11) When comparing net cash provided by operating activities using the indirect versus direct method:

A) net cash is higher using the indirect method

B) net cash is lower using indirect method

C) there is no difference between the two methods

D) depreciation expense is used in the direct method.

 

12) Rick Corporation’s Accounts Receivable decreased by $25,000 during the year. What is the adjustment to the cash flow statement when it is prepared by the indirect method?

A) Subtract the decrease from the net income in operating activities.

B) Add the decrease to the net income in operating activities.

C) Add the decrease in the investing activities section.

D) Subtract the decrease in the financing activities.

 

13) Collins Corporation reported net income of $35,000; depreciation expenses of $20,000; an increase in Accounts Payable of $2,000; and an increase in Accounts Receivable of $3,000. Net cash flow from operating activities using the indirect method is:

A) $55,000.

B) $54,000.

C) $50,000.

D) $56,000.

 

14) Smith Corporation reported net income of $54,000, depreciation expenses of $10,000, an increase in Accounts Payable of $3,000 and an increase in Accounts Receivable of $1,500. Under the indirect method, net cash flow from operating activities is:

A) $62,500.

B) $59,500.

C) $48,500.

D) $65,500.

15) Trundle Corporation reported net income of $40,000; depreciation expense of $1,000; sales of additional common shares of $25,000; and a decrease in Accounts Payable of $8,000. Net cash flow from operating activities using the indirect method is:

A) $41,000.

B) $32,000.

C) $33,000.

D) $58,000.

 

16) Big Toy Corporation’s records show profit of $30,000; depreciation expense of $10,000; and cash dividends declared and paid of $5,000. The amount of cash used in operating activities using the indirect method is:

A) $40,000.

B) $30,000.

C) $20,000.

D) $10,000.

 

17) Carmen’s Candies’ Net Income was $40,000. Other accounts that changed included: Accounts Receivable decreased by $30,000; Merchandise Inventory increased by $20,000; Accounts Payable decreased by $4,000; and Salaries Payable increased by $1,000. The amount of Net Cash Flow from Operating Activities using the indirect method is:

A) $33,000.

B) $47,000.

C) $53,000.

D) $61,000.

 

18) Fidelity Furniture’s Net Income was $25,000. Other accounts that changed included: Accounts Receivable decreased by $18,000; Merchandise Inventory increased by $7,000; Accounts Payable increased by $4,000; and Salaries Payable decreased by $3,000. The amount of Net Cash Flow from Operating Activities using the indirect method is:

A) $57,000.

B) $43,000.

C) $37,000.

D) $15,000.

19) Which of the following items would be added to Net Income to compute Net Cash Flow from Operating Activities under the indirect method?

A) A decrease in Merchandise Inventory

B) A decrease in Accrued Payables

C) A decrease in Accounts Payable

D) An increase in Prepaid Insurance

 

20) The records of Ashley Boutique showed Net Loss, $30,000; Depreciation Expense, $25,000; and increase in Supplies on Hand, $5,000. The amount of Net Cash Flow from Operating Activities using the indirect method is:

A) $15,000.

B) $20,000.

C) ($10,000).

D) ($15,000).

 

 

 



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