(Multiple Choice)

Questions 1–9 use the following data. Solomon Corporation formats operating cash flows by the indirect method.

1 How many items enter the computation of Solomon’s net cash provided by operating activities?

a. 2

b. 5

c. 3

d. 7

2. How do Solomon’s accrued liabilities affect the company’s statement of cash flows for 2012?

a. Increase in cash provided by operating activities

b. They don’t because the accrued liabilities are not yet paid

c. Increase in cash used by financing activities

d. Increase in cash used by investing activities

3. How do accounts receivable affect Solomon’s cash flows from operating activities for 2012?

a. Decrease in cash provided by operating activities

b. Increase in cash provided by operating activities

c. They don’t because accounts receivable result from investing activities

d. Decrease in cash used by investing activities

4. Solomon’s net cash provided by operating activities during 2012 was

a. $41,000.

b. $47,000.

c. $38,000.

d. $44,000.

5. How many items enter the computation of Solomon’s net cash flow from investing activities for 2012?

a. 5

b. 3

c. 2

d. 7

6. The book value of equipment sold during 2012 was $20,000. Solomon’s net cash flow from investing activities for 2012 was

a. net cash used of $38,000.

b. net cash used of $47,000.

c. net cash used of $44,000.

d. net cash used of $25,500.

7. How many items enter the computation of Solomon’s net cash flow from financing activities for 2012?

a. 3

b. 7

c. 2

d. 5

8. Solomon’s largest financing cash flow for 2012 resulted from (Assume no stock dividends were distributed.)

a. sale of equipment.

b. purchase of equipment.

c. payment of dividends.

d. issuance of common stock.

9. Solomon’s net cash flow from financing activities for 2012 was (Assume no stock dividends were distributed.)

a. net cash used of $25,500.

b. net cash provided of $12,000.

c. net cash provided of $42,000.

d. net cash used of $14,500.

10. Credit sales totaled $750,000, accounts receivable increased by $60,000, and accounts payable decreased by $40,000. How much cash did the company collect from customers?

a. $690,000

b. $810,000

c. $730,000

d. $750,000

Transcribed Image Text:

Solomon's Income Statement for 2012 Sales revenue. $170,000 Gain on sale of equipment. Cost of goods sold.. Depreciation. Other operating expenses. 10,000 $180,000 112,000 7,500 24,000 143,500 $ 36,500 Net income. *The book value of cquipment sold during 2012 was $20,000. Solomon's Comparative Balance Sheets at the end of 2012 2012 2011 S 2,000 Accounts payable 11,000 Accrued liabilities 7,000 Common stock 67,000 Retained earnings 2012 2011 Cash $ 3,000 6,000 8,000 95,000 $112,000 $ 7,000 $ 8,000 1,000 Accounts receivable 5,000 Inventory Plant and equipment, net 24,000 12,000 76,000 66,000 $112,000 $87,000 $87,000