Question : 61. Alsup CompanyAlsup Company had the following transactions during the fiscal : 1245952

61. Alsup Company

Alsup Company had the following transactions during the fiscal year ended December 31, Year 4.

·Accounts receivable decreased from $115,000 on December 31, Year 3, to $100,000
on December 31, Year 4.
·Alsup’s Board of Directors declared dividends on December 31, Year 4, of $.05
per share on the 2.8 million shares outstanding, payable to shareholders of record
on January 31, Year 5. The company did not declare or pay dividends for fiscal year,
Year 3.
·Sold a truck with a net book value of $7,000 for $5,000 cash, reporting a loss of $2,000.
·Paid interest to bondholders of $780,000.
·Cash increased from $106,000 on December 31, Year 3, to $284,000 on December 31, Year 4.

(CMA Dec 95 #3) Refer to the Alsup Company example. Alsup Company uses the indirect method to prepare its Year 4 statement of cash flows, and would show a(n) 
A. source or inflow of funds of $5,000 from the sale of the truck in the financing section.
B. deduction of $15,000 in the Operating Section, representing the decrease in year-end accounts receivable.
C. source or inflow of funds of $7,000 from the sale of the truck in the financing section.
D. addition of $2,000 in the Operating Section for the $2,000 loss on the sale of the truck. 
E. deduction of $2,000 in the Operating Section for the $2,000 loss on the sale of the truck.

62. Alsup Company

Alsup Company had the following transactions during the fiscal year ended December 31, Year 4.

·Accounts receivable decreased from $115,000 on December 31, Year 3, to $100,000
on December 31, Year 4.
·Alsup’s Board of Directors declared dividends on December 31, Year 4, of $.05
per share on the 2.8 million shares outstanding, payable to shareholders of record
on January 31, Year 5. The company did not declare or pay dividends for fiscal year,
Year 3.
·Sold a truck with a net book value of $7,000 for $5,000 cash, reporting a loss of $2,000.
·Paid interest to bondholders of $780,000.
·Cash increased from $106,000 on December 31, Year 3, to $284,000 on December 31, Year 4.

(CMA Dec 95 #4) Refer to the Alsup Company example. The total of cash provided (used) by operating activities plus cash provided (used) by investing activities plus cash provided (used) by financing activities is 
A. cash provided of $284,000.
B. cash provided of $178,000.
C. cash used of $178,000.
D. cash used of $582,000.
E. cash used of $284,000.

63. Financing activities on the cash flow statement do not include 
A. issuance of stock.
B. payment of dividends.
C. borrowing from banks.
D. payment of interest expense.
E. acquiring previously issued bonds.

64. Ignoring income tax effects, which of the following is correct concerning depreciation? 
A. Depreciation provides additional cash flow from operating activities than would have been available without the depreciation.
B. Depreciation builds a cash reserve to fund the replacement of plant, property, and equipment.
C. Depreciation reduces net income but does not usually require a cash expenditure during the period.
D. Depreciation is a systematic and rational method for allocating the cost of intangible assets over their useful lives.
E. Depreciation provides less cash flow from operating activities than would have been available without the depreciation.

65. In a statement of cash flows, proceeds from the issuance of common stock should be classified as cash inflows for 
A. operating activities.
B. financing activities.
C. investing activities.
D. lending activities.
E. exchange transactions.

66. U.S. GAAP classifies all of the following as financing activities on the statement of cash flows except 
A. cash inflows from issuance of bonds.
B. cash inflows from selling capital stock of the entity.
C. cash outflows to lender for interest.
D. cash outflows to repurchase capital stock of the entity.
E. cash outflows to repurchase bonds of the entity.

67. U.S. GAAP classifies all of the following as operating activitieson the statement of cash flows except 
A. cash outflows to pay sales employees.
B. cash inflows from the property rental.
C. cash outflows to shareholders for dividends.
D. cash outflows to purchase merchandise for resale.
E. cash inflows from sales to customers.

68. A mature, stable firm might show what type of cash flow pattern from operating, investing, and financing activities? 
A. operating outflow, investing outflow, and financing inflow
B. operating inflow, investing outflow, and financing inflow
C. operating outflow, investing inflow, and financing outflow
D. operating inflow, investing outflow, and financing outflow
E. operating outflow, investing inflow, and financing inflow

69. In a statement of cash flows, interest payments to lenders should be classified as cash outflows for 
A. operating activities.
B. financing activities.
C. investing activities.
D. lending activities.
E. exchange transactions.

70. U.S. GAAP requires the classification of 
A. the cash outflow for interest expense as an operating activity and the dividends that a firm pays to its shareholders as a financing activity.
B. the cash outflow for interest expense and the dividends that a firm pays to its shareholders as a financing activity.
C. the cash outflow for interest expense and the dividends that a firm pays to its shareholders as an investing activity.
D. the cash outflow for interest expense and the dividends that a firm pays to its shareholders as an operating activity.
E. the cash inflow for interest expense and the dividends that a firm pays to its shareholders as an operating activity.