ACC 310F Study Guide - Quiz Guide: Cash Flow, Income Statement, Accrual

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shelbyp96

28 Nov 2016

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*in case a business doesn"t generate enough funds from its operations that it needs for investing, financing is there to provide the extra cash needed or to absorb the extra cash generated. All of this is reported in the (cid:281)statement of cash flows(cid:282) Explain the usefulness of the statement of cash flows. Distinguish between operating, investing, and financing activities. Prepare a statement of cash flows using the indirect method. Statement of cash flows is the 3rd most important financial statement following the balance sheet and the income sheet. We can"t see the statement of cash flows in the accounting equation. Change in cash is on one side of the equation, and everything else is on the other side of equation (comprises the statement of cash flows) The change in cash from the beginning balance to the ending balance is being explained. + cash from sale of used plant and equipment.

Related Questions

1.Accounting standards in the United States have been developedby all except: Select one: a. American Institute of CPAs b.Financial Accounting Standards board c. Independent AccountingCorporation d. Securities and Exchange Commission (SEC) e. InternalRevenue Service (IRs)

2.accounting Standards and concepts used in preparation offinancial statements include all except: Select one: a. usage andcontribution b. historical costs c. conservatism d. consistency e.comparability

Financial statements include the following concepts except:

Select one:

a. assets

b. liabilities

c. own

e. pro bono activity

d. financial position

The income statement shows all except:

Select one:

a. revenue

b. expenses

c. net income

d. cash flows

e. net loss

Assets on the balance sheet include all except:

Select one:

a. cash

b. accounts receivable

c. specialized personnel

d. office supplies

e. office equipment

Statement of cash flows and cash flows analysis answers allexcept:

Select one:

a. is the company growing

b. will the company be able to meet its financialobligations

c. where did the company obtain its funds

d. what use was made of net income

e. who benefited from excess profits

The statement of cash flows classifies all except:

Select one:

a. cash receipts

b. cash payments into illegal activities

c. cash payments into operating activities

d. cash payments into investing activities

e. cash payments into financing activitie

e. pro bono activity

copperelephant293

Question 11

The Kerchin Company purchased $60,000 worth of stock in theXeronics company in 2006. In 2012 the stock was sold for $78,000.On the statement of cash flows prepared using the indirect methodthe company will report:

	A.	a subtraction of $60,000 in the investing section.
	B.	an addition to net income of $18,000 in the operatingsection.
	C.	a subtraction from net income of $18,000 in the operatingsection.
	D.	an addition of $18,000 in the investing section.

2 points

Question 12

When preparing the operating section of a statement of cashflows using the indirect method, various adjustments are needed.Which of the following adjustments is incorrectly stated?

	A.	Add gains on sale of equipment.
	B.	Add to net income any increases in current liabilities.
	C.	Add to net income depreciation and amortization expense.
	D.	Deduct any increases in inventories from net income.

2 points

Question 13

In 2011 Armstrong Company sold for $76,000 cash, an asset whichhad an original cost of $204,000 and accumulated depreciation of$98,000. On the statement of cash flows prepared using the indirectmethod the company should report:

	A.	an addition to net income in the operating section of$30,000.
	B.	a subtraction from net income of $30,000 in the operatingsection.
	C.	a subtraction of $106,000 in the investing section.
	D.	an addition of $76,000 in the investing section.
	E.	Both A and D are correct.

2 points

Question 14

In 2011 Covington Company sold an asset which had an originalcost of $54,000 and accumulated depreciation of $28,000 for $15,000in cash. On the statement of cash flows prepared using the indirectmethod the company should report:

	A.	an addition to net income in the operating section of$11,000.
	B.	a subtraction from net income in the operating section of$11,000.
	C.	a source of cash of $15,000 in the investing section.
	D.	a use of cash in the investing section of $39,000.
	E.	Both a and c are correct.

2 points

Question 15

Henry Company's statement of cash flows indicated a $52,000decrease in cash during the year. The statement also indicated that$63,000 was provided by operating activities and $71,000 was usedby investing activities. How much are net cash used by financingactivities?

	A.	$86,000
	B.	($44,000)
	C.	$42,000
	D.	$40,000

2 points

Question 16

Which of the following would be an example of a cashequivalent?

