Chapter Questions
Cash flows from investing activities include all of the following except:a. Purchases of plant assetsb. Dividends and interest earned on investmentsc. Sales of investmentsd. Collection of the principal amount of a note receivablee. All of the above are investing activities.
Cash flows from financing activities include all of the following except:a. Issuing common stockb. Cash dividends paid to stockholdersc. Repayment of bonds payable at maturityd. Payment of interest on bonds and notes payablee. All of the above are financing activities.
Which of the following is true regarding operating cash flows?a. Cash sales and customer collections on accounts receivable are included in the amount reported as operating cash flows.b. Specific amounts of cash receipts and cash payments will be reported as operating activities using the direct method.c. If cash received from customers differs from the amount of sales revenue reported in the income statement, the difference will be reported as an adjustment to net income using the indirect method.d. All of the above.e. None of the above.
Sales revenue for the year was $$\$ 500,000$$. Beginning accounts receivable was $$\$ 10,000$$, and ending accounts receivable was $$\$ 15,000$$. Cash receipts from customers were:a. $$\$ 500,000$$b. $$\$ 495,000$$c. $$\$ 505,000$$
Salaries expense for the year was $$\$ 100,000$$. Beginning salaries payable was $$\$ 10,000$$, and ending salaries payable was $$\$ 15,000$$. Cash payments for salaries were:a. $$\$ 100,000$$b. $$\$ 95,000$$c. $$\$ 105,000$$
Rent expense for the year was $$\$ 40,000$$. Beginning prepaid rent was $$\$ 10,000$$, and ending prepaid rent was $$\$ 15,000$$. Cash payments for rent were:a. $$\$ 40,000$$b. $$\$ 35,000$$c. $$\$ 45,000$$
Which of the following is true regarding the reporting of depreciation, depletion, and amortization costs?a. These amounts would be ignored in preparing the operating cash flow section using the direct method, as they are noncash expenses.b. These amounts would be added to net income in preparing the operating cash flow section using the indirect method, as these expenses reduced net income but did not have an associated cash outflow.c. Both of the above are true.d. Neither of the above is true.
Which of the following is an example of a noncash investing and/or financing activity?a. Issuing bonds payable to finance the purchase of land and buildingsb. Retiring long-term debt by issuing common stockc. Trading in an old delivery vehicle for a new modeld. All of the abovee. None of the above
Which of the following is true pertaining to cash equivalents?a. Cash equivalents are a particular category of highly liquid, readily marketable investments.b. Cash and cash equivalents often are combined and presented as a single amount on the balance sheet.c. The statement of cash flows should include the change in the total amount of cash and cash equivalents from the beginning to the end of the year.d. All of the above are true.e. None of the above are true.
The term accrual basis of accounting means that the income statement covering a particular period will include the revenues earned and expenses incurred during that period regardless of the period in which the company received cash from its customers or paid cash for operating expenses.a. Trueb. False