Question 1

Which of the following statements about the capital acquisitions ratio is correct?

Accepted Answer

A)  A high ratio indicates less need for outside financing of property,plant and equipment.
B)  The ratio is computed by dividing cash flow from operating activities by the average net property,plant,and equipment.
C)  A low ratio may indicate a failure to update property,plant,and equipment,which can limit a company's ability to compete in the future.
D)  The ratio is comparable across industries.E) All of the above
F) A) and B)

Question 2

Amortization of a patent reduces cash flows from investing activities.

Accepted Answer

A) True 
 B)False

Question 3

During 2019,Boogle reported net income of $785 million and net cash inflow from operating activities of $1,196 million.During 2018,Boogle's net income was $563 million and net cash inflow from operations was $1,237 million.Which of the following is incorrect about the quality of income ratios?

Accepted Answer

A)  In 2018 the ratio was 2.2 and in 2019 it was 1.5.
B)  The ratio in 2018 was better than the ratio in 2019.
C)  Boogle's quality of income ratios indicate poor performance because net income is less than cash flow.
D)  The ratio in both years shows the company's ability to generate positive cash flow from its operating activities.E) B) and D)
F) None of the above

Question 4

KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable. 
-How would this transaction be reported within the cash flow from financing activities section of the cash flow statement?

Accepted Answer

A)  An inflow of $215,000.
B)  An outflow of $215,000.
C)  An outflow of $35,000.
D)  It would not be reported in the financing activities section.E) A) and C)
F) B) and C)

Question 5

A company reported an increase in accrued sales revenues and a decrease in unearned sales revenues during 2019.Which of the following statements is correct?

Accepted Answer

A)  When determining cash collected from customers,both the increase in accrued revenues and the decrease in unearned revenues are subtracted from sales revenues.
B)  When determining cash collected from customers,both the increase in accrued revenues and the decrease in unearned revenues are added to sales revenues.
C)  When determining cash collected from customers,the increase in accrued revenues is subtracted from sales revenues and the decrease in unearned revenues is added to sales revenues.
D)  When determining cash collected from customers,the increase in accrued revenues is added to sales revenues and the decrease in unearned revenues is subtracted from sales revenues.E) C) and D)
F) B) and D)

Question 6

Which of the following statements about the capital acquisitions ratio is incorrect?

Accepted Answer

A)  The ratio is computed by dividing cash flow from operating activities by cash paid for property,plant,and equipment.
B)  Because the need for investment in property,plant,and equipment differs dramatically across industries,a firm's ratio should only be compared with its prior years' ratio or with firms in the same industry.
C)  A high ratio indicates more need for outside financing of current and future purchases of property,plant,and equipment.
D)  The ratio increases when an account receivable is collected.E) B) and D)
F) B) and C)

Question 7

RM Company,a manufacturer,has provided the following information pertaining to its recent year of operation: • Net income,$300,000
• Accounts payable increased $24,000
• Prepaid rent decreased $10,000
• Depreciation expense was $35,000
• Accounts receivable increased $34,000
• Gain on sale of a building was $11,000
• Wages payable decreased $21,000
• Unearned revenue increased $44,000
Using the indirect method,how much was RM's net cash provided by operating activities?

Accepted Answer

A)  $259,000.
B)  $327,000.
C)  $347,000.
D)  $358,000.E) C) and D)
F) B) and C)

Question 8

Canadian Beer reported equipment sold for $222 million cash and new equipment purchased $1,515 million cash.The equipment sold had a net book value of $150 million.Cash flow from investing activities would show:

Accepted Answer

A)  An inflow of $222 million and outflow of $1,515 million.
B)  An inflow of $222 million and outflow of $150 million.
C)  Cash paid for equipment of $1,293 million.
D)  A net outflow of $1,365 million.E) B) and D)
F) A) and D)

Question 9

While repaying principal on long-term debt is reported as part of cash flows from financing activities,repaying principal on short-term debt (notes payable)is reported as part of cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 10

During 2019,Edna Enterprises had a capital acquisitions ratio of 8.0.During 2019,Carlos Corporation had a capital acquisitions ratio of 3.4.The amount of cash flow from operating activities was $5,968,000 for Edna and $5,054,000 for Carlos.Which of the following statements is incorrect?

