Foxx Corp.'s comparative balance sheet at December 31, 2013 and 2012 reported accumulated depreciation balances of $850,000 and $600,000, respectively. Property with a cost of $50,000 and a carrying amount of $38,000 was the only property sold in 2013. Depreciation charged to operations in 2013 was

Foxx Corp.'s comparative balance sheet at December 31, 2013 and 2012 reported accumulated depreciation balances of $850,000 and $600,000, respectively. Property with a cost of $50,000 and a carrying amount of $38,000 was the only property sold in 2013. Depreciation charged to operations in 2013 was

a. $238,000.
b. $250,000.
c. $262,000.
d. $212,000.





Answer: C

A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.

A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.

In a statement of cash flows, what amount is included in investing activities for the above transaction?

a. Cash payment
b. Acquisition price
c. Zero
d. Mortgage amount

In a statement of cash flows, what amount is included in financing activities for the above transaction?

a. Cash payment
b. Acquisition price
c. Zero
d. Mortgage amount
a. Cash payment


Answer: C

How should significant noncash transactions be reported in the statement of cash flows according to FASB Statement No. 95?

How should significant noncash transactions be reported in the statement of cash flows according to FASB Statement No. 95?

a. They should be incorporated in the statement of cash flows in a section labeled, "Significant Noncash Transactions."
b. Such transactions should be incorporated in the section (operating, financing, or investing) that is most representative of the major component of the transaction.
c. These noncash transactions are not to be incorporated in the statement of cash flows. They may be summarized in a separate schedule at the bottom of the statement or appear in a separate supplementary schedule to the financials.
d. They should be handled in a manner consistent with the transactions that affect cash flows.






Answer: C

Which of the following is shown on a statement of cash flows?

Which of the following is shown on a statement of cash flows?

a. A stock dividend
b. A stock split
c. An appropriation of retained earnings
d. None of these






Answer: D

In reporting extraordinary transactions on a statement of cash flows (indirect method), the

In reporting extraordinary transactions on a statement of cash flows (indirect method), the

a. gross amount of an extraordinary gain should be deducted from net income.
b. net of tax amount of an extraordinary gain should be added to net income.
c. net of tax amount of an extraordinary gain should be deducted from net income.
d. gross amount of an extraordinary gain should be added to net income.

Answer: A

Dolan Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in Moss Co. during the current year, even though no dividends were declared or paid by Moss during the year. On Dolan's statement of cash flows (indirect method), the $25,000 should

Dolan Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in Moss Co. during the current year, even though no dividends were declared or paid by Moss during the year. On Dolan's statement of cash flows (indirect method), the $25,000 should

a. not be shown.
b. be shown as cash inflow from investing activities.
c. be shown as cash outflow from financing activities.
d. be shown as a deduction from net income in the cash flows from operating activities section.

Answer: D

Which of the following is false concerning the statement of cash flows?

Which of the following is false concerning the statement of cash flows?

a. When pension expense exceeds cash funding, the difference is deducted from investing activities on the statement of cash flows.
b. The FASB requires companies to classify all income taxes paid as operating cash outflows.
c. Under U.S. GAAP, the purchase of land by issuing stock will be shown as a cash outflow under investing activities and a cash inflow under financing activities.
d. All of the above are true concerning the statement of cash flows.

Answer: B

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is deducted from net income to compute cash provided by/used by operating activities?

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is deducted from net income to compute cash provided by/used by operating activities?

a. Decrease in accounts receivable.
b. Gain on sale of land.
c. Amortization of patent.
d. All of the above are deducted from net income to arrive at cash flow from operating activities.

Answer: B

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided by/used by operating activities?

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided by/used by operating activities?

a. Increase in accounts receivable.
b. Gain on sale of land.
c. Amortization of patent.
d. All of the above are added to net income to arrive at cash flow from operating activities.

Answer: C

Which of the following statements is correct?

Which of the following statements is correct?

a. The indirect method starts with income before extraordinary items.
b. The direct method is known as the reconciliation method.
c. The direct method is more consistent with the primary purpose of the statement of cash flows.
d. All of these.

Answer: C

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities? Gross Accounts Receivable Net Accounts Receivable

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?
Gross Accounts Receivable Net Accounts Receivable

a. Indirect Direct
b. Direct Indirect
c. Direct Direct
d. Neither Indirect

Answer: B

When preparing a statement of cash flows, a decrease in prepaid insurance during a period would require which of the following adjustments in determining cash flows from operating activities? Indirect Method Direct Method

When preparing a statement of cash flows, a decrease in prepaid insurance during a period would require which of the following adjustments in determining cash flows from operating activities?
Indirect Method Direct Method

a. Increase Decrease
b. Decrease Increase
c. Increase Increase
d. Decrease Decrease

Answer: A

When preparing a statement of cash flows, an increase in accounts payable during a period would require which of the following adjustments in determining cash flows from operating activities? Indirect Method Direct Method

When preparing a statement of cash flows, an increase in accounts payable during a period would require which of the following adjustments in determining cash flows from operating activities?
Indirect Method Direct Method

a. Increase Decrease
b. Decrease Increase
c. Increase Increase
d. Decrease Decrease

Answer: A

In determining net cash flow from operating activities, a decrease in accounts payable during a period

In determining net cash flow from operating activities, a decrease in accounts payable during a period

a. means that income on an accrual basis is less than income on a cash basis.
b. requires an addition adjustment to net income under the indirect method.
c. requires an increase adjustment to cost of goods sold under the direct method.
d. requires a decrease adjustment to cost of goods sold under the direct method.

Answer: C

When preparing a statement of cash flows, a decrease in accounts receivable during a period would cause which one of the following adjustments in determining cash flow from operating activities? Direct Method Indirect Method

When preparing a statement of cash flows, a decrease in accounts receivable during a period would cause which one of the following adjustments in determining cash flow from operating activities?
Direct Method Indirect Method

a. Increase Decrease
b. Decrease Increase
c. Increase Increase
d. Decrease Decrease

Answer: C

When preparing a statement of cash flows (indirect method), an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because

When preparing a statement of cash flows (indirect method), an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because

a. cash was increased while cost of goods sold was decreased.
b. cost of goods sold on an accrual basis is lower than on a cash basis.
c. acquisition of inventory is an investment activity.
d. inventory purchased during the period was less than inventory sold resulting in a net cash increase.



Answer: B

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual based selling and administrative expenses to the cash basis? Increase in Depreciation Prepaid Expenses

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual based selling and administrative expenses to the cash basis?
Increase in
Depreciation Prepaid Expenses

a. Deducted From Deducted From
b. Added To Added To
c. Deducted From Added To
d. Added To Deducted From

Answer: C

The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)

The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)

a. addition to net income.
b. deduction from net income.
c. investing activity.
d. financing activity.

Answer: B

Which of the following would be classified as a financing activity on a statement of cash flows?

Which of the following would be classified as a financing activity on a statement of cash flows?

a. Declaration and distribution of a stock dividend
b. Deposit to a bond sinking fund
c. Sale of a loan receivable
d. Payment of interest to a creditor

Answer: B

Xanthe Corporation had the following transactions occur in the current year:

Xanthe Corporation had the following transactions occur in the current year:

1. Cash sale of merchandise inventory.
2. Sale of delivery truck at book value.
3. Sale of Xanthe common stock for cash.
4. Issuance of a note payable to a bank for cash.
5. Sale of a security held as an available-for-sale investment.
6. Collection of loan receivable.

How many of the above items will appear as a cash inflow from investing activities on a statement of cash flows for the current year?

a. Five items
b. Four items
c. Three items
d. Two items





Answer: C