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Exam 12: Statement of Cash Flows

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Question 61

True/False

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A major disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is not emphasized.

A) True
B) False

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Question 62

Multiple Choice

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Assume that the Quinn Corporation uses the indirect method to depict cash flows.Indicate where, if at all, interest paid on a note would be reported on the statement of cash flows.

A) Operating activities section.
B) Investing activities section.
C) Financing activities section.
D) Does not represent a cash flow.

E) All of the above
F) None of the above

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Question 63

Multiple Choice

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A transaction involving a gain on the sale of equipment affects cash provided (used) by

Which of the following would be added to net income using the indirect method?

On the statement of cash flows, the cash flows from operating activities section would be affected by

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows.Indicate where, if at all, a stock dividend declared and issued would be classified on the statement of cash flows.

Free cash flow is cash from operating activities less dividends.

Assume that the Ecuyer Company uses the indirect method to depict cash flows.Indicate where, if at all, stock issued for equipment would be classified on the statement of cash flows.

Using the indirect method, if equipment is sold at a gain, the

A statement of cash flows indicates the sources and uses of cash during a period.

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

The net income reported on the income statement for the current year was $240,000.Depreciation was $52,000.Accounts receivable and inventories decreased by $5,000 and $15,000, respectively.Prepaid expenses and accounts payable increased, respectively, by $500 and $14,000.Investments were sold at a loss of $20,000.How much cash was provided by operating activities?

Assume that the Brackney Inc.uses the indirect method to depict cash flows.Indicate where, if at all, land purchased for cash would be classified on the statement of cash flows.

The net income reported on the income statement of Hutchins Company for the current year was $1,360,000.Depreciation recorded on plant assets was $257,000.Accounts receivable and inventories increased by $72,000 and $48,000, respectively.Prepaid expenses and accounts payable decreased by $6,000 and $66,000, respectively.How much cash was provided by operating activities during the year?

The payment of interest on bonds payable is classified as a cash outflow from operating activities.

The indirect and direct methods of preparing the statement of cash flows are identical except for the

All of the following statements are true regarding cash flow presentations except

Operating activities include the cash effects of transactions that create revenues and expenses.

During the decline phase, cash from investing activities may be negative while cash from financing activities may be positive as the company issues new stock or debt.

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is correct?