Chapter 12

Question 1

When current assets increase on balance sheets what happens on cash flow?

Answer 1

Decrease from Net Income

Question 2

When current assets decrease on balance sheets what effect does it have on cash flow?

Answer 2

Increases the net income

Question 3

When current liabilities increase on balance sheets what does it do on cash flow?

Answer 3

It increases net income

Question 4

When current liabilities decrease on balance sheets what happens to cash flows?

Answer 4

It decreases net income

Question 5

activity: from cash sales to customers

Answer 5

Operating, cash inflow

Question 6

activity: from collections on credit sales

Answer 6

operating, cash inflow

Question 7

activity: from receipt of dividend revenue

Answer 7

operating, cash inflow

Question 8

activity: from receipt of interest revenue

Answer 8

operating, cash inflow

Question 9

activity: to pay operating expenses

Answer 9

operating, cash outflow

Question 10

activity: to pay salaries and wages

Answer 10

operating, cash outflow

Question 11

activity: to pay taxes and fines

Answer 11

operating, cash outflow

Question 12

activity: to pay interest owed

Answer 12

operating, cash outflow

Question 13

activity: to pay suppliers for goods and services

Answer 13

operating, cash outflow

Question 14

activity: from selling intangible assets

Answer 14

investing, cash inflow

Question 15

activity: from selling PPE

Answer 15

investing, cash inflow

Question 16

activity: from selling long-term investments

Answer 16

investing, cash inflow

Question 17

activity: from selling short-term investments

Answer 17

investing, cash inflow

Question 18

activity: from collecting principal on notes receivable

Answer 18

investing, cash inflows

Question 19

activity: from selling (discounting) of notes receivable

Answer 19

investing, cash inflows

Question 20

activity: to buy intangible assets

Answer 20

investing, cash outflows

Question 21

activity: to loan money in return for notes receivable

Answer 21

investing, cash outflow

Question 22

activity: to buy PPE

Answer 22

investing, cash outflow

Question 23

activity: to buy short-term investments

Answer 23

investing, cash outflow

Question 24

activity: to buy long-term investments

Answer 24

investing, cash outflow

Question 25

activity: from issuing its common and preferred stock

Answer 25

financing, cash inflow

Question 26

activity: from reissuing its treasury stock

Answer 26

financing, cash inflow

Question 27

activity: from issuing its short and long term debt (notes payable and bonds payable)

Answer 27

financing, cash inflow

Question 28

activity: from contributions by owners

Answer 28

financing, cash inflow

Question 29

activity: to pay dividends to shareholders

Answer 29

financing, cash outflow

Question 30

activity: to pay withdrawals by owners

Answer 30

financing, cash outflow

Question 31

activity: to pay off its short and long term (NP and BP)

Answer 31

financing, cash outflow

Question 32

activity: to purchase treasury stock

Answer 32

financing, cash outflow

Question 33

Increase in accounts receivable

Answer 33

decrease in operating activities

Question 34

increase in inventory

Answer 34

decrease in operating

Question 35

decrease in investments

Answer 35

Counted as a sale of investments so put as increase under Investing activities (also might be a different amount under notes)

Question 36

The building account was completely emptied and note says flood destructed it but insurance covered it and gave them proceeds of 32,000

Answer 36

proceeds from damage are an increase under investing, and the gain from flood damage is a decrease under operating

Question 37

Accounts receivable is under

Answer 37

Operating

Question 38

accounts payable is under

Answer 38

operating

Question 39

inventory is under

Answer 39

operating

Question 40

depreciation and amortization is under

Answer 40

noncash operating

Question 41

net income is

Answer 41

at the top of cash flows

Question 42

salaries expense, rent expense, utilities expense, and income taxes is under

Answer 42

operating

Question 43

purchase of PPE (machinery, computers and office equipment, company vehicles, buildings, land, furniture) is under

Answer 43

Investing

Question 44

Proceeds from the sale of long-term assets

Answer 44

Investing

Question 45

purchases of other companies' securities

Answer 45

investing

Question 46

sale of securities

Answer 46

investing

Question 47

Issuing stock is under

Answer 47

Financing

Question 48

Issuing Debt (cash inflows from taking out loans, payables/notes) is under

Answer 48

Financing

Question 49

Repaying Debt (paying back loans) is under

Answer 49

Financing

Question 50

Stock repurchases (treasury stock) is under

Answer 50

Financing

Question 51

payment of dividends under

Answer 51

financing