Accounting 203 Chapter 13 Test
Accounting 203 Chapter 13 Test
7. Which of the following would be considered a financing activity that is a source of cash for purposes of constructing a statement of cash flows? A) B) C) D) Borrowing on a long-term note. Income from rental property. Sale of bonds issued by another company. Collection of a loan made to another company.
8. An increase in interest payable of $1,000 during a year would be shown on the companys statement of cash flows prepared under the indirect method as: A) an addition to net income of $1,000 in order to arrive at net cash provided by operating activities. B) a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities. C) a deduction of $1,000 under investing activities. D) an addition of $1,000 under financing activities.
9. An increase in inventories of $5,000 over the course of a year would be shown on the companys statement of cash flows prepared under the indirect method as: A) an addition to net income of $5,000 in order to arrive at net cash provided by operating activities. B) a deduction from net income of $5,000 in order to arrive at net cash provided by operating activities. C) an addition of $5,000 under investing activities. D) a deduction of $5,000 under investing activities.
10. Which of the following items would not be classified as an operating activity on the statement of cash flows? A) B) C) D) Dividends received on the stock of another company. Dividends paid to the companys own stockholders. Payments to government agencies for taxes. Rental income.
11. In a statement of cash flows, interest payments to lenders and other creditors should be classified as a(n): A) B) C) D) Operating activity. Borrowing activity. Lending activity. Financing activity.
12. In a statement of cash flows, which of the following would be classified as an investing activity? A) B) C) D) The sale of the companys own preferred stock for cash. The sale of equipment. Interest received on a long-term note receivable. The conversion of the companys bonds into common stock.
13. Nordal Companys net income last year was $27,000. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Debit balances: Accounts receivable . $(8,000) Inventory . 5,000 Prepaid expenses (4,000) Credit balances: Accumulated depreciation .. 12,000 Accounts payable 11,000 Accrued liabilities .. (7,000) Taxes payable 0 Deferred taxes 2,000 Based solely on this information, the net cash provided by operations under the indirect method on the statement of cash flows would be: A) B) C) D) $38,000. $2,000. $39,000. $52,000.
14. The data given below are from the accounting records of the Huhn Company: Net income.. $40,000 Depreciation charges . 8,000 Decrease in accounts payable 1,800 Decrease in merchandise inventory 2,500 Increase in long-term liabilities .. 10,000 Increase in capital stock . 25,000 Increase in accounts receivable.. 4,000 Based on this information, the net cash provided by operating activities on the statement of cash flows using the indirect method would be: A) B) C) D) $51,300. $50,000. $42,100. $44,700.
Answers: 1. F 2. T 3. F 4. T 5. F Multiple Choice 6. C 7. A 8. A 9. B 10. B 11. A 12. B 13. D 14. D Everett Community College Tutoring Center 3