Question

1- When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except:

Multiple Choice

An increase in accounts receivable.

A decrease in accounts payable.

Proceeds from the disposal of a long-term asset with no gain or loss.

An increase in prepaid expenses.

A decrease in accrued expenses payable.

2- Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:

Cash dividends declared for the year	$	40,000
Cash dividends payable at the beginning of the year		17,000
Cash dividends payable at the end of the year		13,000

The amount of cash paid for dividends was:

Multiple Choice

$44,000.

$40,000.

$57,000.

$53,000.

$36,000.

3- Noncash investing and financing activities may be disclosed in:

Multiple Choice

A note in the financial statements or a schedule attached to the statement of cash flows.

The operating activities section of the statement of cash flows.

The investing activities section of the statement of cash flows.

The financing activities section of the statement of cash flows.

The reconciliation of cash balance section.

4- In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:

Net income for the year was	$	52,000
Accounts payable increased by		18,000
Accounts receivable decreased by		25,000
Inventories increased by		5,000
Depreciation expense was		30,000

Net cash provided by operating activities was:

Multiple Choice

$120,000.

$60,000.

$70,000.

$80,000.

$130,000.

5- Investing activities do not include the:

Multiple Choice

Purchase of plant assets.

Lending and collecting on notes receivable.

Issuance of common stock.

Sale of plant assets.

Sale of short-term investments other than cash equivalents.

Answer 1

Answers:

1) Proceeds from the disposal of a long-term asset with no gain or loss.

2) $44,000

Cash paid for dividends = cash dividend declared + cash dividend payable at the beginning of the year - Cash dividend              payable at the end of year

Cash paid for dividends = $40,000 + $17,000 - $13,000 = $44,000

3) A note in the financial statements or a schedule attached to the statement of cash flows.

4) $120,000

5) Issuance of common stock