FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 14: The Statement of Cash Flows

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

Heckart Corporation purchased plant assets for $120,000 cash.The journal entry to record the outflow of cash is:

A)
$\begin{array} { l } \text { Investments } &120,000 \\\text { Cash } &&120,000 \\\end{array}$
B)
$\begin{array}{c}\text { Plant Assets } &120,000\\\text { Cash }&&120,000\end{array}$
C)
$\begin{array}{cc}\text { Plant Assets } & 120,000 \\\text { Purchases } &&120,000\end{array}$
D)
$\begin{array}{ll}\text { Purchases } & 120,000 \\\text { Plant Assets } &&120,000\end{array}$

E) None of the above
F) B) and D)

Correct Answer

verified

Show Answer

Question 72

True/False

Review LaterAdd Note

Review Later

A cash flow yield of 2.5 times is considered better than one of 2.0 times.

A) True
B) False

Correct Answer

verified

Show Answer

Question 73

True/False

Review LaterAdd Note

Cash equivalents include money market accounts,commercial paper,U.S.Treasury bills,and other short-term investments or marketable securities.

Cash flows to assets is measured in "times."

Geiger Company's cash balance at December 31,2009,was $169,000.Calculate the company's cash balance at December 31,2010,given the following information for the year ended December 31,2010.Show your work. $\begin{array}{lr}\text {Net Income}&\$370,000\\\text {Depreciation and Amortization Expense}&98,000\\\text {Increase in Accounts Receivable (net)}&14,000\\\text { Decrease in Inventory } & 25,000 \\\text { Increase in Accounts Payable } & 20,000 \\\text { Net Cash Flows from Investing Activities } & 133,000 \\\text { Net Cash Flows from Financing Activities } & (600,000)\end{array}$

Royer Corporation engaged in this transaction: Abandoned fully depreciated equipment. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Royer Corporation engaged in this transaction: Purchased one-year insurance policy for cash. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Repayment of bonds payable would be reflected as a cash outflow in the investing activities section of the statement of cash flows.

If the indirect method is used to prepare a statement of cash flows,which of the following would be deducted from net income to arrive at net cash flows from operating activities?

If the indirect method is used,each of the following is a proper adjustment to net income to arrive at net cash flows from operating activities except

Determining net cash flows from operating activities using the indirect method reveals cash collected from customers.

Northbrook Corporation issued $60,000 bonds payable to acquire Machinery.The journal entry to record the transaction is:

Royer Corporation engaged in this transaction: Retired long-term debt with cash. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

When preparing a statement of cash flows using the indirect method,an increase in accounts payable is added to net income.

Indicate on the blanks below the letter of the type of activity (O = operating activity,F = financing activity,I = investing activity,N = noncash transaction)each of the following transactions represents. _____ 1.Firm sold 8,000 shares of its own common stock for cash. _____ 2.Sold $200,000 worth of products for cash. _____ 3.Paid $120,000 dividend. _____ 4.Received $1,500 in interest income. _____ 5.Exchanged 6,000 shares of stock for 15-year bonds. _____ 6.Paid $121,000 to the U.S.Treasury for income taxes.

Royer Corporation engaged in this transaction: Paid income taxes. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Because noncash investing and financing transactions do not affect cash,they should be excluded from the statement of cash flows.

The payment of taxes would be included in the operating activities section of the statement of cash flows.

A decrease in plant assets shown in the investing activities section of the statement of cash flows would be presented based on the amount of the resulting gain or loss incurred.

Assume that the balance of accounts payable does not change during a period.When preparing a statement of cash flows,an increase in ending inventory over beginning inventory will result in an adjustment to net income under the indirect approach because