FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Reporting and Analyzing Cash Flows

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

An investment that must be readily convertible to known amounts of cash,that is subject to insignificant risk of changes in value,and normally qualifies only when it has a short maturity of three months or less from the date of acquisition is called a(n)

A) Trading security
B) Cash equivalent
C) Treasury bill,commercial paper,or equity security
D) Operating activity
E) Financing activity

F) D) and E)
G) A) and D)

Correct Answer

verified

Show Answer

Question 32

True/False

Review LaterAdd Note

Review Later

Financing activities include receiving cash from issuing debt and receiving dividends from investments in other corporations.

A) True
B) False

Correct Answer

verified

Show Answer

Question 33

True/False

Review LaterAdd Note

Many business decisions are based on cash flow evaluations.

A cash equivalent is an investment that

The statement of cash flows reports

The accounting principle which requires that noncash financing and investing activities are reported on the statement of cash flows is the principle of

Use Amulis Corp's income statement and balance sheet information to calculate the net cash provided by operating activities,using the:(a)Direct Method (b)Indirect Method Amulis Corp. Income Statement For the Year Ended December 31, 2021 $\begin{array}{|l|r|r|}\hline & \mathbf{2 0 2 1} & \mathbf{2 0 2 0} \\\hline \text { Sales (all on credit) } & & \$ 227,000 \\\hline \text { Cost of goods sold } & & 70,000 \\\hline \text { Gross profit from sales } & & 157,000 \\\hline \text { Depreciation expense } & 6,000 \\\hline \text { Other operating expenses } & 108,000 \\\hline \text { Income tax expense } & 22,200 &136,200\\\hline \text { Operating income } & & \$ 20,800 \\\hline \text { Gain on sale of equipment } & & 8,100 \\\hline \text { Profit } & & \$ 28,900\\\hline\end{array}$ $\begin{array}{|l|r|r|}\hline & \mathbf{2 0 2 1} & \mathbf{2 0 2 0} \\\hline \text { Cash } & 25,000 & 23,400 \\\hline \text { Accounts receivable } & 62,000 & 67,000 \\\hline \text { Merchandise inventory } & 193,000 & 181,000 \\\hline \text { Long-term investments } & 25,000 & 4,000 \\\hline \text { Equipment } & 452,000 & 412,00 \\\hline \text { Accumulated depreciation, equipment } & 233,000 & 189,000\\\hline&524,000&498,400\\\hline\\\hline \text { Accounts payable } & 27,200 & 22,000 \\\hline \text { Income taxes payable } & 1,800 & 7,800 \\\hline \text { Bonds Payable } & 8,000 & 11,000 \\\hline \text { Common shares } & 221,000 & 252,000 \\\hline \text { Retained earnings } & 266,000 & 205,600 \\\hline & 524,000 & 498,400 \\\hline\end{array}$ Calculate net cash provided by operating activities under the indirect and direct methods

When using the direct method,which of the following should be reported as a source of cash from operating activities?

A calculation of the net cash provided or used by operating activities that lists the major classes of operating cash receipts,such as receipts from customers,and subtracts the major classes of operating cash disbursements,such as cash paid for merchandise,is the

Decisions on whether a company can pay its existing debts as they mature can be evaluated by looking at the company's statement of cash flows.

Under the indirect method,noncash operating expenses are added back to profit when preparing the investing section of the statement of cash flows.

Selected balances from Amplec Company's records are as follows: $\text { December } 31$ $\begin{array}{|l|r|r|}\hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Merchandise inventory } & 6,500 & 4,990 \\\hline \text { Accounts payable } & 17,200 & 12,560 \\\hline \text { Wages payable } & 2,200 & 1,400 \\\hline \text { Accounts receivable } & 22,000 & \underline{15,000} \\\hline \text { Total assets } & \$ 47,900 & \$ 33,950 \\\hline\\\hline \text { Sales } & & 153,000 \\\hline \text { Cost of goods sold } & & 54,000 \\\hline \text { Salaries expense } & & 42,000 \\\hline \text { Other expense } & & 6,000 \\\hline \text { Profit } & & \$ 51,000\\\hline\end{array}$ Calculate the following for Year 2 (a)Cash payments made for merchandise. (b)Cash receipts from customers. (c)Cash payments for wages.

Bank overdrafts repayable on demand may be included in the cash and cash equivalent balance.

The appropriate statement of cash flow activity category for the purchase of equipment for cash is

A change in retained earnings can be due to payment of cash dividends

A machine with a cost of $190,000 and accumulated depreciation of $95,000 was sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is

Financing activities include (a)the purchase and sale of non-current assets,(b)the purchase and sale of trading investments,and (c)lending and collecting on loans.

Which of the following is included in cash flows from financing activities?

The appropriate statement of cash flow activity category for the issuance of common shares for cash is

The direct method for the preparation of the operating activities section of the statement of cash flows