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Exam 14: The Statement of Cash Flows

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Question 71

True/False

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Allen Moving Pictures Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: If the net income for the year was $58,000,the company must have declared $32,000 as dividends during the year.

A) True
B) False

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Question 72

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Wellington Inc.uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2015: - On Wellington's statement of cash flows,using the direct method,what amount will be shown for total cash receipts from operating activities?

A) $267,000
B) $299,300
C) $253,000
D) $254,000

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

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Question 73

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Free cash flow is the amount of cash available from operating activities before paying for planned investments in long-term assets.

Taylor Chemicals Company follows the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: -Note: Net Income for the year was $89,000. Based on the above information,calculate the dividends declared during the year 2014.

Gladiator Inc.uses the direct method to prepare its statement of cash flows.Refer to the following information reported for the year 2014 and determine the amount of cash paid for merchandise inventory. Cost of Goods Sold,$130,000 Inventory,beginning balance,$25,000 Inventory,ending balance,$65,000 Accounts Payable,beginning balance,$7,500 Accounts Payable,ending balance,$4,900

Moore Sales purchased some equipment for $50,000 by issuing a 6-month Note Payable.On the statement of cash flows,this transaction would be shown in the ________.

Company reported net loss of $13,000 for the year. What was the amount of dividends declared during the year?

Which of the following statements is true of the direct and indirect methods of preparing the statement of cash flows?

The cash flow from investing activities section appears exactly the same,whether the company uses the direct or the indirect method to prepare the statement of cash flows.

The amount of net cash flow from operating activities will be different in the direct and indirect methods when preparing the statement of cash flows.

Nelson Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: -The change in Accounts Payable will be shown as a negative cash flow in the adjustments to Net Income.

Which of the following statements is true?

Which of the following would appear on a statement of cash flows prepared using the direct method?

Avatar Auto Parts Company uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ending December 31,2015: Additional information provided by the company includes the following: Equipment costing $60,000 was purchased for cash. Equipment with a net asset value of $10,000 was sold for $16,000 During 2014,the company repaid $43,000 of Long-Term Notes Payable. During 2014,the company borrowed $34,000 on a new Note Payable There were no stock retirements during the year. There were no sales of Treasury Stock during the year. Prepare a complete statement of cash flows using the direct method. Assume Accrued Liabilities relate to Other Operating Expense

Planned investments and cash dividends are deducted from ________ to arrive at free cash flow.

The financing activities section of the statement of cash flows includes paying dividends and paying off loans.

While preparing the statement of cash flows using the indirect method,Depreciation Expense is subtracted from Net Income under operating activities.

Pastel Paints Company uses the direct method for its statement of cash flow.It reports the following information regarding the year 2014: From the income statement: Sales Revenues,$265,000 Cost of Goods Sold,$210,000 Operating expenses,$31,000 From the balance sheet: -On the statement of cash flows,what amount will be shown for payments to suppliers for inventory purchases? (Assume that Accounts Payable are for purchases of inventory only.)

Allen Services purchased twenty delivery vehicles by issuing a 20-year installment Note Payable for $720,000.On the statement of cash flows,this transaction would be shown in the ________.

Walker Inc.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: -The change in Inventory will be shown as a negative cash flow in the adjustments to Net Income.