Chapter 9 Quiz

Question 1

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Question 2

The activity from the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders’ equity only.

Question 3

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

Question 4

The cash debt coverage ratio indicates a company’s ability to repay its liabilities from cash generated from operations.

Question 5

The current cash debt coverage ratio is considered a better representative of liquidity than the current ratio because it involves the entire year rather than a balance at one point in time.

Question 6

The statement of cash flows

Question 7

Generally, the most important category on the statement of cash flows is cash flows from

Question 8

Assume that the Quinn 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.

Question 9

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

Question 10

Zoum Corporation had the following transactions during 2014:

1 - Issued $125,000 of par value common stock for cash.
2 - Recorded and paid wages expense of $60,000.
3 - Acquired land by issuing common stock of par value $50,000.
4 - Declared and paid a cash dividend of $10,000.
5 - Sold a long-term investment (cost $3,000) for cash of $3,000.
6 - Recorded cash sales of $400,000.
7 - Bought inventory for cash of $160,000.
8 - Acquired an investment in Zynga stock for cash of $21,000.
9 - Converted bonds payable to common stock in the amount of $500,000.
10 - Repaid a 6 year note payable in the amount of $220,000.

What is the net cash provided by financing activities?

Question 11

In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

Question 12

The information to prepare the statement of cash flows comes from all of the following sources except

Question 13

Peninsula Company reported net income of $260,000 for the year. During the year, accounts receivable increased by $21,000, accounts payable decreased by $9,000 and depreciation expense of $45,000 was recorded. Net cash provided by operating activities for the year is

Question 14

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Question 15

The net income reported on the income statement for the current year was $440,000. Depreciation was $62,000. Accounts receivable and inventories decreased by $20,000 and $32,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $2,000 and $16,000. How much cash was provided by operating activities?

Question 16

The statement of cash flows will not provide insight into

Question 17

Laser Performance Inc. has the following information available (amount in thousands).
Net Income                                                     $30,000
Average Total Liabilities                                   80,000
Average Current Liabilities                               36,000
Cash Provided by Operations                          48,000
Cash Sales                                                     130,000
Capital Expenditures                                        22,000
Dividends Paid                                                   6,000
 
What is the current cash debt coverage?

Question 18

Authentic Exposure Company had the following transactions that took place during the year:
I.    Paid amount owing to suppliers $2,750.
II.   Purchased new equipment for $5,000 by signing a long-term note payable.
III.  Purchased a patent and paid $15,000 cash for the asset.
 
How what is the total effect of these transactions on Free Cash Flow, Current Cash Debt Coverage, and Cash Debt Coverage respectively?
           Free                          Current Cash Debt                         Cash Debt
       Cash Flow                             Coverage                                Coverage

Question 19

All of the following statements are true regarding cash flow presentations except

Question 20

For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.