Multiple Choice Question 54

-The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

cash flows from financing activities.

cash flows from operating activities.

usually different from year to year.

cash flows from investing activities.


-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation uses the indirect method to depict cash flows. Indicate where, if at all, long-term debt retired with cash would be classified on the statement of cash flows.

Does not represent a cash flow.

Operating activities section.

Financing activities section.

Investing activities section.


-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation uses the indirect method to depict cash flows. Indicate where, if at all, interest paid on note would be classified on the statement of cash flows.

Financing activities section.

Does not represent a cash flow.

Operating activities section.

Investing activities section.


-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation uses the indirect method to depict cash flows. Indicate where, if at all, dividends received on securities held would be classified on the statement of cash flows.

Financing activities section.

Investing activities section.

Does not represent a cash flow.

Operating activities section.

-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation uses the indirect method to depict cash flows. Indicate where, if at all, income taxes paid would be classified on the statement of cash flows.

Investing activities section.

Does not represent a cash flow.

Financing activities section.

Operating activities section.

-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation uses the indirect method to depict cash flows. Indicate where, if at all, common stock issued for cash would be classified.

Operating activities section.

Does not represent a cash flow.

Investing activities section.

Financing activities section.


-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation 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.

Financing activities section.

Does not represent a cash flow.

Operating activities section.

Investing activities section.


-Harden Corporation engaged in the following transaction. Assume that the Harden Corporation uses the indirect method to depict cash flows. Indicate where, if at all, treasury stock purchased with cash would be classified on the statement of cash flows.

Investing activities section.

Operating activities section.

Financing activities section.

Does not represent a cash flow.


-On the statement of cash flows, the cash flows from operating activities section would include

receipts from the sale of investments.

receipts from the issuance of capital stock.

payments for the acquisition of investments.

cash receipts from sales activities.


-Which of the following is not typically a characteristic experienced by a company during the introductory phase of the corporate life cycle?

Cash from financing is positive.

Considerable cash will be used to purchase productive assets.

Cash used in operations will exceed cash generated by operations.

Cash from investing is positive.


-Which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle?

Cash from operations on the statements of cash flows will be less than net income on the income statement.

Cash from investing is positive.

Collections on accounts receivable will lag behind sales.

Cash from financing is positive.


-If accounts receivable have increased during the period

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.

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.


-If accounts payable have increased during a period

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

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

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

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


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

ignored because it does not affect cash.

not reported on a statement of cash flows.

deducted from net income.

added to net income.
Multiple Choice Question 114

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

ignored because it does not affect expenses.

added to net income.

ignored because it does not affect income.

deducted from net income.


-Which of the following would not be an adjustment to net income using the indirect method?

Depreciation Expense.

An increase in Land.

An increase in Prepaid Insurance.

Amortization Expense.


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

amount of the gain is deducted in the operating activities section.

sale proceeds received are deducted in the operating activities section.

sale proceeds received are added in the operating activities section.

amount of the gain is added in the operating activities section.

-The cost of goods sold during the year was $275,000. Merchandise inventory decreased by $10,000 during the year and accounts payable decreased by $5,000 during the year. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

$260,000.

$290,000.

$280,000.

$270,000.


-Geary Company had credit sales of $1,400,000. The beginning accounts receivable balance was $80,000 and the ending accounts receivable balance was $280,000. Using the direct method of reporting cash flows from operating activities, what were the cash collections from customers during the period?

$1,480,000.

$1,400,000.

$1,200,000.

$1,600,000


-Cash receipts from customers are greater than sales revenues when there is a(n)

decrease in accounts receivable.

increase in accounts receivable.

increase in cost of goods sold.

decrease in cost of goods sold.