Chapter 13 - Cash Flows

An asset with an original cost of $60,000 and accumulated depreciation of $15,000 was sold at a gain of $5,000. What is the amount of cash received?

• $50,000

• $45,000

• $55,000

• $65,000

A piece of equipment with a book value of $40,000 is sold for $50,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

• an increase of $40,000 from investing activities

• an increase of $50,000 from investing activities and a deduction from net income of $10,000

• an increase of $10,000 from investing activities

• an increase of $40,000 from investing activities and an addition to net income of $10,000

Which of the following would be classified under cash flows from investing activities on the statement of cash flows?

• proceeds from issuing bonds

• cash paid for purchasing equipment

• cash received from customers

• cash paid for interest on loans

Calculate the net cash flow from operating activities using the indirect method given the following information: Net income $200,000 Depreciation expense 35,000 Increase in inventory 18,000 Increase in accrued liabilities 12,000

• $229,000

• $265,000

• $229,000

• $247,000

Inventory was valued at $30,000 at the beginning of the year and $45,000 at the end of the year. The net income reported for the year was $120,000. Ignoring other adjustments, what is the cash flow from operating activities to be reported on the statement of cash flows using the indirect method?

• $120,000

• $135,000

• $105,000

• $150,000

When using the indirect method to calculate net cash flows from operating activities, which of the following should be subtracted from net income?

• an increase in accounts receivable

• a decrease in inventory

• an increase in accounts payable

• a decrease in accrued liabilities

Which of the following transactions would result in an increase in cash flow?

• payment of accounts payable

• purchase of equipment for cash

• issuing common stock for cash

• repayment of a bank loan

When using the indirect method to calculate net cash flows from operating activities, which of the following should be subtracted from net income?

• amortization expense

• gain on sale of equipment

• increase in accounts payable

• interest received

Which of the following is considered a financing activity?

• purchasing inventory

• paying dividends

• issuing equity

• selling goods

A business sells a piece of machinery for $15,000 cash. This transaction should be recorded on the statement of cash flows under:

• investing activities

• financing activities

• noncash investing and financing activities

• operating activities