Cash Flow Statement Questions! Trivia Quiz

74 Questions | By Cobbmr | Updated: Mar 21, 2022 | Attempts: 721

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Cash Flow Statement Questions! Trivia Quiz - Quiz

Questions and Answers

1.

All of the following activities are reported on the statement of cash flows except:
- A.
  
  Marketing activities
- B.
  
  Investing activities
- C.
  
  Operating activities
- D.
  
  Financing activities
2.

Activites that create long-term liabilites are usually
- A.
  
  Financing activities
- B.
  
  Operating activities
- C.
  
  Noncash investing and financing activities
- D.
  
  Investing activities
3.

Activities affecting long-term assets are
- A.
  
  Financing activities
- B.
  
  Marketing activities
- C.
  
  Operating activities
- D.
  
  Investing activities
4.

In 2010, PMW Corporation borrowed $110,000, paid dividends of $34,000, issued 10,000 shares of stock for $45 per share, purchased land for $240,000, and received dividends of $10,000. Net income was $150,000, and depreciation for the year totaled $8,000. How much should be reported as net cash provided by operating activites by the indirect method?
- A.
  
  $194,000
- B.
  
  $158,000
- C.
  
  $234,000
- D.
  
  $134,000
5.

Activities that obtain the cash needed to launch and sustain a company are
- A.
  
  Marketing activities
- B.
  
  Income activities
- C.
  
  Investing activities
- D.
  
  Financing activities
6.

The exchange of stock for land would be reported as
- A.
  
  Exchanges are not reported on the statement of cash flow
- B.
  
  Financing activities
- C.
  
  Noncash investing and financing activities
- D.
  
  Investing activities
7.

Net Income: $50,000 Increase in Accounts Payable: $9,000 Depreciation Expense:$10,000 Acquisition of Equipment: $35,000 Payment of Dividends: $1,000 Sales of Treasury Stock: $4,000 Increase in Accounts Receivable: $8,000 Payment of Long-Term Debt: $16,000 Collections of Long-Term Notes Receivable:$5,000Proceeds from Sale of Land: $40,000 Loss on Sale of Land: $15,000 Decrease in Inventories: $3,000 Under the direct method, net cash provided by operating activites would be
- A.
  
  $84,000
- B.
  
  $76,000
- C.
  
  $79,000
- D.
  
  $89,000
8.

Net Income: $50,000 Increase in Accounts Payable: $9,000 Depreciation Expense:$10,000 Acquisition of Equipment: $35,000 Payment of Dividends: $1,000 Sales of Treasury Stock: $4,000 Increase in Accounts Receivable: $8,000 Payment of Long-Term Debt: $16,000 Collections of Long-Term Notes Receivable:$5,000Proceeds from Sale of Land: $40,000 Loss on Sale of Land: $15,000 Decrease in Inventories: $3,000 Net cash provided by (used for) investing activites would be
- A.
  
  $20,000
- B.
  
  $10,000
- C.
  
  $(15,000)
- D.
  
  $ (10,000)
9.

Net Income: $50,000 Increase in Accounts Payable: $9,000 Depreciation Expense:$10,000 Acquisition of Equipment: $35,000 Payment of Dividends: $1,000 Sales of Treasury Stock: $4,000 Increase in Accounts Receivable: $8,000 Payment of Long-Term Debt: $16,000 Collections of Long-Term Notes Receivable:$5,000Proceeds from Sale of Land: $40,000 Loss on Sale of Land: $15,000 Decrease in Inventories: $3,000 Net cash provided by (used for) financing activities would be
- A.
  
  $3,000
- B.
  
  $ (13,000)
- C.
  
  $ (21,000)
- D.
  
  $1,000
10.

Net Income: $50,000 Increase in Accounts Payable: $9,000 Depreciation Expense:$10,000 Acquisition of Equipment: $35,000 Payment of Dividends: $1,000 Sales of Treasury Stock: $4,000 Increase in Accounts Receivable: $8,000 Payment of Long-Term Debt: $16,000 Collections of Long-Term Notes Receivable:$5,000Proceeds from Sale of Land: $40,000 Loss on Sale of Land: $15,000 Decrease in Inventories: $3,000 The cost of land must have been
- A.
  
  $40,000
- B.
  
  $55,000
- C.
  
  $25,000
- D.
  
  Cannot be determined for the data given
11.

Sweet Treat Ice Cream began the year with $60,000 in accounts receivable and ended the year with $50,000 in accounts receivable. If credit sales for the year were $700,000, the cash collected from customers during the year amounted to
- A.
  
  $690,000
- B.
  
  $760,000
- C.
  
  $750,000
- D.
  
  $710,000
12.

Nasau Farms, Ltd., made sales of $750,000 and has cost of goods sold of $410,000. Inventory decreased by $10,000 and accounts payable decreased by $12,000. Operating expenses were $180,000. How much was Nassau Farm's net income for the year?
- A.
  
