Question

1. In the statement of cash flows, in which section is the cash payment of salaries reported?

		A. Operating Activities
		B. Investing Activities
		C. Financing Activities
		D. Schedule of Noncash Transactions
		E. None of the above

2. Using the direct method, if the cash receipts from customers are 5,000,000 and the cash paid for merchandise is 3,000,000 and the net cash flow from operating activities using the indirect method is 1,500,000, what is the amount of cash paid for operating activities?

		A. 9,500,000
		B. 5,000,000
		C. 3,000,000
		D. 500,000
		E. None of the above

3. In the statement of cash flows, in which section is the cash payment of dividends reported?

		A. Operating Activities
		B. Investing Activities
		C. Financing Activities
		D. Schedule of Noncash Transactions
		E. None of the above

4. Which account does not have the normal balance?

		A. Bonds Payable balance 100,000 credit
		B. Cash balance 10,000 debit
		C. Discount on Bonds Payable balance 10000 credit
		D. Premium on Bonds Payable balance 10000 credit
		E. All of the accounts have a normal balance

5. In the statement of cash flows, in which section is the cash payment of income taxes reported?

		A. Operating Activities
		B. Investing Activities
		C. Financing Activities
		D. Schedule of Noncash Transactions
		E. None of the above

6. On March 31, 2020, if the balance in Bonds Payable is $3,000,000 and the balance in Unamortized Premium on Bonds Payable (Premium on Bonds Payable) is $100,000, what is the amount for the carrying value of the bonds at March 31, 2020?

		A. 3,100,000
		B. 3,000,000
		C. 2,900,000
		D. 100,000
		E. None of the above

7. STATEMENT OF CASH FLOW: For Company X, if the beginning inventory is 2,000,000 and the ending inventory is 3,000,000, what is the change in inventory from the beginning of the year until the end of the year?

		A. 3,000,000
		B. 2,000,000
		C. 1,000,000 increase
		D. 1,000,000 decrease
		E. None of the above

8. STATEMENT OF CASH FLOW: Company A has a net income of 1,000,000, depreciation of 500,000, a decrease in accounts receivable of 300,000, and an increase in accounts payable of 100,000. Using the indirect method, what is the amount for net cash flow from operating activities?

		A. 1,900,000
		B. 1,700,000
		C. 1,500,000
		D. 1,100,000
		E. None of the above

9. In which comparison between the market rate and the stated rate are the bonds issued at a discount?

		A. Market rate 10% Stated rate 10%
		B. Market rate 2% Stated rate 10%
		C. Market rate 8% Stated rate 2%
		D. None of the above

Answer 1

Q1. Cash payments for salaries is an operating cash flow item. it will record as cash outflow from operating activities.

So, answer will be: A. Operating Activities

Q2.

Cash received from customers	$   5,000,000
Less: cash paid for merchandise	$   3,000,000
Less:net cash flow from operating activities using the indirect method	$   1,500,000
cash paid for operating activities	$      500,000

Answer is D. $500,000

Q3. Dividend is a return on investment made to shareholders, who is financed funds to company as share capital. So payment for dividends will be financing activity

Answer is C. Financing Activities

Q4. Discount on bond payable is contra liability account. So it should have debit balance.

.Answer is: C. Discount on Bonds Payable balance 10000 credit

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