Quizzes - BrainMass

1

All of the following are sections of the statement of cash flows except:

Operating activities

Managerial activities

Financing activities

Investing activities

None of the above

2

There are two methods of computing cash flows. Which of the following are those methods?

The direct method

The indirect method

Neither the direct nor indirect method

Both the direct and indirect method

3

Smith Enterprises reported sales revenues of $150,000 for the calendar year 20X2. Its accounts receivable balance was $25,000 on January 1, 20X2 and $35,000 on December 31, 20X2. What is the amount of cash it collected from its customers during 20X2?

$150,000

$10,000

$140,000

$160,000

$25,000

4

The direct method is ALWAYS used to compute the cash flows from which activities?

Operating activities

Financing activities

Investing activities

Operating, financing and investing activities

Financing and investing activities

5

Lew's Cleaners sold a pressing machine for $2,500. It had bought the machine for $10,000 and recorded accumulated depreciation on the machine of $6,000. What adjustment will be made to net income to arrive at cash flows from operating activities regarding this sale?

Add $2,500

Add $1,500

Deduct $2,500

Deduct $1,500

Add $4,000

6

Lew's Cleaners sold a pressing machine for $2,500. It had bought the machine for $10,000 and recorded accumulated depreciation on the machine of $6,000. What effect will this transaction have on cash flows from investing activities?

Increase it by $4,000

Decrease it by $2,500

Increase it by $2,500

Decrease it by $1,500

This is an operating activity, so there is no effect

7

Kaneisha's Catering Company bought a new oven for $6,500 by signing a note for the full amount. What effect will this transaction have on the statement of cash flows?

It will increase financing cash flows by $6,500

It will decrease investing cash flows by $6,500

It will increase financing cash flows and decrease investing cash flows by $6,500

It will have no effect, as this is a non-cash transaction

It will be disclosed in the notes because it is a non-cash transaction

8

Mohammed's Construction Company reported net income of $15,000 for the year. During the year, its accounts receivable increased by $5,000; its prepaid expenses increased by $10,000; its equipment increased by $50,000; its accounts payable increased by $25,000; and it issued common stock for $150,000. What was Mohammed's cash flows from operations?

$5,000

$25,000

($25,000)

$15,000

$125,000

9

Martinez & Martinez reported cost of goods sold of $107,500 for calendar year 20X5. Its merchandise inventory increased by $23,000 during the year and its accounts payable increased by $17,000 during the year. What was the company's cash paid to suppliers for 20X5?

$113,500

$101,500

$147,500

$130,500

$90,500

10

True or False: FASB recommends that the operating activities section of the statement of cash flows be prepared using the indirect method.

True

False

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Accounting: Statement of Cash flows