21.Bombay Imports reported a substantial net income for the most recent accounting period. Its net cash flows for the same period
a.must have been positive
b.must have been negative
c.could have been either positive or negative
d.cannot be measured
22.Red River Manufacturing reported a substantial net loss for the most recent accounting period. Its net cash flows for the same period
a.must have been negative
b.must have been positive
c.could have been either negative or positive
d.cannot be measured
23.When preparing the operating activities section of the statement of cash flows under the indirect method, which of the following is an addition to net income?
Amortization Increase in current
Expense asset accounts
a.Yes Yes
b.Yes No
c.No Yes
d.No No
24.Boomer’s Auto Sound Company reported 2007 sales of $640,000. The following information is also available:
Accounts Receivable Balances
Beginning of year $50,000
End of year 80,000
On a statement of cash flows (direct format) what amount would be reported for "cash collected from customers" for 2007?
a.$510,000
b.$670,000
c.$610,000
d.$720,000
25.Which of the following are permissible methods of presenting "Cash Flow from Operating Activities?"
Indirect Method Direct Method
a.Yes Yes
b.Yes No
c.No Yes
d.No No
26.Which financial statement reports the events that caused changes in a company's assets, liabilities, and owners equity?
a.income statement
b.statement of stockholders' equity
c.statement of cash flows
d.balance sheet
27.Under which format(s) of the statement of cash flows would you expect to find a line titled "Depreciation Expense?"
Direct Method Format Indirect Method Format
a.Yes Yes
b.Yes No
c.No Yes
d.No No
28.Under which format(s) of the statement of cash flows would you expect to find a line titled "Net Cash Flow from Operating Activities?"
Indirect Method Format Direct Method Format
a.Yes Yes
b.Yes No
c.No Yes
d.No No
29.Diversified Ventures reported the following information for fiscal year 2007. Determine cash flow from operations.
Net income$1,000,000
Net increase in current asset accounts300,000
Net decrease in current liability accounts120,000
Amortization expense80,000
Depreciation expense40,000
a.$700,000
b.$1,060,000
c.$1,180,000
d.$580,000
30.Sales for the year totaled $85,000 with $70,000 of it sold on account. Beginning accounts receivable was $9,000 while ending accounts receivable totaled $12,000. What amounts of revenue and cash flow will be reported for the period as a result of these facts?
Revenue Cash Flow
a.$70,000 $82,000
b.$85,000 $88,000
c.$70,000 $88,000
d.$85,000 $82,000