Chapter 17, Statement of Cash Flows Video Solutions, Accounting Principles , Tenth Edition

Problem 1

Which of the following is incorrect about the statement of cash flows?
a. It is a fourth basic financial statement.
b. It provides information about cash receipts and cash payments of an entity during a period.
c. It reconciles the ending cash account balance to the balance per the bank statement.
d. It provides information about the operating, investing and financing activities of the business.

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Problem 2

Which of the following will not be reported in the statement of cash flows?
a. The net change in plant assets during the year.
b. Cash payments for plant assets during the year.
c. Cash receipts from sales of plant assets during the year.
d. How acquisitions of plant assets during the year were financed.

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Problem 3

The statement of cash flows classifies cash receipts and cash payments by these activities:
a. operating and nonoperating.
b. investing. financing and operating.
c. financing, operating, and nonoperating.
d. investing, financing, and nonoperating.

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Problem 4

Which is an example of a cash flow from an operating activity?
a. Payment of cash to lenders for interest.
b. Receipt of cash from the sale of capital stock.
c. Payment of cash dividends to the company's stockholders.
d. None of the above.

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Problem 5

Which is an example of a cash flow from an investing activity?
a. Receipt of cash from the issuance of bonds payable.
b. Payment of cash to repurchase outstanding capital stock.
c. Receipt of cash from the sale of equipment.
d. Payment of cash to suppliers for inventory.

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Problem 6

Cash dividends paid to stockholders are classified on the statement of cash flows as:
a. operating activities.
b. investing activities.
c. a combination of (a) and (b).
d. financing activitics.

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Problem 7

Which is an example of a cash flow from a financing activity?
a. Receipt of cash from sale of land.
b. Issuance of debt for cash.
c. Purchase of equipment for cash.
d. None of the above

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Problem 8

Which of the following is incorrect about the statement of cash flows?
a. The direct method may be used to report cash provided by operations.
b. The statement shows the cash provided (used) for three categories of activity.
c. The operating section is the last section of the statement.
d. The indirect method may be used to report cash provided by operations.

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03:01

Problem 9

Questions 9 through 11 apply only to the indirect method.
Net income is $$\$ 132,000$$, accounts payable increased $$\$ 10,000$$ during the year, inventory decreased $$\$ 6,000$$ during the year, and accounts receivable increased $$\$ 12.000$$ during the year. Under the indirect method, what is net cash provided by operating activities?
a. $$\$ 102,000$$.
c. $$\$ 124,000$$.
b. $$\$ 112.000$$.
d. $$\$ 136,000$$.

Breanna Ollech

Numerade Educator

00:56

Problem 10

Questions 9 through 11 apply only to the indirect method.
Items that are added back to net income in determining cash provided by operating activities under the indirect method do not include:
a. depreciation expense.
c. amortization expense.
b. an increase in inventory.
d. loss on sale of equipment.

Oluwadamilola Ameobi

Numerade Educator

Problem 11

Questions 9 through 11 apply only to the indirect method.
The following data are available for Allen Clapp Corporation.
Net income
$$\$ 200,000$$
Depreciation expense
40.000
Dividends paid
60.000
Gain on sale of land
10.000
Decrease in accounts receivable
20,000
Decrease in accounts payable
30,000
Net cash provided by operating activities is:
a. $$\$ 160,000$$.
c. $$\$240,000$$.
b. $$\$ 220,000$$.
d. $$\$ 280,000$$.

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Problem 12

The following data are available for Orange Peels Corporation.
Sale of land
Sale of equipment
Issuance of common stock
Purchase of equipment
Payment of cash dividends
$$\$ 100,000$$
50,000
70.000
30,000
60.000
Net cash provided by investing activitics is:
a. $$\$ 120,000$$.
c. $$\$ 150,000$$.
b. $$\$ 130,000$$.
d. $$\$ 190,000$$.

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Problem 13

The following data are available for Something Strange!
Increase in accounts payable
$$\$ 40,000$$
Increase in bonds payable
100.000
Sale of investment
Issuance of common stock
Payment of cash dividends
50.000
60.000
30.000
Net cash provided by financing activities is:
a. $$\$ 90,000$$.
c. $$\$ 160,000$$.
b. $$\$ 130,000$$.
d. $$\$ 170,000$$.

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01:46

Problem 14

The statement of cash flows should not be used to evaluate an entity's ability to:
a. earn net income.
b. generate future cash flows.
c. pay dividends.
d. meet obligations.

Oluwadamilola Ameobi

Numerade Educator

01:46

Problem 15

Free cash flow provides an indication of a company's ability to:
a. generate net income.
b. generate eash to pay dividends.
c. generate cash to invest in new capital expenditures. d. Both (b) and (c).

Oluwadamilola Ameobi

Numerade Educator

Problem 16

In a worksheet for the statement of eash flows, a decrease in accounts receivable is entered in the reconciling columns as a credit to Accounts Receivable and a debit in the:
a. investing activities section.
b. operating activities section.
c. financing activitics section.
d. None of the above.

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Problem 17

In a worksheet for the statement of cash flows, a worksheet entry that includes a credit to accumulated depreciation will also include a:
a. credit in the operating section and a debit in another section.
b. debit in the operating section.
c. debit in the investing section.
d. debit in the financing section.

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Problem 18

The beginning balance in accounts receivable is $$\$ 44,000$$, the ending balance is $$\$ 42,000$$, and sales during the period are $$\$ 129,000$$. What are cash receipts from customers?
a. $$\$ 127,000$$.
c. $$\$ 131,000$$.
b. $$\$ 129,000$$.
d. $$\$ 141,000$$.

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Problem 19

Which of the following items is reported on a cash flow statement prepared by the direct method?
a. Loss on sale of building.
b. Increase in accounts receivable.
c. Depreciation expense.
d. Cash payments to suppliers.

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