Accepted Answer

A)  Edna used less cash for investments in property,plant and equipment during 2019 than did Carlos.
B)  Compared to Carlos,Edna's capital acquisitions ratio is higher which indicates that Edna has less need for external financing of its investments in property,plant,and equipment.
C)  Edna invested approximately $746,000 in property,plant,and equipment during 2019.
D)  Carlos invested approximately one-half the amount that Edna invested in property,plant,and equipment during 2019.E) C) and D)
F) None of the above

Question 11

For the year ended December 31,2019,Kennel
Company reported short-term borrowings of $2,500,000,long-term borrowings of $6,800,000,repayments of long-term borrowings of $3,500,000,interest payments of $780,000,purchase of treasury shares of $500,000,cash dividends declared of $1,100,000,and cash dividend payments of $800,000.Kennel also issued its common stock in exchange for a building costing $400,000.
A.Prepare the financing activities section of the Kennel
Company cash flow statement for the year ended December 31,2019.
B.Is the net cash flow for financing activities a net cash inflow,or a net cash outflow? Briefly describe the reason for your answer.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> B.When more net cash is provi...

Question 12

Which of the following transactions decreases the quality of income ratio?

Accepted Answer

A)  The cash purchase of equipment.
B)  The issue of stock in exchange for cash.
C)  Collecting cash for services to be provided in the future.
D)  Earning revenue that was previously recorded as unearned revenue.E) A) and D)
F) B) and C)

Question 13

Brice Corporation reported the following information:
   Compute Brice's cash paid for operating expenses for 2019.

Accepted Answer

The answer of Brice Corporation reported the following information:
 ...

Question 14

Canadian Beer had a capital acquisitions ratio of 7.49,which means its net income exceeded its cash investment in property,plant and equipment by almost 7.5 times.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following transactions increases the quality of income ratio?

Accepted Answer

A)  The cash payment of an account payable.
B)  The payment of a cash dividend.
C)  A decrease in receivables.
D)  The accrual of revenue.E) A) and D)
F) None of the above

Question 16

Milliken Company paid $2.2 million to purchase stock in another company,$1.0 million to repurchase treasury shares,$0.5 million to buy short-term investments,sold used equipment for $0.8 million when its book value was $0.6 million,and purchased new equipment for $3.4 million.What was the net cash flow from investing activities?

Accepted Answer

A)  $6.3 million net cash outflow.
B)  $5.3 million net cash outflow.
C)  $5.1 million net cash outflow.
D)  $4.8 million net cash outflow.E) None of the above
F) C) and D)

Question 17

Which of the following is not reported as a cash flow from investing activities?

Accepted Answer

A)  Sale of a depreciable asset for cash.
B)  Purchasing land in exchange for common stock.
C)  Selling a long-term investment at a loss for cash.
D)  Selling a patent in exchange for cash.E) A) and B)
F) All of the above

Question 18

Sagaworth Inc.reported the following information:
   Prepare the operating activities section of the statement of cash flows for the year ended December 31,2019 using the indirect method.

Accepted Answer

The answer of Sagaworth Inc.reported the following information:
  ...

Question 19

When accrued liabilities increase from the beginning to the end of the year,it means accrued expenses were greater than cash payments of such expenses,and,under the indirect method,the increase in accrued liabilities would be added to net income to convert to cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about the statement of cash flows is correct?

Accepted Answer

A)  A company with a net loss on the income statement will always have a net cash outflow from operating activities.
B)  A purchase of equipment is classified as a cash inflow from investing activities.
C)  Cash dividends received on stock investments are classified as cash flows from operating activities.
D)  Cash dividends paid are classified as cash flows from operating activities.E) None of the above
F) A) and C)

Exam 12: Statement of Cash Flows

Which of the following statements about the capital acquisitions ratio is incorrect?

Correct Answer
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Canadian Beer had a capital acquisitions ratio of 7.49,which means its net income exceeded its cash investment in property,plant and equipment by almost 7.5 times.

Correct Answer
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Canadian Beer reported equipment sold for $222 million cash and new equipment purchased $1,515 million cash.The equipment sold had a net book value of $150 million.Cash flow from investing activities would show:

Correct Answer
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A company reported an increase in accrued sales revenues and a decrease in unearned sales revenues during 2019.Which of the following statements is correct?

Correct Answer
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Correct Answer
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Sagaworth Inc.reported the following information: Prepare the operating activities section of the statement of cash flows for the year ended December 31,2019 using the indirect method.

Correct Answer
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Amortization of a patent reduces cash flows from investing activities.