	A.	Notes receivable.
	B.	Accounts receivable.
	C.	Money market funds.
	D.	Investment in GMC stock.

2 points

Question 17

Carte Company reported cost of goods sold for $100,000 anddepreciation expense totaling $7,000. On January 1, Carte hadinventory and accounts payable of $21,000 and $24,000,respectively. On December 31, inventory and accounts payable were$28,000 and $20,000, respectively. Net income is $60,000. Beginningaccounts receivable was $13,000 and ending was $12,000. How muchare the cash flows from operating activities using the indirectmethod?

	A.	$57,000
	B.	$50,000
	C.	$65,000
	D.	$77,000

2 points

Question 18

The statement of cash flows is typically used to determine if acompany can:

	A.	generate enough cash to pay cash dividends to stockholders.
	B.	generate enough cash to pay an increase in employees wages.
	C.	generate enough cash to acquire another company.
	D.	generate enough cash to buy equipment.

2 points

Question 19

Cash flows related to buying and selling long-term assets areclassified as:

	A.	financing activities.
	B.	investing activities.
	C.	non-cash activities.
	D.	operating activities.

2 points

Question 20

Given the following information, what amount of cash wascollected from customers during 2012? All sales are on account.

	2011	2012
Accounts receivable	$ 800,000	$ 580,000
Sales	3,100,000	3,250,000

	A.	$2,880,000
	B.	$3,620,000
	C.	$2,670,000
	D.	$3,470,000

2 points

crimsonshark725

The comparative balance sheet of Yellow Dog Enterprises Inc. atDecember 31, 20Y8 and 20Y7, is as follows:

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$80,000.00	$100,000.00
4	Accounts receivable (net)	275,000.00	300,000.00
5	Inventories	510,000.00	400,000.00
6	Prepaid expenses	15,000.00	10,000.00
7	Equipment	1,070,000.00	750,000.00
8	Accumulated depreciation-equipment	(200,000.00)	(160,000.00)
9	Total assets	$1,750,000.00	$1,400,000.00
10	Liabilities and Stockholdersâ Equity
11	Accounts payable (merchandise creditors)	$100,000.00	$90,000.00
12	Mortgage note payable	ââââ0.00	400,000.00
13	Common stock, $10 par	600,000.00	200,000.00
14	Paid-in capital: Excess of issue price over parâcommon stock	300,000.00	100,000.00
15	Retained earnings	750,000.00	610,000.00
16	Total liabilities and stockholdersâ equity	$1,750,000.00	$1,400,000.00

Additional data obtained from the income statement and from anexamination of the accounts in the ledger for 20Y8 are asfollows:

	a. Net income, $190,000.
	b. Depreciation reported on theincome statement, $115,000.
	c. Equipment was purchased at acost of $395,000 and fully depreciated equipment costing $75,000was discarded, with no salvage realized.
	d. The mortgage note payable wasnot due for six years, but the terms permitted earlier paymentwithout penalty.
	e. 40,000 shares of common stockwere issued at $15 for cash.
	f. Cash dividends declared andpaid, $50,000.

Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Refer to theLabels and Amount Descriptions list provided for the exact wordingof the answer choices for text entries. Be sure to complete theheading of the statement. Enter amounts that represent cashoutflows as negative numbers using a minus sign.

Yellow Dog Enterprises Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow fromoperating activities:
4
5	Changes in current operating assets and liabilities:
6
7
8
9
10
11
12	Cash flows from investing activities:
13
14
15
16	Cash flows from financing activities:
17
18
19
20
21
22	Cash at the beginning of the year
23	Cash at the end of the year

Labels and AmountDescriptions
Cash paid for dividends
Cash paid for equipment
Cash paid formerchandise
Cash paid for purchase ofequipment
Cash paid for purchase ofland
Cash paid to retire mortgagenote payable
Cash received fromcustomers
Cash received from sale ofcommon stock
Change in cash
December 31, 20Y8
Decrease in inventory
Decrease in accountspayable
Decrease in accountsreceivable
Decrease in prepaidexpenses
Depreciation
For the Year Ended December31, 20Y8
Gain on disposal ofequipment
Gain on sale ofinvestments
Increase in accountspayable
Increase in accountsreceivable
Increase in inventory
Increase in prepaidexpenses
Loss on disposal ofequipment
Loss on sale ofinvestments
Net cash flow from financingactivities
Net cash flow from investingactivities
Net cash flow from operatingactivities
Net cash flow used forfinancing activities
Net cash flow used forinvesting activities
Net cash flow used foroperating activities
Net income
Net loss

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ACC 310F Study Guide - Quiz Guide: Cash Flow, Income Statement, Accrual

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