Question

The statement of cash flows classifies cash receipts and cash payments into two categories: operating activities...

  1. The statement of cash flows classifies cash receipts and cash payments into two categories: operating activities and nonoperating activities.
  1. True
  2. False
  1. In, Roswell Corporation, there was an increase in the land account during the year of $48.000. Analysis reveals that the change resulted from a cash sale of land at a cost $150.000, and a cash purchase of land for $198.000. In the statement of cash flows, the change in the land account should be reported in the investing section:

a.   as a net purchase of land, $48.000.

b.   only as a purchase of land $198.000.

c.   as a purchase of land $198.000 and a sale of land $150.000.

d.   only as a sale of land $150.000.

  1. A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.
  1. True
  2. False
  1. In the Shannon Company, cash receipts from customers were $255.000, cash payments for operating expenses were $170.000, and one-third (1/3) of the company's $10.500 income taxes were paid during the year. Net cash provided by operating activities is:

a.   $85.000.

b.   $74.500.

c.   $81.500.

d.   $78.000.

  1. New Corp. had on account sales of $850.000. The beginning accounts receivable balance was $40.000 and the ending accounts receivable balance was $140.000. What were the cash collections from customers during the period?

a.   $950.000

b.   $850.000

c.   $750.000

d.   $890.000

  1. Rader Company issues 4.000 shares with a $10 par value at $16 per share. When the transaction is recorded, credits are made to

a.   Share Capital $24.000 and Additional Paid-in Capital $40.000.

b.   Share Capital $64.000.

c.   Share Capital $40.000 and Additional Paid-in Capital $24.000.

d.   Share Capital $40.000 and Retained Earnings $24.000.

  1. If Vickers Company issues 5.400 shares with a $5 par value for $96.000, the account

a.   Share Capital will be credited for $69.000.

b.   Additional Paid-in Capital will be credited for $27.000.

c.   Additional Paid-in Capital will be credited for $96.000.

d.   Cash will be debited for $96.000.

  1. The information to prepare the statement of cash flows usually comes from each of the following except

a.   the comparative balance sheet.

b.   the former income statement.

c.   additional information.

d.   the current income statement.

  1. Jahnke Corporation issued 10.000 shares of €2 par value for €11 per share. The journal entry to record the sale will include

a.   a debit to Cash for €20.000.

b.   a credit to Additional Paid-in Capital for €90.000.

c.   a credit to Share Capital for €110.000.

d.   a debit to Retained Earnings for €27.500.

  1. Financing activities involve

a.   lending money to other entities and collecting on those loans.

b.   cash receipts from sales of goods and services.

c.   acquiring and disposing of productive long-lived assets.

d.   non-current liability and equity items.

  1. On January 1, Shannon Manufacturing had 120.000 shares with a €10 par value. On March 17, the company declared a 15% share dividend to shareholders of record on March 20. Market value of the shares was €13 on March 17. The entry to record the transaction of March 17 would include a

a.   credit to Cash Dividends for €54.000.

b.   credit to Cash for €234.000.

c.   credit to Ordinary Share Dividends Distributable for €180.000.

d.   debit to Ordinary Share Dividends Distributable for €180.000.

  1. Swanson Corporation declared a 10% share dividend when it had 350.000 shares with a $3 par value. The market price per share was $12 per share when the dividend was declared. The entry to record this dividend declaration includes a credit to

a.   Retained Earnings for $105.000.

b.   Additional Paid-in Capital for $315.000.

c.   Share Capital for $420.000.

d.   Retained Earnings for $350.000.

  1. If Kiner Company issues 8.000 shares with a $5 par value for $250.000,

a.   Share Capital will be credited for $250.000.

b.   Additional Paid-in Capital will be credited for $40.000.

c.   Additional Paid-in Capital will be credited for $210.000.

d.   Cash will be debited for $210.000.

  1. EI Toro Manufacturing Inc. declared a 20% share dividend when it had 200.000 shares with a €5 par value. The market price per share was €8 on the declaration date. The entry to record the dividend declaration included a credit to

a.   Retained Earnings for €320.000.

b.   Additional Paid-in Capital for €280.000.

c.   Share Capital for €320.000.

d.   Additional Paid-in Capital €200.000.

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Homework Answers

Answer #1

1. b)False

2. a)as a net purchase of land $48000

3. a)True

4. c)$81500

5. c)$750000

6. c)share capital $40000 and additional paid in capital $24000

7. d)cash will be debited for $96000

8. b)the former income statement

9. b)a credit to additional paid in capital 90000

10. a)lending money to other entities and collecting on those loans

11. d) debit to ordinary share dividend 180000

12 c) share capital for 420000

13 c)additional paid in capital will be credited $210000

14. c) share capital for 320000

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