QUESTION 11

Accounts receivable were $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $280,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

A.$280,000.

B.$290,000.

C.$350,000.

D.$270,000.

1 points

QUESTION 12

Buster Company reported a net loss of $6,000 for the year ended December 31, 2010. During the year, accounts receivable increased $14,000, merchandise inventory decreased $10,000, accounts payable decreased by $20,000, and depreciation expense of $10,000 was recorded. During 2010, operating activities

A.used net cash of $20,000.

B.used net cash of $28,000.

C.provided net cash of $28,000.

D.provided net cash of $18,000.

1 points

QUESTION 13

If a gain of $15,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

A.$95,000.

B.$115,000.

C.$100,000.

D.$15,000.

1 points

QUESTION 14

If accounts receivable have increased during the period,

A.revenues on an accrual basis are less than revenues on a cash basis.

B.revenues on an accrual basis are greater than revenues on a cash basis.

C.revenues on an accrual basis are the same as revenues on a cash basis.

D.expenses on an accrual basis are greater than expenses on a cash basis.

1 points

QUESTION 15

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

A.added to net income.

B.deducted from net income.

C.ignored because it does not affect cash.

D.not reported on a statement of cash flows.

1 points

QUESTION 16

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

A.direct method.

B.indirect method.

C.working capital method.

D.cost-benefit method.

1 points

QUESTION 17

In developing the cash flows from operating activities, most companies in the U. S.

A.use the direct method.

B.use the indirect method.

C.prepare the operating activities section on the accrual basis.

1 points

QUESTION 18

The indirect and direct methods of preparing the statement of cash flows are identical except for the

A.significant noncash activity section.

B.operating activities section.

C.investing activities section.

D.financing activities section.

1 points

QUESTION 19

During 2010, Klugman Industries reported cash provided by operations of $690,000, cash used in investing of $1,029,000, and cash used in financing of $135,000. In addition, cash spent for fixed assets during the period was $414,000. No dividends were paid. Based on this information, what was Klugman's free cash flow?

A.($339,000)

B.$1,440,000

C.$276,000

D.($888,000)

1 points

QUESTION 20

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

True

False