Statement of Cash Flows Quiz

The statement of cash flows should help investors and creditors assess each of the following except the

• entity's ability to generate future income.

• entity's ability to pay dividends.

• reasons for the difference between net income and net cash provided by operating activities.

• cash investing and financing transactions during the period.

The statement of cash flows

• must be prepared on a daily basis.

• summarizes the operating, financing, and investing activities of an entity.

• is another name for the income statement.

• is a special section of the income statement.

Which one of the following items is not generally used in preparing a statement of cash flows?

• Adjusted trial balance

• Comparative balance sheets

• Current income statement

• Additional information

The primary purpose of the statement of cash flows is to

• provide information about the investing and financing activities during a period.

• prove that revenues exceed expenses if there is a net income.

• provide information about the cash receipts and cash payments during a period.

• facilitate banking relationships.

In converting net income to net cash provided by operating activities, under the indirect method:

• decreases in accounts receivable and increases in prepaid expenses are added.

• decreases in inventory and increases in accrued liabilities are added.

• decreases in accounts payable and decreases in inventory are deducted.

• increases in accounts receivable and increases in accrued liabilities are deducted.

Accounts receivable arising from sales to customers amounted to $86,000 and $77,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $290,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

• $290,000.

• $299,000.

• $213,000.

• $280,000.

Accounts receivable arising from sales to customers amounted to $40,000 and $55,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $180,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

• $180,000.

• $195,000.

• $220,000.

• $165,000.

Bush Company reported net income of $60,000 for the year. During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is

• $48,000.

• $77,000.

• $59,000.

• $55,000.

Adama Company reported a net loss of $6,000 for the year ended December 31, 2020. During the year, accounts receivable increased $15,000, merchandise inventory decreased $12,000, accounts payable decreased by $20,000, and depreciation expense of $12,000 was recorded. During 2020, operating activities

• used net cash of $17,000.

• used net cash of $29,000.

• provided net cash of $24,000.

• provided net cash of $21,000.

The net income reported on the income statement for the current year was $220,000. Depreciation recorded on plant assets was $35,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $12,000 respectively. How much cash was provided by operating activities?

• $200,000

• $235,000

• $220,000

• $255,000