STATEMENT OF CASH FLOWS

1. Information about the sources and uses of an b. Cash receipts from sale of equity and debt instruments
enterprise cash and cash equivalents is provided on of other entities held primarily for the purpose of being
the: traded
a. Income statement c. Cash receipts from sale of equity instruments
b. Statement of changes in equity representing interests in joint ventures
c. Cash flow statement d. Cash payments to employees for short-term employee
d. Balance sheet benefits
2. “Cash flows” in the cash flow statement are 10.Which of the following is not part of the cash flows from
a. Inflows of cash and cash equivalents financing activities?
b. Outflows of cash and cash equivalents
a. Proceeds from sale of the company’s ordinary shares
c. Inflows and outflows of cash
b. Proceeds from issuing bonds, mortgages, and notes
d. Inflows and outflows of cash and cash
equivalents
3. Entities are encouraged to report cash flows from c. Proceeds from other short-term or long-term
operating activities using borrowings
a. The direct method, whereby major classes of d. Proceeds from sale of inventories
gross cash receipts and gross cash payments 11.Cash flows provided by (used in) investing activities include
are disclosed. the following, except
b. The indirect method, whereby profit or loss is a. Payments to or on behalf of employees
adjusted for the effects of transactions of a b. Purchase of equity instruments classified as available
non-cash nature, any deferrals or accruals of for sale
past or future operating cash receipts or c. Sale of plant and equipment
payments, and items of income or expense d. Principal collections from loans previously granted by
associated with investing or financing cash
the enterprise.
flows.
12.Company uses the direct method to prepare its statement
c. Either a or b
d. Neither a nor b of cash flows. The company had the following cash flows
4. Operating activities are during the current year
a. The principal revenue-producing activities of the Cash receipts from the issuance of
entity and other activities that are not investing ordinary shares 400,000
or financing activities Cash receipts from customers 200,000
b. The acquisition and disposal of long-term assets Cash receipts from dividends on long-term
and other investments not included in cash Investments 30,000
equivalents. Cash receipts from repayment of loan
c. Activities that result in changes in the size and made to another company 220,000
composition of the contributed equity and Cash payment for wages and other
borrowings of the entity. operating expenses 120,000
d. Original and planned investigation undertaken Cash payments for insurance 10,000
with the prospect of gaining new scientific or Cash payments for dividends 20,000
technical knowledge and understanding. Cash payments for taxes 40,000
5. Cash receipts from royalties, fees and commissions Cash payments to purchase land 80,000
and other revenue are The net cash provided by (used in) operating activities
a. Cash outflows for operating activities a. 60,000 c. 30,000
b. Cash inflows from operating activities b. 40,000 d. (20,000)
c. Cash inflows from investing activities 13.Word corporation is preparing its statement of cash flows
d. Cash outflows for financing activities and has provided this information:
6. In the statement of cash flows, receipts from sales of Net income before taxes 400,000
property, plant and equipment would be classified as Depreciation on Property, Plant and
cash inflows from Equipment 200,000
a. Liquidating activities c. investing activities Loss on sale of building 100,000
b. Operating activities. D. Financing activities Interest expense 150,000
7. Cash outflows for financing activities include all, except Interest payable, beginning of the year 100,000
a. Principal payments to creditors who have Interest payable, end of the year 50,000
extended long-term credit Income taxes paid 100,000
b. Interest payment on loans Accounts receivable, beginning of the year 500,000
c. Payments of dividends Accounts receivable, end of the year 850,000
d. Repayment of amounts borrowed on a short-term Inventory, Beginning 500,000
bank loan Inventory, end of the year 400,000
8. In preparing a statement of cash flows, sale of treasury Accounts payable, beginning of the year 200,000
stock at an amount greater than cost would be Accounts payable. End of the year 500,000
classified as a(n) The net cash provided by operating is
a. Transfer activity c. Investing activity a. 750,000 c. 600,000
b. Operating activity d. Financing activity b. 700,000 d. 500,000
9. Which of the following will not be classified under
operating activities in a cash flow statement?
a. Cash receipts from sale of goods or rendering of
services
14. Aklan Company reported net income of 10,000,000 18.The transaction of Tsape Company for the current year
for the current period. Changes occurred in several included the following:
balance sheet accounts during the period as Cash borrowed from bank for purchase
follows: Of land 6,000,000
Investment in shares, carried Purchase of land for cash 6,000,000
At equity 2,500,000 increase Sale of securities for cash 1,000,000
Premium on bonds payable 500,000 decrease Dividend declared (of which 2,000,000
Accumulated depreciation, Was paid during the year) 3,000,000
Caused by major repair 1,000,000 decrease Issuance of ordinary shares for cash 7,000,000
Deferred tax liability 400,000 increase Payment of bank loan including interest
In the current period statement of cash flows, the Of 500,000 3,500,000
