AC_239_PRACTICE_FINAL_EXAM_QUESTIONS_AND_ANSWERS[1]

AC_239_PRACTICE_FINAL_EXAM_QUESTIONS_AND_ANSWERS[1] - AC...

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AC 239 PRACTICE FINAL EXAM QUESTIONS & ANSWERS Chapter 16 1. The statement of cash flows reports a. cash flows from operating activities b. total assets c. total changes in stockholders' equity d. changes in retained earnings ANS: A 2. A ten-year bond was issued at par for $150,000 cash. This transaction should be shown on a statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities ANS: B 3. Cash receipts from interest and dividends are classified as a. investing activities. b. operating activities. c. either financing or investing activities. d. financing activities. ANS: B 4. Which one of the following below should be added to net income in calculating net cash flow from operating activities using the indirect method? a. a gain on the sale of land b. a decrease in accounts payable c. an increase in accrued liabilities d. dividends paid on common stock ANS: C 5. If a gain of $9,000 is incurred in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is a. $46,000 b. $9,000 c. $55,000 d. $64,000 ANS: D
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6. Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. a decrease in inventory b. a decrease in accounts payable c. preferred dividends declared and paid d. a decrease in accounts receivable ANS: B 7. Concerning the Indirect Statement of Cash Flows, select the correct statement. a. The management of a company would mostly utilize the Indirect Statement of Cash Flows as a management tool since it starts with Net Income from the Income Statement. b. The management of a company would not normally distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it would most likely confuse the average reader. c. The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it starts with Net Income and ends in the current cash balance which increases reader confidence in the report. d. The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it does not present any relation to the other statements of the report, therefore it is least likely to confuse the reader. ANS: A 8. Operating expenses other than depreciation for the year were $400,000. Prepaid expenses increased by $17,000 and accrued expenses decreased by $30,000 during the year. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be a. $353,000 b. $413,000 c. $447,000 d. $383,000 ANS: C 9. The cost of merchandise sold during the year was $45,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were
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This note was uploaded on 10/05/2010 for the course ACCOUNTING n/a taught by Professor N/a during the Summer '09 term at Kaplan University.

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AC_239_PRACTICE_FINAL_EXAM_QUESTIONS_AND_ANSWERS[1] - AC...

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