  $150,000
- B.
  
  $160,000
- C.
  
  $148,000
- D.
  
  $340,000
13.

Nasau Farms, Ltd., made sales of $750,000 and has cost of goods sold of $410,000. Inventory decreased by $10,000 and accounts payable decreased by $12,000. Operating expenses were $180,000. How much cash did Nassau Farms pay for inventory during the year?
- A.
  
  $410,000
- B.
  
  $400,000
- C.
  
  $422,000
- D.
  
  $412,000
14.

Bartman, Inc. purchased a tract of land, a small office building, and some equipment for $1,900,000. The appraised value of the land was $1,380,000, the building $575,000, and the equipment $345,000. What is the cost of the land?
- A.
  
  $633,333
- B.
  
  $1,140,000
- C.
  
  $1,380,000
- D.
  
  None of the above
15.

Which statement is false?
- A.
  
  Depreciation is a process of allocating the cost of a plant asset over its useful life.
- B.
  
  Depreciation is based on the matching principle because it matches the cost of the asset with the revenue generated over the asset's useful life.
- C.
  
  The cost of a plant asset minus accumulated depreciation equals the asset's book value.
- D.
  
  Depreciation creates a fund to replace the asset at the end of its useful life.
16.

On July 1, 2010, Horizon Communications purchased a new piece of equipment that cost $45,000. The estimated useful life is 10 years and estimated residual value is $5,000. What is the depreciation expense for 2010 fif Horizon uses the straight-line method?
- A.
  
  $4,000
- B.
  
  $2,000
- C.
  
  $4,500
- D.
  
  $2,250
17.

On July 1, 2010, Horizon Communications purchased a new piece of equipment that cost $45,000. The estimated useful life is 10 years and estimated residual value is $5,000. Assume Horizon Communications purchased the equipment on January 1, 2010. If Horizon uses the straight-line method for depreciation, what is the asset's book value at the end of 2011?
- A.
  
  $42,000
- B.
  
  $36,000
- C.
  
  $32,000
- D.
  
  $37,000
18.

On July 1, 2010, Horizon Communications purchased a new piece of equipment that cost $45,000. The estimated useful life is 10 years and estimated residual value is $5,000. Assume Horizon Communications purchased the equipment on January 1, 2010. If Horizon uses the double-declining-balance method, what is the depreciation for 2011?
- A.
  
  $9,000
- B.
  
  $6,400
- C.
  
  $16,200
- D.
  
  $7,200
19.

On July 1, 2010, Horizon Communications purchased a new piece of equipment that cost $45,000. The estimated useful life is 10 years and estimated residual value is $5,000. Return to Horizon's original purchase date of July 1 ,2010. Assume that Horizon uses the straight-line method of depreciation and sells the equipment for $36,500 on July 1, 2014. The result of the sale of the equipment is a gain (loss) of
- A.
  
  ($3,500)
- B.
  
  $7,500
- C.
  
  $2,500
- D.
  
  $0
20.

A company bought a new machine for $24,000 on January 1. The machine is expected to last five years and have a residual value of $4,000. If the company uses the double-declining-balance method, accumulated depreciation at the end of year 2 will be:
- A.
  
  $12,800
- B.
  
  $15,360
- C.
  
  $19,200
- D.
  
  $16,000
21.

Which of the following is not a capital expenditure?
- A.
  
  The addition of a building wing
- B.
  
  A tune-up of a company vehicle
- C.
  
  A complete overhaul of an air-conditioner system
- D.
  
  Replacement of an old motor with a new one in a piece of equipment
- E.
  
  The cost of installing a piece of equipment
22.

Which of the following assets is not subject to a decreasing book value through depreciation, depletion, or amortization?
- A.
  
  Land Improvements
- B.
  
  Goodwill
- C.
  
  Intangibles
- D.
  
  Natural Resources
23.

Why would a business select an accelerated method of depreciation for tax purposes?
- A.
  
  MACRS depreciation follows a specific pattern of depreciation.
- B.
  
  Accelerated depreciation generates higher depreciation expense immediately, and therefore lowers tax payments in the early years of the assets life.
- C.
  
  Accelerated depreciation is easier to calculate because salvage value is ignored.
- D.
  
  Accelerated depreciation generates a greater amount of depreciation over the life of the asset than does straight-line depreciation.
24.

A company purchased an oil well for $270,000. It estimates that the well contains 90,000 barrels, has an eight-year life, and no salvage value. If the company extracts and sells 10,000 barrels of oil in the first year, how much depletion expense should be recorded?
- A.
  
  $33,750
- B.
  
  $135,000
- C.
  
  $27,000
- D.
  
  30,000
25.

Which item among the following is not an intangible asset?
- A.
  
  A copyright
- B.
  
  A patent
- C.
  
  A trademark
- D.
  
  Goodwill
- E.
  
  All of the above are intangible assets