Question :
119.All of the following advantages of an increasing cash flow : 1259497
119.All of the following are advantages of an increasing cash flow from operations except:
A. A company is likely to pay its current bills with cash from operations not earnings.
B. A company with cash is in a better position to fund growth.
C. Large cash flows eliminate the need for borrowing.
D. Earnings are viewed better if cash flows from operations closely match net income.
120.When net cash flow from operating activities is presented by the direct method, the statement of cash flows is accompanied by a supplementary schedule reconciling:
A. Net cash flow from operating activities with net sales.
B. Net income with the net increase or decrease in cash and cash equivalents.
C. Net income with net cash flow from operating activities.
D. Net cash flow from operating activities shown in the statement with that which would result from use of the indirect method.
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.
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.
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.
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.
