1. Bonds payable issued in exchange for building and equipment would be reported

Question

1. Bonds payable issued in exchange for building and equipment would be reported in the statement of cash flows in:

       the cash flows from financing activities section
       the cash flows from investing activities section
       a separate schedule
       the cash flows from oeprating activities section

2. The net income reported on the income statement for the current year was $90,000. Depreciation recorded on fixed assets and amortization of bond discount for the year were $12,000 and $3,000, respectively. What is the amount of cash flows from operating activities that would appear on the statement of cash flows prepared by the indirect method?      

   $90,000
       $93,000
       $75,000
       $105,000

3. Accounts receivable arising from trade transactions amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activies to be reported on the statement of cash flows prepared by the indirect method is:        $120,000
       $125,000
       $115,000
       $155,000

       all cash in the bank
       cash from operations
       cash from financing, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends.
       cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends

4. The net income reported on the income statement for the current year was $200,000. Depreciation recorded on fixed assets and amortization of patents for the year were $30,000 and $8,000, respectively. Balances of current asset and curent liability accounts at the end and at the beginning of the year are as follows:

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

       $180,000
       $200,000
       $238,000
       $218,000

Explanation / Answer

Answers:

1.   the cash flows from financing activities section

2. $105,000 (90000 + 12000 + 3000)

3. $115,000 (120000 - 40000 + 35000)

5. $37,500

6. purchase of treasury stock

7. $85,000 (25000 + 80000 - 20000 = 85000)

8. $60,000

9. $630,000

10. Free cash flow is: cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends

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