciation expense would be a deduction under operating activities.
D) Depreciation expense would not be reported on the statement of cash flows.

E) All of the above
F) A) and B)

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The managerial accountant at the Holiday Musical Academy is required to complete the statement of cash flows.The managerial accountant is required to determine the amount of money the company used to purchase property,plant,and equipment (PP&E) during the year.The balance of PP&E at the beginning of the year is $1,850,000 and the balance of PP&E at the end of the year is $2,950,000.The managerial accountant reviewed the general journal and noticed that the original cost of equipment sold during the year was $20,000. Using the following information,calculate the amount of cash the company paid in cash to purchase new property,plant,and equipment during the year: The managerial accountant at the Holiday Musical Academy is required to complete the statement of cash flows.The managerial accountant is required to determine the amount of money the company used to purchase property,plant,and equipment (PP&E) during the year.The balance of PP&E at the beginning of the year is $1,850,000 and the balance of PP&E at the end of the year is $2,950,000.The managerial accountant reviewed the general journal and noticed that the original cost of equipment sold during the year was $20,000. Using the following information,calculate the amount of cash the company paid in cash to purchase new property,plant,and equipment during the year: A) $20,000 B) $1,850,000 C) $1,120,250 D) $2,950,250


A) $20,000
B) $1,850,000
C) $1,120,250
D) $2,950,250

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

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Where are noncash investing and financing activities reported?


A) The financing activities section of the statement of cash flows
B) A schedule accompanying the statement of cash flows
C) The investing activities section of the statement of cash flows
D) In both A and B

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

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Smithson Corporation had the following selected balance sheet changes for the past year: Smithson Corporation had the following selected balance sheet changes for the past year: The company's operating income during the year was $35,000.What is the net cash provided by operating activities during last year on the statement of cash flows for Smithson Corporation (using the indirect method) ? A) $25,000 B) $45,000 C) $92,000 D) $10,000 The company's operating income during the year was $35,000.What is the net cash provided by operating activities during last year on the statement of cash flows for Smithson Corporation (using the indirect method) ?


A) $25,000
B) $45,000
C) $92,000
D) $10,000

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

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Computing cash generated from operating activities is


A) the same for both the direct and indirect methods.
B) different because the indirect method considers depreciation.
C) different in that the direct method considers depreciation.
D) none of the above.

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

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