cash provided by operating activities should be Increase in customers’ deposit 500,000
a. 7,400,000 c. 6,400,000
b. 9,400,000 d. 7,000,000 The current year statement of cash flows should report
15. Antique Corp. Reported net income of 420,000 for net cash provided by financing activities at
the current period. Changes occurred in several a. 8,000,000 c. 8,500,000
statement of financial position accounts as follows: b. 7,500,000 d. 7,000,000
Equipment 35,000 increase Use the following information for the next two questions.
Accumulated depreciation 56,000 increase Faye Company collected the following data for the current
Note payable 42,000 increase year:
Additional information: Gain on sale of equipment 60,000
 During the year, Antique sold equipment costing Proceeds from sale of equipment 100,000
35,000, with accumulated depreciation of Purchase of bond investment
16,800, for a gain of 7,000. (face value, 2,000,000) 1,800,000
 In December of the current year, Antique Amortization of bond discount 20,000
purchased equipment costing 70,000 with Dividend declared 450,000
28,000 cash and a 12% note payable of 42,000. Dividend paid 380,000
 Depreciation expense for the year was 72,800. Proceeds from sale of treasury shares
In Antiques current period statement of cash flows, (cost, 650,000) 750,000
net cash used in investing activities should be 19. What is the net cash provided by financing activities?
a. 2,800 c. 16,800 a. 200,000 c. 300,000
b. 30,800 d. 49,000 b. 270,000 d. 370,000
16. Capiz Company had the following activities during 20. What is the net cash used in investing activities?
the current period: a. 1,700,000 c. 1,880,000
 Acquired investment in ordinary shares b. 1,760,000 d. 1,940,000
classified as available for sale for 3,000,000
 Sold investment in trading securities for Use the following information for the next five questions.
4,500,000 when the carrying amount was The following is a list of the items to be included in the
3,800,000. preparation of the current year statement of cash flows for
 Acquired a 5,000,000 one year certificate of the Norhan Company
deposit from a bank. During the year, interest of a) Net income, 59,200
400,000 was received from the bank. b) Payment for purchase of building, 98,000
 Collected dividends of 800,000 in investments in c) Increase in accounts receivable, 7,400
equity securities. d) Proceeds from issuance of ordinary shares, 37,100
In the current period statement of cash flows, net cash e) Increase in accounts payable, 4,500
used in investing activities should be f) Proceeds from sale of land, 7,000
a. 8,000,000 c. 3,500,000 g) Depreciation expense, 12,600
b. 6,800,000 d. 3,000,000 h) Payment of dividends, 36,000
17. Warner Limited had the following cash flows during i) Gain on sale of land, 5,300
a reporting period: j) Decrease in inventory, 3,700
 Acquisition of subsidiary, net of cash flows k) Payment for purchase of long term investments,
250,000 9,600
 Dividends paid 65,000 l) Amortization of discount on bonds payable, 1,900
 Repayment of borrowings 90,000 m) Proceeds from issuance of note, 18,000
 Interest paid on borrowings 57,000 n) Increase in deferred taxes payable, 5,000
 Proceeds from sale of plant 215,000 o) Equipment acquired by finance lease, 19,500
What is the amount of the cash flows in relation to p) Decrease in salaries payable, 2,300
financing activities of Warner Limited for the reporting q) Beginning cash balance, 20,300
period? Compute the following
a. Net cash inflows 155,000 21.Cash provided by operating activities
b. Net cash inflow 212,000 a. 68,100 c. 74,900
c. Net cash outflow 155,000 b. 89,900 d. 71,900
d. Net cash outflow 212,000 22.Cash used in investing activities
a. 120,100 c. 100,600
b. 107,600 d. 9,600
3.Cash provided by financing activities
a. 19,100 c. 20,600
b. 38,600 d. 1,100
24. Net decrease in cash
a. 19,600 c. 13,400
b. 6,600 d. 9,600
25. Cash balance, ending
a. 13,700 c. 700
b. 10,700 d. 6,900
Use the following information for the next five
questions.
Debbie Company provided the following data:
2019 2018
Cash 350,000 150,000
Accounts Receivable net 840,000 580,000
Merchandise inventory 660,000 420,000
Prepaid expenses 50,000 100,000
Long-term investment 80,000 -
Proper, Plant & Equipment 1,130,000 600,000
Acc. Depreciation 110,000 50,000
Accounts payable 530,000 440,000
Accrued Expenses 140,000 130,000
Dividend payable 70,000 -
Note payable-Long Term 500,000 -
Share capital 1,200,000
900,000
Retained earnings 560,000 330,000
Net credit sales 6,400,000 4,000,000
Expenses 1,000,000 520,000
Net income 400,000 280,000

All accounts receivable and accounts payable relate to

trade merchandise. Accounts payable are recorded net
and always paid to take all of the discounts allowed.
The allowance for doubtful accounts at the end of 2019
was the same at the end of 2018. No receivables were
charged against the allowance during 2011.

The proceeds from the note payable were used to

finance a new store building. Share capital was sold to
provide additional working capital.

26. What is the amount of cash collection from

customers in 2019?
a. 5,560,000 c. 6,140,000
b. 5,580,000 d. 6,400,000
27. What is the amount of cash payments to
merchandise creditors in 2019?
a. 4,670,000 c. 5,000,000
b. 4,910,000 d. 5,150,000
28. What is the net cash provided by operating
activities?
a. 400,000 c. 200,000
b. 100,000 d. 110,000
29. What is the net cash provided by financing
activities?
a. 140,000 c. 500,000
b. 300,000 d. 700,000
30. What is the net cash used in investing activities?
a. 80,000 c. 610,000
b. 530,000 d. 660,000