Reference no: EM132316115

Question

1) Arizona Company plans to purchase a property to build its corporate headquarters. An investor is willing to exchange land with a market value of? $500,000 for common stock. This transaction would be shown in the financing activities section of the statement of cash flows.

True

False

2) Louisiana Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance? sheet:

Louisiana Company

Comparative Balance Sheet

December? 31, 2018 and 2017

2018 2017 Increase/(Decrease)

Common Stock $31,000 $2,500 $28,500

Retained Earnings 122,000 79,000 43,000

Treasury Stock (12,000) (8,500) (3,500)

Total Equity $141,000 $73,000 $68,000

Note:

1. There were no stock retirements during the year.

2. There were no sales of treasury stock during the year.

3) Compute the cash flow from transactions involving treasury stock.

A.$3,500 negative cash flow

B.$3,500 of positive cash flow

C.$12,000 negative cash flow

D.zero net cash flow

4) Systern

Systern Furniture Center had accounts receivable of $ 29 comma 000

$29,000 at the beginning of the year and $ 55 comma 000

$55,000 at? year-end. Revenue for the year totaled $ 114 comma 000

$114,000. How much cash did the business collect from? customers?

A.$140,000

B.$114,000

C.$88,000

D.$59,000

5) ?Tanglewood, Inc. uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ended December? 31, 2018:

?Tanglewood, Inc.

Comparative Balance Sheet

December? 31, 2018 and 2017

2018 2(017 Increase(Decrease)

Cash $36,6600 $16,600 $20,000

Accounts Receivable 29,000 36,000 (7,000)

Merchandise Inventory 52,400 25,400 27,000

PP&E, net 126,000 92,000 34,000

Total Assets $244,000 $170,000 $74,000

Accounts Payable 9,500 13,500 ?$(4,000)

Accrued Liabilities 6,200 2,200 ?4,000

Long-term Notes Payable 70,300 79,300 (9,000?)

Total Liabilities ?$86,000? $95,000 $(9,000)

Common Stock ?$55,000 ?$3,000? $52,000

Retained Earnings 115,000? 78,000 ?37,000

Treasury Stock ?(12,000) ?(6,000) ?(6,000)

Total? Stockholders' Equity?$158,000 ?$75,000? &83,000

Total Liabilities and? Stockholders' Equity ?$244,000 ?$170,000? $74,000

?Tanglewood, Inc.

Income Statement

December? 31, 2018

Sales Revenue $290,200

Interest Revenue $2,100

Gain on Sale of Plant Assets $?6,000

Total Revenues and Gains ?$298,300

Cost of Goods Sold $146,300

Salaries and Wages Expense $49,200

Depreciation Expense-Plant Asset $?16,000

Other Operating Expense $23,500

Interest Expense $?3,500

Income Tax Expense $7,800

Total Expenses $?246,300

Net Income ?$52,000

Use the direct method to compute the payments to suppliers for Merchandise Inventory and other operating expenses.? (Accrued Liabilities relate to other operating? expense.)

A. $200,800

B. $19,500

C. $196,800

D. $177,300

6) Which of the following sections from the statement of cash flows includes borrowing cash and paying off? loans?

A.the investing activities section

B.the operating activities section

C.the financing activities section

D.the? non-cash investing and financing section

7) Which of the following sections of the statement of cash flows include purchases and sales of? long-term assets?

A.the financing activities section

B.the investing activities section

C.the operating activities section

D.the? non-cash investing and financing section

8) The statement of cash flows is dated the same as the balance sheet.

True

False

9) Regarding the use of a spreadsheet for the preparation of the statement of cash? flows, which of the following statements is? incorrect?

A.Accountants can prepare the statement of cash flows directly from the lower part of the spreadsheet.

B.When companies face complex? situations, a spreadsheet can help in preparing the statement of cash flows.

C.The spreadsheet starts with the beginning balance sheet and concludes with the ending balance sheet.

D.The spreadsheet cannot be used for the direct method.

10) Designer Paints Company uses the direct method for preparing its statement of cash flow. Designer Paints reports the following information regarding? 2018:

From the income? statement:

Sales? Revenues, $267,000

Cost of Goods? Sold, $213,000

Operating? Expenses, $33,000

From the balance? sheet:

Beginning Balance Ending Balance

Accounts Receivable ?$14,500? $17,900

Merchandise Inventory ?24,100? 18,400

Accounts Payable? 6,900 ?13,500

Accrued Liabilities ?4,800? 1,600

11) What amount will be shown for payments to suppliers for Merchandise Inventory?purchases? (Assume that Accounts Payable are for purchases of merchandise inventory? only.)

A.?$200,700

B.?$213,900

C.?$212,100

D.?$207,300

12) The operating and financing activities of the statement of cash flows are presented differently between the indirect and direct methods.

True

False

13) Utah Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance? sheet:

Utah Corp.

Comparative Balance Sheet

December? 31, 2018 and 20 17

2018 2017 ?Increase/(Decrease)

Cash $45,000? $27,000 ?$18,000

Accounts Receivable ?48,000? 45,000 3,000

Merchandise Inventory ?180,000 132,000 48,000

Total Assets $273,000 ?$204,000? $69,000

How will the change in Merchandise Inventory be shown on the statement of cash?flows?

A.positive cash flow under the financing activities section

B.negative cash flow under the investing activities section

C.addition to net income under the operating activities section

D.subtraction from net income under the operating activities section

14) When preparing the statement of cash? flows, the amount of net cash provided by operating activities differs between the direct and indirect methods.

True

False

15) Canada Company needs to purchase a property to build their headquarters. An investor is willing to exchange land with a market value of ? $700,000 for shares of common stock. On the statement of cash? flows, this transaction would be shown as? ________.

A.financing activities

B.investing activities

C.operating activities

D.?non-cash investing and financing activities

16) Wesley, Inc. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance? sheet:

?Wesley, Inc.

Comparative Balance Sheet

December? 31, 2019 and 2018

2019 2018 Increase/(Decrease)

Cash $42,000? $25,000? $17,000

Accounts Receivable ?32,000 ?55,000 ?(23,000)

Merchandise Inventory ?180,000 123,000 ?57,000

Total Assets ?$254,000 ?$203,000? $51,000

The change in Merchandise Inventory is shown as a negative cash flow in the adjustments to net income.

True

False