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When preparing a statement of cash flows,money held in cash equivalents is considered the same as cash.

A) True
B) False

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[The following information applies to the questions displayed below.] The financial statements of New World,Inc. ,provide the following information for the current year: [The following information applies to the questions displayed below.] The financial statements of New World,Inc. ,provide the following information for the current year: -New World's net cash flow from operating activities for the current year is: A) $1,191,750 B) $1,192,800 C) $1,113,000 D) $1,160,250 -New World's net cash flow from operating activities for the current year is:


A) $1,191,750
B) $1,192,800
C) $1,113,000
D) $1,160,250

E) A) and C)
F) A) and D)

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Cash flows from investing activities include all of the following except:


A) Cash proceeds from selling investments.
B) Cash proceeds from collections on loans.
C) Cash advanced to borrowers.
D) Cash proceeds from borrowing.

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

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Haven Corporation issued $700,000 of 10-year bonds payable at par in 2014.During 2018 Haven paid $50,000 interest and an additional $233,333 to retire one-third of the bonds at par.These activities would be reported in Haven's statement of cash flows for 2018 as:


A) $283,333 net cash provided by financing activities.
B) $283,333 net cash used in financing activities.
C) $233,333 net cash used in financing activities,and $50,000 cash disbursed for operating activities.
D) $466,667 net cash provided by financing activities,and $50,000 cash disbursed for operating activities.

E) A) and D)
F) A) and B)

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[The following information applies to the questions displayed below.] An analysis of Kenny Corporation's Investment in Marketable Securities account during 2018 disclosed the following: [The following information applies to the questions displayed below.] An analysis of Kenny Corporation's Investment in Marketable Securities account during 2018 disclosed the following: Kenny's 2018 income statement included a $90,000 loss on sale of marketable securities and $65,000 dividend income from marketable securities.All payments and proceeds relating to marketable securities transactions were in cash. -The amount of cash paid by Kenny Corporation in 2018 for the purchase of marketable securities was: A) $445,000. B) $535,000. C) $355,000. D) $420,000. Kenny's 2018 income statement included a $90,000 loss on sale of marketable securities and $65,000 dividend income from marketable securities.All payments and proceeds relating to marketable securities transactions were in cash. -The amount of cash paid by Kenny Corporation in 2018 for the purchase of marketable securities was:


A) $445,000.
B) $535,000.
C) $355,000.
D) $420,000.

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

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Interest paid belongs in the operating activities section of the statement of cash flows.

A) True
B) False

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Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2018.The company's statement of cash flows for 2018 reported $1 million of cash received from customers.What amount of net sales must Hamilton have recorded in 2018?


A) $ 630,000
B) $1,370,000
C) $1,000,000
D) $ 370,000

E) B) and C)
F) A) and B)

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When using the indirect method,depreciation expense:


A) Increases net cash flow from operations.
B) Decreases net cash flow from operations.
C) Does not affect net income.
D) Does not affect net cash flow from operations.

E) B) and C)
F) C) and D)

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Dividends paid belong in the operating activities section of the statement of cash flows.

A) True
B) False

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[The following information applies to the questions displayed below.] An analysis of changes in selected balance sheet accounts of Johnson Corporation shows the following for the current year: [The following information applies to the questions displayed below.] An analysis of changes in selected balance sheet accounts of Johnson Corporation shows the following for the current year: Johnson's income statement for the current year includes a $14,000 loss on disposal of plant assets.All payments and proceeds relating to purchase or sale of plant assets were in cash. -Total cash proceeds received by Johnson from sales of plant assets during the current year amounted to: A) $ 13,000. B) $ 104,000. C) $195,000. D) $ 41,000. Johnson's income statement for the current year includes a $14,000 loss on disposal of plant assets.All payments and proceeds relating to purchase or sale of plant assets were in cash. -Total cash proceeds received by Johnson from sales of plant assets during the current year amounted to:


A) $ 13,000.
B) $ 104,000.
C) $195,000.
D) $ 41,000.

