31 magnum company reports 2007 net income of 20 000 depreciation expense of 3 000 an 4352164

31.Magnum Company reports 2007 net income of $20,000; depreciation expense of $3,000; an increase in accounts receivable during the year of $1,600; and $1,000 of interest earned but not received. Based on this information, net cash flow from operations in 2007 is

a.$18,600

b.$19,400

c.$20,400

d.$22,600

32.Given the following information for the last fiscal year

1.  Accounts receivable increased by $12,000

2.  Net income was $24,000

3.  Wages payable decreased by $8,000

4.  Amortization expense was $4,000

5.  Prepaid expense decreased by $10,000

Determine net cash flow from operating activities.

a.$(2,000)

b.$18,000

c.$28,000

d.$30,000

e.$38,000

33.Dairy Delights reported the following information for its most recent fiscal year. Accounts payable increased $3,900; inventory decreased $2,700; net income was $6,600; and depreciation expense was $1,500. On the statement of cash flows, net cash flow from operating activities should be reported as

a.$1,500

b.$6,900

c.$9,300

d.$14,700

34.Which of the following is a TRUE statement regarding the operating activities section of the statement of cash flows when the indirect format is used?

a.it explains the relationship between cash flows for a period and the results of operations reported on the income statement

b.it is designed to report to the reader what events caused cash to increase during the period and what events caused cash to decrease during the period

c.it results in a slightly higher amount of cash from operations being reported because depreciation expense is included

d.it is easier to understand and interpret correctly than when it is prepared using the direct method

35.Nearly all major corporations use which format for reporting the statement of cash flows?

a.accrual basis

b.reconciliation

c.indirect

d.direct

36.The indirect format of the cash flow statement reconciles

a.assets to liabilities and owners' equity

b.accrual basis net income to cash from operations

c.accrual basis net income to change in cash balance

d.sales revenues to accrual basis net income

37.Which of the following has a different effect on net income than it does on cash flow?

a.payment for wages

b.cash sale to customer

c.amortization of a patent

d.payment of office rent

38.Which of the following is subtracted from net income to arrive at cash from operations?

a.depreciation

b.an increase in wages payable

c.an increase in prepaid rent

d.a decrease in accounts receivable

39.Which of the following combinations represents adjustments that are made to net income to arrive at cash from operations?

Increases in current assets        Increases in current liabilities

a.deducted from net income     added to net income

b.deducted from net income     deducted from net income

c.added to net income              added to net income

d.added to net income              deducted from net income

40.Which of the following sections of the cash flow statement differs between the direct and indirect formats?

a.financing

b.banking

c.investing

d.operating

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