Question :
91. The following information available from JB Corporation’s accounting records for : 1230562
91. The following information is available from JB Corporation’s accounting records for the year ended December 31, Year 4:
Cash received from customers
$600,000
Dividends received from marketable securities
80,000
Cash paid for purchase of supplies
300,000
Income taxes paid
50,000
Cash dividends paid to shareholders
30,000
Net cash flow from operating activities for Year 4 totaled
A. $200,000
B. $250,000
C. $300,000
D. $330,000
E. $220,000
92. Royce Company
Royce 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.
·Royce’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 #2) Refer to the Royce Company example. Royce Company uses the direct method to prepare its statement of cash flows at December 31, Year 4. The interest that is paid to bondholders would be reported in the
A. Financing Section, as a use or outflow of cash
B. Operating Section, as a use or outflow of cash
C. Investing Section, as a use or outflow of cash
D. Debt Section, as a use or outflow of cash
E. Financing Section, as a source or inflow of cash
93. Royce Company
Royce 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.
·Royce’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 Royce Company example. Royce 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
94. Royce Company
Royce 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.
·Royce’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 Royce 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 $582,00
E. cash used of $284,000
95. 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.
96. Many countries around the world require a
A. statement of cash flows
B. cash reconciliation statement
C. statement of funds flow
D. statement of cash created
E. statement of cash receipts and disbursements
97. Increased earnings
A. are reflected as an increase in cash flow
B. do not always generate an increase in cash flow
C. result in a decrease in cash flow only if dividends are paid
D. are the starting point for the direct method cash flow statement
E. none of the above
98. 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
99. If a statement of cash flow showed that a firm had a small cash loss from operating activities, a large cash outflow from investing activities, and a large cash inflow from financing activities, you would expect the firm to be at what stage of development?.
A. a new, rapidly growing firm
B. a profitable, growing firm
C. a mature, stable firm
D. a firm in early decline
E. an unprofitable, long-term declining firm
100. While the indirect method is prevalent in the construction of cash flow statements in the U.S., why might a firm choose to construct its cash flow statement using the direct method?
A. the direct method will always show a higher net change in cash
B. the direct method is usually easier for users to understand
C. the direct method is required by some industries
D. the direct method will always make the firm’s management look better
E. none of the above
