Question :
78. From the viewpoint of stockholders or potential investors, which of : 1229420
78. From the viewpoint of stockholders or potential investors, which of the following cash flow measurements would be of least importance?
A. The dollar amount of net cash flow from operating activities for the current year.
B. The trend in net cash flow from operating activities from year to year.
C. The corporation’s free cash flow for the current year.
D. The dollar amount of overall increase or decrease in cash for the current year.
79. Craig Corporation’s reported net income for 2009 is less than its net cash flow from operating activities. One reason for this could be:
A. The sale of machinery at a loss in 2009.
B. An increase in inventory levels during 2009.
C. The sale of investments at a gain in 2009.
D. An error in the preparation of the statement of cash flows; net income should be greater than or equal to net cash flow from operating activities.
80. The Nelson Corporation reported net income in excess of its net cash flow from operating activities for the current year. An explanation for this may be:
A. A loss on the sale of equipment in the current year.
B. An increase in accounts payable during the year.
C. Depreciation expense recognized for the year.
D. A gain on the sale of investments during the year.
81. 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.
82. Which statement is true as to the FASB’s position on the presentation of the statement of cash flows?
A. The FASB recommends the use of the indirect method, but most companies use the direct method.
B. The FASB recommends the use of the direct method, but most companies use the indirect method.
C. The FASB recommends the use of the direct method, and most companies use the direct method.
D. The FASB recommends the use of the indirect method, and most companies use the indirect method.
83. 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.
84. The FASB classifies interest received on investments and interest paid on debt financing as part of operating cash flows, while the IASB:
A. Allows interest received to be classified as either operating or investing and interest paid as either operating or financing.
B. Allows interest received to be classified as either operating or financing and interest paid as either operating or investing.
C. Allows interest received to be classified only as investing and interest paid only as financing.
D. Allows interest received to be classified only as financing and interest paid only as investing.
85. Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2009. The company’s statement of cash flows for 2009 reported $1 million of cash received from customers. What amount of net sales must Hamilton have recorded in 2009?
A. $630,000.
B. $1,370,000.
C. $1,000,000.
D. $370,000
86. Rent expense in Marrin Company’s 2010 income statement is $420,000. If Prepaid Rent was $70,000 at December 31, 2009, and is $95,000 at December 31, 2010, the cash paid for rent during 2010 is:
A. $420,000.
B. $445,000.
C. $395,000.
D. $480,000.
87. Bert’s Bungy Jumping, Inc. paid $650,000 cash for casualty insurance during the year 2009. If the income statement for the year reports insurance expense of $620,000:
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.
The financial statements of New World, Inc., provide the following information for the current year:
