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    Multiple choice relating to Statement of Cash Flows

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    1. Newby Corporation's 2000 net income is smaller than net cash flow
    from operating activities. Which of the following would not be an
    explanation of why net income is smaller than net cash flow from
    operating activities?
    a. Newby paid dividends to shareholders during 2000.
    b. Newby's accounts payable increased during 2000.
    c. Newby recognized depreciation expense in 2000.
    d. Newby sold machinery at a loss in 2000.
    2. Rent expense in Lailani Company's 2001 income statement is
    $360,000. If Prepaid Rent was $45,000 at December 31, 2000, and is
    $70,000 at December 31, 2001, the cash paid for rent during 2001 is:
    a. $360,000
    b. $385,000
    c. $335,000
    d. $430,000
    Use the following to answer questions 28-31:
    An analysis of Clifton Corporation's Investment in Marketable
    Securities account during 2000 disclosed the following:
    Debit entries $375,000
    Credit entries 200,000
    Clifton's 2000 income statement included a $20,000 loss on sale of
    marketable securities and $15,000 dividend income from marketable
    securities. All payments and proceeds relating to marketable
    securities transactions were in cash.
    3. Refer to the above data. The amount of cash paid by Clifton
    Corporation in 2000 for the purchase of marketable securities was:
    a. $395,000
    b. $375,000
    c. $355,000
    d. $360,000
    4. Refer to the above data. The cash proceeds received by Clifton
    Corporation in 2000 for the sale of marketable securities was:
    a. $220,000
    b. $200,000
    c. $195,000
    d. $180,000
    5. Refer to the above data. How should the transactions involving
    marketable securities be classified in Clifton's statement of cash
    flows for 2000?
    a. The purchase of marketable securities, sales of marketable
    securities, and receipt of dividends are all classified as investing
    activities.
    b. The purchase and the sale of marketable securities are classified
    as investing activities; the receipt of dividends is classified as an
    operating activity.
    c. The purchase of marketable securities is classified as an
    investing activity; the sale of marketable securities is classified
    as a financing activity; the receipt of dividends is classified as an
    operating activity.
    d. The purchase and the sale of marketable securities are classified
    as investing activities; the receipt of dividends is classified as a
    financing activity.

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    https://brainmass.com/business/accounting/multiple-choice-relating-to-statement-of-cash-flows-36798

    Solution Preview

    1. To answer this question we have to look at transactions that affect the net income and cash flow and that which do not affect. Here a c and d affect either the netincome or the cash flow. But b, changes in accounts payable does not have any effect on ...

    Solution Summary

    The solution explains how to calculate the cash flow impact given the changes in the balance sheet and the income statement.

    $2.19