21) Using the indirect method of statement of cash flows, which of the following would be added to net income?
A) Depletion expense
B) An increase in accounts receivable
C) A decrease in accounts payable
D) A gain on the sale of property
22) On a statement of cash flows prepared using the indirect method, an increase in Accounts Payable during the period is:
A) added to net income to determine net cash provided by operating activities.
B) deducted from net income to determine net cash provided by operating activities.
C) shown as a cash inflow in the investing activities section.
D) shown as a cash inflow in the financing activities section.
23) When converting net income to net cash in the operating activities section of the statement of cash flows, which of the following is NOT added to net income?
A) Gain on sale of land
B) Decrease in inventory
C) Decrease in accounts receivable
D) Depreciation expense
24) Salem, Inc. uses the indirect method to prepare its statement of cash flows. Salem’s Accumulated Depreciation-Trucks account increased during the period. Salem did not purchase or sell equipment during the period. The increase in Accumulated Depreciation-Trucks is:
A) subtracted from net income to determine net cash provided by operating activities.
B) added to net income to determine net cash provided by operating activities.
C) shown as a cash outflow on the investing activities section.
D) shown as a cash outflow on the financing activities section.
25) If $350,000 of bonds are issued during the year, but $150,000 of old bonds are retired during the year, the statement of cash flows will show a(n):
A) net gain on retirement of bonds of $200,000.
B) increase in cash of $350,000 and a decrease in cash of $150,000.
C) net increase in cash of $200,000.
D) net decrease in cash of $200,000.
26) Activities that affect long-term assets are:
A) operating activities.
B) investing activities.
C) financing activities.
D) noncash investing and financing activities.
27) Burton, Inc. had the following transactions:
Sale of land
$300,000
Sale of equipment
150,000
Purchase of treasury stock
40,000
Purchase of equipment
45,000
Issuance of common stock
100,000
Net cash provided by investing activities is:
A) $465,000.
B) $545,000.
C) $405,000.
D) $265,000.
28) Activities that affect stockholders’ equity and long-term debt are:
A) operating activities.
B) investing activities.
C) financing activities.
D) noncash investing and financing activities.
29) Land was purchased with the proceeds from the issuance of common stock. This transaction would be reported on the statement of cash flows as a(n):
A) operating activity.
B) investing activity.
C) financing activity.
D) noncash investing and financing activity.
30) Cash payments from financing activities include:
A) issuing stock for property.
B) sale of treasury stock.
C) payment of notes payable.
D) purchase of plant assets.
31) During the year, New Liberty Corporation’s treasury stock increased $30,000 from a cash purchase, cash dividends paid totaled $44,000 and the company reported net income of $220.000. Net cash used by financing activities is:
A) $74,000.
B) $14,000.
C) $146,000.
D) $206,000.
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