Correct Answer
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Which of the following transactions decreases the quality of income ratio?

Correct Answer
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When accrued liabilities increase from the beginning to the end of the year,it means accrued expenses were greater than cash payments of such expenses,and,under the indirect method,the increase in accrued liabilities would be added to net income to convert to cash flow from operating activities.

Correct Answer
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During 2019,Boogle reported net income of $785 million and net cash inflow from operating activities of $1,196 million.During 2018,Boogle's net income was $563 million and net cash inflow from operations was $1,237 million.Which of the following is incorrect about the quality of income ratios?

Correct Answer
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Correct Answer
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Correct Answer
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B.When more net cash is provi...
View Answer

While repaying principal on long-term debt is reported as part of cash flows from financing activities,repaying principal on short-term debt (notes payable)is reported as part of cash flows from operating activities.

Correct Answer
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Which of the following is not reported as a cash flow from investing activities?

Correct Answer
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Which of the following transactions increases the quality of income ratio?

Correct Answer
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During 2019,Edna Enterprises had a capital acquisitions ratio of 8.0.During 2019,Carlos Corporation had a capital acquisitions ratio of 3.4.The amount of cash flow from operating activities was $5,968,000 for Edna and $5,054,000 for Carlos.Which of the following statements is incorrect?

Correct Answer
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Brice Corporation reported the following information: Compute Brice's cash paid for operating expenses for 2019.

Correct Answer
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KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable. -How would this transaction be reported within the cash flow from financing activities section of the cash flow statement?

Correct Answer
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Which of the following statements about the statement of cash flows is correct?

Correct Answer
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Which of the following statements about the capital acquisitions ratio is correct?

Correct Answer
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Exam 12: Statement of Cash Flows

Which of the following statements about the capital acquisitions ratio is incorrect?

Correct AnswerverifiedShow Answer

Canadian Beer had a capital acquisitions ratio of 7.49,which means its net income exceeded its cash investment in property,plant and equipment by almost 7.5 times.

Correct AnswerverifiedShow Answer

Canadian Beer reported equipment sold for $222 million cash and new equipment purchased $1,515 million cash.The equipment sold had a net book value of $150 million.Cash flow from investing activities would show:

Correct AnswerverifiedShow Answer

A company reported an increase in accrued sales revenues and a decrease in unearned sales revenues during 2019.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sagaworth Inc.reported the following information: Prepare the operating activities section of the statement of cash flows for the year ended December 31,2019 using the indirect method.

Correct AnswerverifiedShow Answer

Amortization of a patent reduces cash flows from investing activities.

Correct AnswerverifiedShow Answer

Which of the following transactions decreases the quality of income ratio?

Correct AnswerverifiedShow Answer

When accrued liabilities increase from the beginning to the end of the year,it means accrued expenses were greater than cash payments of such expenses,and,under the indirect method,the increase in accrued liabilities would be added to net income to convert to cash flow from operating activities.

Correct AnswerverifiedShow Answer

During 2019,Boogle reported net income of $785 million and net cash inflow from operating activities of $1,196 million.During 2018,Boogle's net income was $563 million and net cash inflow from operations was $1,237 million.Which of the following is incorrect about the quality of income ratios?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified B.When more net cash is provi...View AnswerShow Answer

While repaying principal on long-term debt is reported as part of cash flows from financing activities,repaying principal on short-term debt (notes payable)is reported as part of cash flows from operating activities.

Correct AnswerverifiedShow Answer

Which of the following is not reported as a cash flow from investing activities?

Correct AnswerverifiedShow Answer

Which of the following transactions increases the quality of income ratio?

Correct AnswerverifiedShow Answer

During 2019,Edna Enterprises had a capital acquisitions ratio of 8.0.During 2019,Carlos Corporation had a capital acquisitions ratio of 3.4.The amount of cash flow from operating activities was $5,968,000 for Edna and $5,054,000 for Carlos.Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Brice Corporation reported the following information: Compute Brice's cash paid for operating expenses for 2019.

Correct AnswerverifiedShow Answer

KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable. -How would this transaction be reported within the cash flow from financing activities section of the cash flow statement?

Correct AnswerverifiedShow Answer

Which of the following statements about the statement of cash flows is correct?

Correct AnswerverifiedShow Answer

Which of the following statements about the capital acquisitions ratio is correct?

Correct AnswerverifiedShow Answer

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B.When more net cash is provi...
View Answer

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