Question :
121.Which of the following would be presented in the cash : 1237496
121.Which of the following would be presented in the cash from operating activities section of the statement of cash flows when the indirect method is used?
A. Gain on the sale of investments.
B. Depreciation expense.
C. Neither a gain on the sale of investments nor depreciation expense would be shown.
D. Both a gain on the sale of investments and depreciation expense would be shown.
122.At the beginning of 2015, Baldwin Corporation bought an automobile for $36,000 by issuing a note payable. The automobile has a six-year life and is depreciated using the straight-line method. To determine net cash flow from operating activities for 2015 using the indirect method, net income should be:
A. Increased by $6,000.
B. Decreased by $6,000.
C. Increased by $42,000.
D. Neither increased nor decreased. No adjustments are necessary since no cash was received or paid.
$36,000/6 = $6,000
123.Gannon Corporation uses the indirect method to prepare its statement of cash flows. Following this approach, a gain on sale of equipment was deducted from net income in computing net cash flow from operating activities. The most likely reason for this adjustment is that:
A. The sale of equipment did not result in the receipt of any cash by Gannon Corporation.
B. The sale resulted in a cash receipt in an accounting period different from the period in which the gain was recognized.
C. The amount of the gain recognized was not equal to the cash received.
D. This type of transaction is not classified as an operating activity.
124.The statement of cash flows of Bosley Corporation shows the amount of cash received from customers as $720,000. If net sales in Bosley Corporation’s income statement are reported at $670,000 then:
A. Bosley’s accounts receivable increased $50,000.
B. Bosley’s Cash account decreased $50,000.
C. Bosley’s accounts receivable decreased $50,000.
D. Bosley’s accounts receivable are $50,000 at the end of the year.
125.Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2015. The company’s statement of cash flows for 2015 reported $1 million of cash received from customers. What amount of net sales must Hamilton have recorded in 2015?
A. $630,000.
B. $1,370,000.
C. $1,000,000.
D. $370,000.
$1,000,000 + $370,000 = $1,370,000
126.Rent expense in Marrin Company’s 2015 income statement is $420,000. If Prepaid Rent was $70,000 at December 31, 2014, and is $95,000 at December 31, 2015, the cash paid for rent during 2015 is:
A. $420,000.
B. $445,000.
C. $395,000.
D. $480,000.
$420,000 + ($95,000 – $70,000) = $445,000
127.Bert’s Bungy Jumping, Inc. paid $650,000 cash for casualty insurance during the year 2015. If the income statement for the year reports insurance expense of $620,000 then:
A. Bert’s prepaid insurance decreased $30,000.
B. Bert’s cash account balance decreased $30,000.
C. Bert’s prepaid insurance increased $30,000.
D. Bert’s prepaid insurance was $30,000 at year-end.
128.The comparative balance sheets of Friends, Inc. show a net increase in accounts receivable of $650 and a net decrease in inventory of $500. To determine net cash flow from operating activities under the indirect method, net income should be:
A. Reduced by $650.
B. Increased by $650.
C. Reduced by $150.
D. Increased by $150.
129.The comparative balance sheets of Greenvale Games, Inc. show a net decrease in unexpired insurance of $400 and a net decrease in interest payable of $250. In order to reconcile net income with net cash flow from operating activities, net income should be:
A. Increased by $650.
B. Reduced by $650.
C. Increased by $150.
D. Reduced by $150.
$400 – $250 = $150
130.The comparative balance sheets of Apollo Rocket, Inc. show a net increase in inventory of $79,000 and a net decrease in accounts payable of $42,000 during 2015. In computing net cash flow from operating activities under the indirect method, net income for 2015 should be:
A. Increased by $37,000.
B. Reduced by $37,000.
C. Increased by $121,000.
D. Reduced by $121,000.
$79,000 + $42,000 = $121,000
