1. The statement of cash flows classifies cash receipts and cash payments into two categories: operating activities and nonoperating activities.

1. True
2. False

2. In, Roswell Corporation, there was an increase in the land account during the year of $48.000. Analysis reveals that the change resulted from a cash sale of land at a cost $150.000, and a cash purchase of land for $198.000. In the statement of cash flows, the change in the land account should be reported in the investing section:

a. as a net purchase of land, $48.000.

b. only as a purchase of land $198.000.

c. as a purchase of land $198.000 and a sale of land $150.000.

d. only as a sale of land $150.000.

3. A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.

1. True
2. False

4. In the Shannon Company, cash receipts from customers were $255.000, cash payments for operating expenses were $170.000, and one-third (1/3) of the company's $10.500 income taxes were paid during the year. Net cash provided by operating activities is:

a. $85.000.

b. $74.500.

c. $81.500.

d. $78.000.

5. New Corp. had on account sales of $850.000. The beginning accounts receivable balance was $40.000 and the ending accounts receivable balance was $140.000. What were the cash collections from customers during the period?

a. $950.000

b. $850.000

c. $750.000

d. $890.000

6. Rader Company issues 4.000 shares with a $10 par value at $16 per share. When the transaction is recorded, credits are made to

a. Share Capital $24.000 and Additional Paid-in Capital $40.000.

b. Share Capital $64.000.

c. Share Capital $40.000 and Additional Paid-in Capital $24.000.

d. Share Capital $40.000 and Retained Earnings $24.000.

7. If Vickers Company issues 5.400 shares with a $5 par value for $96.000, the account

a. Share Capital will be credited for $69.000.

b. Additional Paid-in Capital will be credited for $27.000.

c. Additional Paid-in Capital will be credited for $96.000.

d. Cash will be debited for $96.000.

8. The information to prepare the statement of cash flows usually comes from each of the following except

a. the comparative balance sheet.

b. the former income statement.

c. additional information.

d. the current income statement.

9. Jahnke Corporation issued 10.000 shares of 2 par value for 11 per share. The journal entry to record the sale will include

a. a debit to Cash for 20.000.

b. a credit to Additional Paid-in Capital for 90.000.

c. a credit to Share Capital for 110.000.

d. a debit to Retained Earnings for 27.500.

10. Financing activities involve

a. lending money to other entities and collecting on those loans.

b. cash receipts from sales of goods and services.

c. acquiring and disposing of productive long-lived assets.

d. non-current liability and equity items.

11. On January 1, Shannon Manufacturing had 120.000 shares with a 10 par value. On March 17, the company declared a 15% share dividend to shareholders of record on March 20. Market value of the shares was 13 on March 17. The entry to record the transaction of March 17 would include a

a. credit to Cash Dividends for 54.000.

b. credit to Cash for 234.000.

c. credit to Ordinary Share Dividends Distributable for 180.000.

d. debit to Ordinary Share Dividends Distributable for 180.000.

12. Swanson Corporation declared a 10% share dividend when it had 350.000 shares with a $3 par value. The market price per share was $12 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to

a. Retained Earnings for $105.000.

b. Additional Paid-in Capital for $315.000.

c. Share Capital for $420.000.

d. Retained Earnings for $350.000.

13. If Kiner Company issues 8.000 shares with a $5 par value for $250.000,

a. Share Capital will be credited for $250.000.

b. Additional Paid-in Capital will be credited for $40.000.

c. Additional Paid-in Capital will be credited for $210.000.

d. Cash will be debited for $210.000.

14. EI Toro Manufacturing Inc. declared a 20% share dividend when it had 200.000 shares with a 5 par value. The market price per share was 8 on the declaration date. The entry to record the dividend declaration included a credit to

a. Retained Earnings for 320.000.

b. Additional Paid-in Capital for 280.000.

c. Share Capital for 320.000.

d. Additional Paid-in Capital 200.000.