101. Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? A. a decrease in inventoryB. a decrease in accounts payableC. preferred dividends declared and paidD. a decrease in accounts receivable
102. Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? A. depreciation expenseB. an increase in inventoryC. a gain on the sale of equipmentD. dividends declared and paid
103. The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:
End
Beginning
Cash
$ 50,000
$ 60,000
Accounts receivable
112,000
108,000
Inventories
105,000
93,000
Prepaid expenses
4,500
6,500
Accounts payable (merchandise creditors)
75,000
89,000
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? A. $271,000B. $279,000C. $327,000D. $256,000
104. The following information is available from the current period financial statements:
Net income
$150,000
Depreciation expense
28,000
Increase in accounts receivable
16,000
Decrease in accounts payable
21,000
The net cash flow from operating activities using the indirect method is A. $215,000B. $173,000C. $183,000D. $141,000
105. Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $15,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is A. $45,000B. $55,000C. $75,000D. $65,000
106. Accounts receivable arising from sales to customers amounted to $40,000 and $35,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is A. $115,000.B. $110,000.C. $105,000.D. $150,000.
107. Loster Company reported a net loss of $13,000 for the year ended December 31, 2008. During the year, accounts receivable decreased $5,000, merchandise inventory increased $8,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. During 2008, operating activities A. provided net cash of $8,000.B. provided net cash of $1,000.C. used net cash of $8,000.D. used net cash of $1,000.
108. A company had net income of $242,000. Depreciation expense is $26,000. During the year, Accounts Receivable and Inventory increased $15,000 and $40,000, respectively. Prepaid Expenses and Accounts Payable decreased $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much cash was provided by operating activities? A. $207,000.B. $211,000.C. $274,000.D. $295,000.
109. Mega Sales sells some used store fixtures. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $3,000. The value of this transaction in the Investing section of the statement of cash flows is: A. $12,500B. $3,000C. $2,750D. $250
110. Concerning the Indirect Statement of Cash Flows, select the correct statement. A. The management of a company would mostly utilize the Indirect Statement of Cash Flows as a management tool since it starts with Net Income from the Income Statement.B. The management of a company would not normally distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it would most likely confuse the average reader.C. The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it starts with Net Income and ends in the current cash balance which increases reader confidence in the report.D. The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it does not present any relation to the other statements of the report, therefore it is least likely to confuse the reader.
