Question 1 which of the following adjustments to convert net income

Question 1  

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?


 Add to Net IncomeDeduct from Net Income



Accounts Payableincreasedecrease 

Accounts Receivabledecreaseincrease 

Prepaid Expensesincreasedecrease


Question 2  

Which of the following transactions does not affect cash during a period?


Collection of an accounts receivable 

Sale of treasury stock 

Exercise of the call option on bonds payable 

Write-off of an uncollectible account


Question 3  

Indicate where the event purchased land and a building with a mortgage would appear, if at all, on the indirect statement of cash flows.


Investing activities section 

Financing activities section 

Does not represent a cash flow 

Operating activities section


Question 4  

The statement of cash flows


is used to assess an entity’s ability to pay dividends and meet obligations. 

reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement. 

is prepared instead of an income statement under generally accepted accounting principles. 

is prepared from comparative income statements.


Question 5  

The cash effects of transactions that create revenues and expenses are


processing activities. 

investing activities. 

financing activities. 

operating activities


Question 6  

In Garland Company, land decreased $140,000 because of a cash sale for $140,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value. The net cash provided by investing activities is







Question 7  

If accounts receivable have increased during the period,


revenues on an accrual basis are less than revenues on a cash basis. 

revenues on an accrual basis are greater than revenues on a cash basis. 

revenues on an accrual basis are the same as revenues on a cash basis. 

expenses on an accrual basis are greater than expenses on a cash basis


Question 8  

The following data are available for Quarter Company.

Increase in accounts payable$120,000

Increase in bonds payable400,000

Sale of investments150,000

Issuance of common stock180,000

Payment of cash dividends90,000


Net cash provided by financing activities is:







Question 9  

Which of the following adjustments to convert net income to net cash provided by operating activities is correct?


                                   Add to Net Income         Deduct from Net Income 

Accounts Receivable         increase            decrease 

Prepaid Expensesincrease                  decrease 

Inventory                 decrease                   increase 

Taxes Payable            decrease          increase


Question 10  

On the statement of cash flows using the indirect method, patent amortization expense will


be added to net income in the operating section. 

appear as an inflow of cash in the investing section. 

appear as an outflow of cash in the investing section. 

be deducted from net income in the operating section.


Question 11  

Blocker Company reported a net loss of $5,000 for the year ended December 31, 2013. During the year, accounts receivable increased $14,000, merchandise inventory decreased $10,000, accounts payable decreased by $20,000, and depreciation expense of $10,000 was recorded. During 2013, operating activities


provided net cash of $27,000. 

provided net cash of $17,000. 

used net cash of $19,000.  

used net cash of $27,000


Question 12  

Joan’s Vegetable Market had the following transactions during 2013:


1.  Issued $60,000 of par value common stock for cash.

2.  Repaid a 6 year note payable in the amount of $21,000.

3.  Acquired land by issuing common stock of par value $50,000.

4.  Declared and paid a cash dividend of $5,000.

5.  Sold a long-term investment (cost $63,000) for cash of $6,000.

6.  Acquired an investment in IBM stock for cash of $10,000.


What is the net cash provided by financing activities?







Question 13  

Land acquired from the issuance of common stock is reported


in a separate schedule at the bottom of the statement. 

as an investing activity. 

as an operating activity. 

as a financing activity.


Question 14  

Using the indirect method, patent amortization expense for the period


is added to net income. 

is deducted from net income. 

causes cash to decrease. 

causes cash to increase.


Question 15  

The statement of cash flows reports each of the following except


the net change in cash. 

cash receipts from operating activities. 

cash payments from investing activities. 

cash sales.


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