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QUESTION 1

1. Which of the following are the three major categories included on the statement of cash flows?

Investing, operating and financing activities

Investing, capital and financing activities

Investing, operating and contracting activities

Financial, operating and internal control activities

1.5 points

QUESTION 2

1. Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following portion of the comparative balance sheet:

2014

2013

Increase/decrease

Cash

$ 21,000

$ 18,000

$ 3,000

Accounts receivable

31,000

35,000

(4,000)

Inventory

53,000

25,000

28,000

PP&E, net

120,000

90,000

30,000

Total assets

$225,000

$168,000

$57,000

2. Additional information provided: Equipment costing $52,000 was purchased for cash.

3. Equipment with a net asset value of $10,000 was sold for $14,000.

4. Depreciation expense of $12,000 was recorded during the year.

5.

6. What was the net amount of Cash from investing activities?

$30,000 negative

$60,000 positive

$52,000 negative

$38,000 negative

1.5 points

QUESTION 3

1. Which of the following sections from the statement of cash flows includes activities that affect current assets and current liabilities on the balance sheet?

The investing section

The financing section

The operating section

The noncash investing and financing section

1.5 points

QUESTION 4

1. Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following income statement:

Sales revenue

$240,000

Interest revenue

1,000

Gain on sale of plant assets

4,000

Total revenues and gains

$245,000

Cost of goods sold

110,000

Salary expense

45,000

Depreciation expense

12,000

Other operating expenses

23,000

Interest expense

1,000

Income tax expense

5,000

Total expenses

$196,000

Net income (loss)

$49,000

2. Other information provided: Current assets other than cash increase by $24,000. Current liabilities decrease by $1,000. How much is the Net cash flow provided by operations?

$20,000 positive

$75,000 positive

$32,000 positive

$82,000 positive

1.5 points

QUESTION 5

1. Which of the following sections from the statement of cash flows includes activities that increase and decrease long-term liabilities and stockholders' equity?

The financing section

The operating section

The investing section

The noncash investing and financing section

1.5 points

QUESTION 6

1. Which of the following sections from the statement of cash flows includes activities that increase and decrease long-term assets?

The financing section

The operating section

The investing section

The noncash investing and financing section

1.5 points

QUESTION 7

1. Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet

2014

2013

Increase/decrease

Cash

$ 33,000

$ 18,000

$15,000

Accounts receivable

22,000

35,000

(13,000)

Inventory

170,000

115,000

55,000

Total assets

$225,000

$168,000

$57,000

2. How will the change in Accounts receivable be shown on the statement of cash flows?

Operating activities as of positive cash flow

Operating activities as of negative cash flow

Financing activities as of positive cash flow

Investing activities as of negative cash flow

1.5 points

QUESTION 8

1. Which of the following sections from the statement of cash flows includes activities that affect net income on the income statement?

The financing section

The operating section

The investing section

The noncash investing and financing section

1.5 points

QUESTION 9

1. Which of the following describes the investing activities as shown in the statement of cash flows?

Includes increases and decreases in long-term assets

Includes transactions affecting the capitalization of the business

Includes transactions that primarily impact current assets and current liabilities

Shows the beginning and ending balance of cash

1.5 points

QUESTION 10

1. Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet:

2014

2013

Increase/decrease

Accounts payable

$ 4,000

$ 6,000

$(2,000)

Accrued liabilities

2,000

1,000

1,000

Long-term notes payable

84,000

90,000

(6,000)

Total liabilities

$90,000

$97,000

$(7,000)

2. How will the change in Accounts payable be shown on the statement of cash flows?

Operating activities as of positive cash flow

Operating activities as of negative cash flow

Financing activities as of positive cash flow

Investing activities as of negative cash flow

1.5 points

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