FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Statement of Cash Flows

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Marquette Décor is a merchandiser that operates a small retail store. Comparative balance sheets for the years ending December 31, 2014 and 2013 and its income statement for 2014 follow: $\begin{array}{lrr}&\text { December } 31\\\text { Assets }&2014&2013\\\text { Cash } & \$ 35,400 & \$ 45,300 \\\text { Accounts receivable } & 11,400 & 14,500 \\\text { Merchandise inventories } & 36,500 & 34,100 \\\text { Equipment } & 90,000 & 66,000 \\\text { Accumulated depreciation } & (28,600) & (31,400) \\\text { Total assets } & \$ 144,700 & \$ 128,500\\\\\text { Liabilities and Stockholders'Equity }\\\text { Accounts payable } & \$ 14,300 & \$ 12,500 \\\text { Income taxes payable } & 4,500 & 8,800 \\\text { Long-term notes payable } & 16,500 & 23,000 \\\text { Common stock, \$2 par } & 88,200 & 65,300 \\\text { Retained earnings } & 21,200 & 18,900 \\\text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500\\\\\text { Sales } & \$ 224,000 \\\text { Cost of goods sold } & 123,000 \\\text { Depreciation expense } & 14,000 \\\text { Other expenses } & 56,000 \\\text { Gain on sale of equipment } & 3,400 \\\text { Income taxes } & 16,000 \\\text { Net income } & \$ 18,400\end{array}$ During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600. Dividends were declared and paid during the year. How much cash was paid for income taxes during 2014?

A) $20,300
B) $11,700
C) $30,300
D) $16,000

E) B) and C)
F) None of the above

Correct Answer

verified

Show Answer

Question 62

True/False

Review LaterAdd Note

Review Later

Financial statement users focus a great deal of attention on cash flows related to operating activities, because, over the long run, a business must generate positive cash flows from its profit-oriented activities to be successful.

A) True
B) False

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

How is cash paid for interest on a mortgage classified on a statement of cash flows?

How is cash received from using a line of credit reported on the statement of cash flows?

Marquette Décor is a merchandiser that operates a small retail store. Comparative balance sheets for the years ending December 31, 2014 and 2013 and its income statement for 2014 follow: $\begin{array}{lrr}&\text { December } 31\\\text { Assets }&2014&2013\\\text { Cash } & \$ 35,400 & \$ 45,300 \\\text { Accounts receivable } & 11,400 & 14,500 \\\text { Merchandise inventories } & 36,500 & 34,100 \\\text { Equipment } & 90,000 & 66,000 \\\text { Accumulated depreciation } & (28,600) & (31,400) \\\text { Total assets } & \$ 144,700 & \$ 128,500\\\\\text { Liabilities and Stockholders'Equity }\\\text { Accounts payable } & \$ 14,300 & \$ 12,500 \\\text { Income taxes payable } & 4,500 & 8,800 \\\text { Long-term notes payable } & 16,500 & 23,000 \\\text { Common stock, \$2 par } & 88,200 & 65,300 \\\text { Retained earnings } & 21,200 & 18,900 \\\text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500\\\\\text { Sales } & \$ 224,000 \\\text { Cost of goods sold } & 123,000 \\\text { Depreciation expense } & 14,000 \\\text { Other expenses } & 56,000 \\\text { Gain on sale of equipment } & 3,400 \\\text { Income taxes } & 16,000 \\\text { Net income } & \$ 18,400\end{array}$ During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600. Dividends were declared and paid during the year. How much is the net increase or decrease in cash and cash equivalents during 2014?

Limon Grill's balance in retained earnings was $87,000 at the beginning of the year and $92,000 at the end of the year. If the company declared and paid dividends of $26,000 during the year, how much was net income/(loss) for the year?

Financing activities are presented as the first classification on a statement of cash flows because a company must first obtain financing when it begins operations before it can acquire assets to start operations.

Which of the following is reported as an operating activity on the statement of cash flows?

Under the indirect method of preparing the statement of cash flows, a loss on the sale of equipment is added to net income in the investing activities section.

Increases in receivables and prepaid expenses are added to net income to determine cash provided/(used) by operating activities when using the indirect method.

What primary information is provided in the statement of cash flows?

First National Eatery prepares its statement of cash flows using the indirect method. The statement reported that cash provided by operating activities for the year was $7,000. If the company experienced a $14,000 decrease in accounts receivable, a $13,000 decrease in accounts payable, and a $4,000 increase in inventory during the year, how much is the company's net income/(loss) for the year?

Cost of goods sold less any increase in accounts payable equals cash paid for inventory.