31) Which statement about the statement of cash flows is FALSE?
A) The statement of cash flows is based on information from several financial statements.
B) The statement of cash flows is based on information in a company's balance sheet only.
C) The change in the Cash account on the comparative balance sheets is the check figure for the statement of cash flows.
D) The indirect method of preparing the statement of cash flows is used by most companies in the United States.
32) On a statement of cash flows prepared with the indirect method, adjustments to reconcile net income to net cash provided by operating activities do NOT include:
A) gain on Sale of Equipment.
B) Patent Amortization Expense.
C) Depletion Expense.
D) changes in all the current assets.
33) On a statement of cash flows prepared with the indirect method, financing activities do NOT include:
A) payment of principal amounts of long-term debt.
B) payment of interest on long-term debt.
C) payment of dividends.
D) sale of treasury stock.
34) On a statement of cash flows prepared with the indirect method, investing activities do NOT include:
A) sale of investments that are not cash equivalents.
B) receipt of interest on investments.
C) collection of note receivable.
D) lending money to an employee.
35) A company is adjusting net income to determine Net Cash Provided by Operating Activities for the statement of cash flows. The indirect method is used. Which statement is FALSE?
A) An increase in a noncash current asset is subtracted from net income.
B) A decrease in a noncash current asset is added to net income.
C) A decrease in a current liability is added to net income.
D) An increase in a current liability is added to net income.
36) Why is depreciation expense added to net income when reconciling net income to net cash provided by operating activities?
A) Because depreciation expense represents a cash inflow
B) Because depreciation expense is a tax deduction that reduces the payment of taxes
C) Because depreciation expense conserves cash outflows for taxes
D) Because depreciation expense reduces net income but it has no effect on cash, so we add depreciation expense to net income to cancel the deduction
37) On January 1, 2015, plant assets, net are $200,000. On December 31, 2015, plant assets, net are $300,000. Depreciation expense for the year is $20,000. During the year, plant assets were acquired for $150,000 with cash. There is a Gain on Sale of Plant Asset of $10,000. What is the book value of the plant asset sold during the year?
A) $0
B) $20,000
C) $30,000
D) $50,000
38) On January 1, 2015, plant assets, net are $200,000. On December 31, 2015, plant assets, net are $300,000. Depreciation expense for the year is $20,000. During the year, plant assets were acquired for $150,000 with cash. There is a Gain on Sale of Plant Asset of $10,000. What are the cash proceeds from the sale of the plant asset?
A) $0
B) $20,000
C) $30,000
D) $40,000
39) On January 1, 2015, plant assets, net are $200,000 and on December 31, 2015, plant assets, net are $320,000. Depreciation expense for the year is $100,000. No plant assets were sold or exchanged during the year. What is the cost of the plant assets acquired during the year?
A) $0
B) $100,000
C) $120,000
D) $220,000
40) On January 1, 2015, Notes Receivable have a balance of $10,000. On December 31, 2015, Notes Receivable have a balance of $90,000. No collections on notes receivable occurred in 2015. What amount of new notes were written in 2015?
A) $10,000
B) $80,000
C) $90,000
D) $100,000