Question : Multiple Choice Questions 31. Which of the following transactions would not create : 1228461

Multiple Choice Questions
 

31. Which of the following transactions would not create a cash flow? 
A. A company purchased some of its own stock from a stockholder.
B. Amortization of a patent.
C. Payment of a cash dividend.
D. Sale of equipment at book value.

32. Which of the following transactions would not create a cash flow from operating activities? 
A. Collecting cash from a customer.
B. Paying cash to a supplier.
C. Paying cash to stockholders for dividends.
D. Paying cash for a utility bill.

33. Which of the following transactions would not be reported as a cash flow from investing activities? 
A. Selling a depreciable asset for cash at a loss.
B. Purchasing a patent using cash.
C. Purchasing land in exchange for stock.
D. Purchasing shares of stock of another company using cash.

34. Which of the following transactions would be reported as a cash flow from financing activities? 
A. The cash payment of interest expense.
B. Acquiring land by signing a note payable.
C. Paying cash to stockholders for dividends.
D. Purchasing shares of stock of another company using cash.

35. Which of the following statements regarding use of the direct and indirect methods of determining cash flows from operating activities is incorrect? 
A. The indirect method starts with net income.
B. The direct method calculates cash collected from customers.
C. The majority of U.S. companies use the indirect method.
D. The FASB recommends use of the indirect method.

36. Which of the following would be deducted from net income when determining cash flows from operating activities under the indirect method? 
A. An increase in accounts payable.
B. Depreciation expense.
C. A decrease in prepaid insurance.
D. A gain on the sale of a depreciable asset.

37. Which of the following would be added to net income when determining cash flows from operating activities under the indirect method? 
A. A decrease in accounts payable.
B. Patent amortization expense.
C. An increase in prepaid insurance.
D. A gain on the sale of a depreciable asset.

38. Which of the following would be deducted from net income when determining cash flows from operating activities under the indirect method? 
A. A decrease in utilities payable.
B. Patent amortization expense.
C. A decrease in prepaid rent.
D. A loss on the sale of a depreciable asset.

39. Rice Company, a retailer, has provided the following information pertaining to its recent year of operation:
? Net income, $100,000;
? Accounts receivable increased $9,000;
? Prepaid insurance decreased $3,000;
? Depreciation expense was $15,000;
? Gain on sale of land, $2,000;
? Wages payable decreased $7,000;
? Unearned revenue increased $11,000.
How much was Rice’s net cash inflow from operating activities? 
A. $89,000
B. $115,000
C. $125,000
D. $111,000

40. Darwin Company, a manufacturer, has provided the following information pertaining to its recent year of operation:
? Net income, $200,000;
? Accounts receivable increased $18,000;
? Prepaid insurance increased $7,000;
? Depreciation expense was $25,000;
? Loss on sale of a building was $22,000;
? Wages payable increased $14,000;
? Unearned revenue decreased $21,000.
How much was Darwin’s net cash inflow from operating activities? 
A. $227,000
B. $215,000
C. $171,000
D. $257,000