E) A) and B)
F) B) and C)

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When applying the direct method in a statement of cash flows,the amount of depreciation is added to net income.

A) True
B) False

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Based solely on the data provided above,Hierarchy's net cash flow from investing activities for the current year is:


A) $264,000 net cash provided by investing activities.
B) $264,000 net cash used by investing activities.
C) $201,600 net cash provided by investing activities.
D) $1,200,000 net cash provided by investing activities.

E) C) and D)
F) B) and D)

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Based on the information provided below,complete the following worksheet to be used to prepare the statement of cash flows for the Gulp-it-Down Coffee Co. Based on the information provided below,complete the following worksheet to be used to prepare the statement of cash flows for the Gulp-it-Down Coffee Co. Additional Information: (1. )Net income for the year amounted to $60,000,and cash dividends were declared and paid in the amount of $20,000. (2. )Gulp-it-Down Coffee Co.'s only noncash expense was depreciation that totaled $100,000. (3. )The company purchased plant assets for $140,000. (4. )Notes payable in the amount of $60,000 were issued during the year. Based on the information provided below,complete the following worksheet to be used to prepare the statement of cash flows for the Gulp-it-Down Coffee Co. Additional Information: (1. )Net income for the year amounted to $60,000,and cash dividends were declared and paid in the amount of $20,000. (2. )Gulp-it-Down Coffee Co.'s only noncash expense was depreciation that totaled $100,000. (3. )The company purchased plant assets for $140,000. (4. )Notes payable in the amount of $60,000 were issued during the year. Additional Information: (1. )Net income for the year amounted to $60,000,and cash dividends were declared and paid in the amount of $20,000. (2. )Gulp-it-Down Coffee Co.'s only noncash expense was depreciation that totaled $100,000. (3. )The company purchased plant assets for $140,000. (4. )Notes payable in the amount of $60,000 were issued during the year.

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In a statement of cash flows,payments of dividends are classified as:


A) Operating activities.
B) Financing activities.
C) Investing activities.
D) Costs and Expenses.

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

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[The following information applies to the questions displayed below.] The financial statements of Seldin,Inc. ,provide the following information for the current year: [The following information applies to the questions displayed below.] The financial statements of Seldin,Inc. ,provide the following information for the current year: -Compute the amount of cash received from customers during the current year. A) $265,000 B) $255,000 C) $260,000 D) $ 40,000 -Compute the amount of cash received from customers during the current year.


A) $265,000
B) $255,000
C) $260,000
D) $ 40,000

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

Correct Answer

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Which of the following indicates a cash receipt?


A) A decrease in accrued expenses,such as wages payable.
B) A decrease in accounts receivable.
C) An increase in inventory.
D) A decrease in accounts payable.

E) A) and C)
F) A) and B)

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Peak pricing charges:


A) A higher price when demand is high and a lower price when demand is low.
B) A lower price when demand is high and a higher price when demand is low.
C) A low price when demand is high and a lower price when demand is low.
D) A high price when demand is high and a higher price when demand is low.

E) C) and D)
F) A) and B)

Correct Answer

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Which statement is true as to the FASB's position on the presentation of the statement of cash flows?


A) The FASB recommends the use of the indirect method,but most companies use the direct method.
B) The FASB recommends the use of the direct method,but most companies use the indirect method.
C) The FASB recommends the use of the direct method,and most companies use the direct method.
D) The FASB recommends the use of the indirect method,and most companies use the indirect method.

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

Correct Answer

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Large cash flows from operations are more important to financial statement analysts over the long term than cash flows from financing or investing.

A) True
B) False

Correct Answer

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Which of the following indicates cash receipts?


A) Debit entries in the Notes Receivable account.
B) Credit entries in the Marketable Securities account.
C) Debit entries in the Notes Payable account.
D) Credit entries in the Accumulated Depreciation account.

E) C) and D)
F) A) and C)

Correct Answer

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