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All of the following would appear on a direct method statement of cash flows EXCEPT:


A) cash purchase of equipment.
B) net income.
C) cash payments for interest and taxes.
D) cash receipts from customers.

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

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Phoenix Rising Corporation sold an unused building for $177,000. The building's book value on the date of sale was $172,000. How will this transaction appear in a statement of cash flows prepared using the indirect method?


A) A $172,000 increase in investing activities and $5,000 increase in operating activities
B) A $177,000 increase in investing activities and $5,000 increase in operating activities
C) A $177,000 increase in investing activities and $5,000 decrease in operating activities
D) A $172,000 increase in investing activities and $5,000 decrease in operating activities

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

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Under the indirect method of preparing a statement of cash flows, cash disbursed for the acquisition of a plant asset is:


A) subtracted in the operating activities section.
B) subtracted in the investing activities section.
C) added in the investing activities section.
D) added in the financing activities section.

E) B) and C)
F) A) and B)

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Under the indirect method, an increase in a current asset other than cash indicates a decrease in cash.

A) True
B) False

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On a statement of cash flows prepared using the indirect method, an increase in Accounts Receivable during the period is:


A) added to net income to determine net cash provided by investing activities.
B) deducted from net income to determine net cash provided by investing activities.
C) deducted from net income to determine net cash provided by operating activities.
D) added to net income to determine net cash provided by operating activities.

E) A) and B)
F) A) and C)

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Under the indirect method, depletion expense must be added back to net income under the operating activities.

A) True
B) False

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The receipt of interest on loans would be reported on a statement of cash flows under:


A) the financing activities.
B) the investing activities.
C) the operating activities.
D) none of these categories, because interest received on loans would not be reported on a Statement of cash flows.

E) A) and B)
F) A) and C)

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Which statement regarding the statement of cash flows is TRUE?


A) The indirect method is preferred by FASB and is used by most companies.
B) The direct method is preferred by FASB; the indirect method is used by most companies.
C) The direct method is preferred by FASB and is used by most companies.
D) The indirect method is preferred by FASB; the direct method is used by most companies.

E) All of the above
F) A) and B)

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The change in cash is the "check figure" for the statement of cash flows.

A) True
B) False

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Under the direct method of preparing the statement of cash flows, cash payments from operating activities do NOT include:


A) payment of dividends.
B) payments to suppliers.
C) payments to employees.
D) payments of income tax.

E) None of the above
F) All of the above

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Under the indirect method of preparing the financing section of the statement of cash flows, net cash provided by financing activities is $63,700. If the direct method of preparing the financing section of the statement of cash flows was used:


A) cash provided by financing activities would be more than $63,700.
B) cash provided by financing activities would be less than $63,700.
C) cash provided by financing activities would be the same, $63,700.
D) cannot be determined from the facts given.

E) A) and B)
F) A) and C)

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A statement of cash flows:


A) is typically prepared at the request of major creditors.
B) may be combined with the balance sheet.
C) may be combined with the income statement at the option of management.
D) is a basic financial statement required for publicly-held companies.

E) A) and B)
F) A) and C)

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The statement of cash flows provides the answer as to why a company's cash increased or decreased.

A) True
B) False

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The following data is provided for last year. Net income was $210,000. Current receivables and prepaid expenses increased by $10,000 and $2,000, respectively. Current payables decreased by $8,000. Under the indirect method, the cash flows from operating activities would be:


A) $190,000.
B) $206,000.
C) $230,000.
D) $214,000.

E) A) and B)
F) All of the above

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Which statement is TRUE regarding the direct method of preparing the statement of cash flows?


A) Depreciation is a cash payment under operating activities.
B) Sales on credit is listed under cash receipts in the operating section.
C) Collections from customers are the cash receipts listed in the operating section.
D) Proceeds from the issuance of long-term debt is listed as a cash receipt in the operating section.

E) All of the above
F) B) and D)

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Naraval Corporation sold used equipment with a book value of $31,000 for $27,000. The indirect method statement of cash flows will reflect:


A) an addition of $27,000 in the investing activities section and an addition of $4,000 in the operating activities section.
B) an addition of $27,000 in the investing activities section and a deduction of $4,000 in the operating activities section.
C) an addition of $31,000 in the investing activities section and an addition of $4,000 in the operating activities section.
D) an addition of $31,000 in the investing activities section and a deduction of $4,000 in the operating activities section.

E) None of the above
F) All of the above

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Tryout Corporation's balance in its land account, which represented one piece of land, was $100,000. During the year, the piece of land was sold for $165,000. The amount reported in the operating activities section of the statement of cash flows, using the indirect method, would be a(n) :


A) $100,000 increase to net income.
B) $165,000 decrease to net income.
C) $ 65,000 increase to net income.
D) $ 65,000 decrease to net income.

E) B) and C)
F) C) and D)

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Which of the following would be reported on a statement of cash flows as an investing activity?


A) Purchase of treasury stock
B) Sale of equipment for cash
C) Depreciation expense
D) All of the above

E) A) and C)
F) B) and C)

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Noncash investing and financing activities are disclosed in a separate schedule that accompanies the statement of cash flows.

A) True
B) False

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Under the direct method, cash receipts from dividend revenue affect both the statement of cash flows and the income statement.

A) True
B) False

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