FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Reporting and Analyzing Cash Flows

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 91

Multiple Choice

Review LaterAdd Note

Review Later

The statement of cash flows helps analysts evaluate all but which of the following?

A) Ability of the company to generate profit.
B) Source of cash used for plant expansion.
C) Differences between net income and net operating cash flow.
D) Source of cash used to finance investing activities.
E) Source of cash used for debt repayments.

F) A) and E)
G) D) and E)

Correct Answer

verified

Show Answer

Question 92

Multiple Choice

Review LaterAdd Note

Review Later

Mercury Company reports depreciation expense of $40,000 for Year 2.Also,equipment costing $150,000 was sold for its book value in Year 2.There were no other equipment purchases or sales during the year.The following selected information is available for Mercury Company from its comparative balance sheet.Compute the cash received from the sale of the equipment. $\begin{array}{lrr}\text { At December 31 } & \text { Year 2 } & \text { Year 1 } \\\text { Equipment } & \$ 600,000 & \$ 750,000 \\\text { Accumulated Depreciation-Equipment } & 428,000 & 500,000\end{array}$

A) $32,000.
B) $68,000.
C) $38,000.
D) $40,000.
E) $36,000.

F) None of the above
G) B) and E)

Correct Answer

verified

Show Answer

Question 93

True/False

Review LaterAdd Note

A spreadsheet can help organize the information needed to prepare a statement of cash flows.

Cash flows are essentially the same as net income because they are both measured using accrual accounting principles.

All of the following statements related to preparation of the statement of cash flows under U.S.GAAP and IFRS are true except:

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n) :

The statement of cash flows cannot help address questions such as:

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.

In preparing a company's statement of cash flows for the year just ended,the following information is available: Net cash flows from financing activities for the year were:

Investing activities include (a)the purchase and sale of long-term assets,(b)the purchase and sale of short-term investments,and (c)lending and collecting on loans.

Equipment costing $400,000 with accumulated depreciation of $260,000 is sold at a gain of $10,000.This implies that $150,000 cash was received from the sale.

Companies have the option of using either the direct or indirect method to prepare the operating section of the statement of cash flows.

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

When preparing the operating activities section of the statement of cash flows using the indirect method,non-operating losses are added to net income.

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

When preparing the operating activities section of the statement of cash flows using the indirect method,non-operating gains are added to net income.

When preparing the operating activities section of the statement of cash flows using the indirect method,a decrease in accounts receivable is subtracted from net income.

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.