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Exam 5: Communicating and Interpreting Accounting Information

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Question 41

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Which of the following statements about the statement is correct?

A) The sale of an investment in bonds for less than the carrying value of the investment would be reported as cash outflow from financing activities.
B) The sale and issuance of common shares for cash would be reported as a cash inflow from financing activities.
C) The retirement of bonds payable by the issuance of common shares would be reported as a cash inflow from investing activities.
D) Collecting cash interest revenue on a note receivable would be reported as a cash inflow from investing activities.

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

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Question 42

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Typical financing activities do NOT include the following:

A) Proceeds from issuance of short- and long-term borrowings.
B) Principal payments on short- and long-term borrowings.
C) Purchase of short- or long-term investments for cash.
D) Purchase of shares for retirement.

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

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Question 43

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Expenses reported on the income statement for 20A (the first year of operations),totaled $60,000,which included depreciation expense of $8,000,and wages payable increased to $3,000 by the end of 20A.Therefore,the 20A cash outflow for expenses was $71,000. Calculation: $60,000-8,000-3,000 = $49,000

Using the indirect method,calculate the amount of cash flows from operating activities from the following data:

Randy,Inc.,issued $50,000 of bonds,paid cash dividends of $8,000,sold long-term investments for $12,000,received $5,000 of dividend revenue,purchased treasury shares for $15,000,and purchased new equipment for $19,000.What is the net cash flow from financing activities?

Reba Company reported profit of $10,000 for 20A.Additional 20A information is as follows: Based on the information given above,the statement of cash flows would show "cash flows from operating activities" of $______________

Which of the following is a cash flow from operating activities?

Which of the following transactions would not create a cash flow?

A cash inflow from operating activities includes which of the following?

While preparing a statement of cash flow,you encountered the following transaction: February 1,20A: Zorro Corporation acquired a small office building in exchange for 5,000 shares of its own common shares; par value $10 per share; market value $15 per share. (a)Should this transaction be included in the calculations on the statement of cash flows or shown in the notes? (b)Explain your answer.

Investing activities reported on the statement of cash flows include cash payments to acquire property,plant,and equipment,and short- and long-term investments.

The net increase (or decrease)in cash that is reported on the statement of cash flows should be the same as the change in the balance of the cash account for the two most recent years on the comparative statements of financial position.

Which of the following statements about the quality of earnings ratio is true?

The 20B income statement for Ryan Corporation showed the following: What was the cash flow from operating activities?

Which of the following transactions is not a direct use of cash?

Allen Company reported total sales revenue of $150,000 and total expenses of $152,000 for the year ended December 31,20D.During 20D,trade receivables decreased by $1,000,trade payables increased by $5,000,wages payable increased by $3,000,and $18,000 in depreciation expense was recorded.Assuming no other adjustments are needed,what was the "net cash flow from operating activities" for 20D (parentheses indicate net cash outflow) ?

Cash equivalents are defined as short-term,highly liquid investments that are readily convertible into known amounts of cash and are so near their maturity that there is insignificant risk of changes in their value due to interest rate changes.

Lori Company sold an operational asset,a machine,for cash.It originally cost $20,000.The accumulated depreciation at the date of disposal was $15,000.A gain on the disposal of $2,000 was reported.What was the cash inflow from this transaction?

The financial statements for Ozzie Company show the following: How much cash was paid for merchandise?

The sales revenue reported on the income statement for 20A totaled $96,000,of which one third was on credit.The 20A beginning balance of trade receivables was zero and the 20A ending balance reported on the statement of financial position was $10,000; therefore,the 20A cash inflow from customer sales was $86,000. Calculation: $96,000-10,000 = $86,000