Chapter 9 Quiz\t\t\t\t\t\t\t\t\tQuestion 1\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.\t\t\t\t\t\t\t\t\tQuestion 2\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe 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.\t\t\t\t\t\t\t\t\tQuestion 3\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.\t\t\t\t\t\t\t\t\tQuestion 4\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe cash debt coverage ratio indicates a company’s ability to repay its liabilities from cash generated from operations.\t\t\t\t\t\t\t\t\tQuestion 5\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe 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.\t\t\t\t\t\t\t\t\tQuestion 6\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe statement of cash flows\t\t\t\t\t\t\t\t\tQuestion 7\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tGenerally, the most important category on the statement of cash flows is cash flows from\t\t\t\t\t\t\t\t\tQuestion 8\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tAssume 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.\t\t\t\t\t\t\t\t\tQuestion 9 \t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tWhich of the following transactions does not affect cash during a period?\t\t\t\t\t\t\t\t\tQuestion 10\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tZoum Corporation had the following transactions during 2014:\t\t\t\t\t\t\t\t\t\t1 – Issued $125,000 of par value common stock for cash.\t\t\t\t\t2 – Recorded and paid wages expense of $60,000.\t\t\t\t\t3 – Acquired land by issuing common stock of par value $50,000.\t\t\t\t\t4 – Declared and paid a cash dividend of $10,000.\t\t\t\t\t5 – Sold a long-term investment (cost $3,000) for cash of $3,000.\t\t\t\t\t6 – Recorded cash sales of $400,000.\t\t\t\t\t7 – Bought inventory for cash of $160,000.\t\t\t\t\t8 – Acquired an investment in Zynga stock for cash of $21,000.\t\t\t\t\t9 – Converted bonds payable to common stock in the amount of $500,000.\t\t\t\t\t10 – Repaid a 6 year note payable in the amount of $220,000.\t\t\t\t\t\t\t\t\t\tWhat is the net cash provided by financing activities?\t\t\t\t\t\t\t\t\tQuestion 11\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tIn order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under\t\t\t\t\t\t\t\t\tQuestion 12\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe information to prepare the statement of cash flows comes from all of the following sources except\t\t\t\t\t\t\t\t\tQuestion 13\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tPeninsula 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\t\t\t\t\t\t\t\t\tQuestion 14\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tIn calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)\t\t\t\t\t\t\t\t\tQuestion 15\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe 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?\t\t\t\t\t\t\t\t\tQuestion 16\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tThe statement of cash flows will not provide insight into\t\t\t\t\t\t\t\t\tQuestion 17 \t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tLaser Performance Inc. has the following information available (amount in thousands).\t\t\t\t\tNet Income \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0 \ufffd$30,000\t\t\t\t\tAverage Total Liabilities \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0 80,000\t\t\t\t\tAverage Current Liabilities \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 36,000\t\t\t\t\tCash Provided by Operations \ufffd \ufffd \ufffd \ufffd \ufffd 48,000\t\t\t\t\tCash Sales \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0130,000\t\t\t\t\tCapital Expenditures \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0 22,000\t\t\t\t\tDividends Paid \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd 6,000\t\t\t\t\t\u00a0\t\t\t\t\tWhat is the current cash debt coverage?\t\t\t\t\t\t\t\t\tQuestion 18\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tAuthentic Exposure Company had the following transactions that took place during the year:\t\t\t\t\tI.\u00a0\u00a0\u00a0 Paid amount owing to suppliers $2,750.\t\t\t\t\tII.\u00a0\u00a0 Purchased new equipment for $5,000 by signing a long-term note payable.\t\t\t\t\tIII.\u00a0 Purchased a patent and paid $15,000 cash for the asset.\t\t\t\t\t\u00a0\t\t\t\t\tHow what is the total effect of these transactions on Free Cash Flow, Current Cash Debt Coverage, and Cash Debt Coverage respectively?\t\t\t\t\t \ufffd \ufffd Free \ufffd \ufffd \ufffd \ufffd \ufffd Current Cash Debt \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0 Cash Debt\t\t\t\t\t \ufffd\u00a0 Cash Flow \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 Coverage \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0 Coverage \t\t\t\t\t\t\t\t\tQuestion 19 \t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tAll of the following statements are true regarding cash flow presentations except\t\t\t\t\t\t\t\t\tQuestion 20\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\tFor 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.<\/p>\n","protected":false},"excerpt":{"rendered":"
Chapter 9 Quiz Question 1 \u00a0 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 \u00a0 The activity from the balance sheet to Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-200207","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/200207","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=200207"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/200207\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=200207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=200207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=200207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}