Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 9MCQ
An increase in accounts receivable is deducted from net income to obtain operating
- a. cash collections increased due to increasing sales.
- b. cash collections from customers were less than the revenues reported.
- c. cash collections decreased due to declining sales.
- d. cash collections from customers were greater than the revenues reported.
- e. None of these.
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Students have asked these similar questions
Which of the following statement is true ?
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Answer choices :
I. Increase in collection of cash from customer will lead to decrease in days of payable outstanding .
II . Increase in credit sales of the company will lead to increase in days of payable outstanding .
III . Decrease in average accounts payable will cause decrease in accounts payable turnover ratio .
IV . All the above statements are false .
When the indirect method is used to determine net cash provided by (used in) operating activities, subtracting an increase in Accounts Receivable from net income eliminates the effect of recording revenue that:
A. Increased net income, but did not impact cash
B. Decreased net income, but did not impact cash
C. Increased net income and increased cash flow
D. Decreased net income and decreased cash flow
An increase in Accounts Receivables is :
 a
A negative item for calculating Operating Cash Flow
 b
Not included in the calculation of Operating Cash Flow.
 c
A capital expenditure.
 d
A positive item for calculating Operating Cash Flow
Chapter 14 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Of the three categories on the statement of cash...Ch. 14 - Prob. 4DQCh. 14 - Why is it better to report the noncash investing...Ch. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Explain how a company can report a loss and still...Ch. 14 - In computing the periods net operating cash flows,...Ch. 14 - Prob. 10DQ
Ch. 14 - In computing the periods net operating cash flows,...Ch. 14 - Explain the reasoning for including the payment of...Ch. 14 - What are the advantages in using worksheets when...Ch. 14 - Prob. 14DQCh. 14 - Cash inflows from operating activities come from...Ch. 14 - Prob. 2MCQCh. 14 - Prob. 3MCQCh. 14 - Sources of cash include a. profitable operations....Ch. 14 - Uses of cash include a. cash dividends. b. the...Ch. 14 - Prob. 6MCQCh. 14 - Prob. 7MCQCh. 14 - Which of the following adjustments to net income...Ch. 14 - An increase in accounts receivable is deducted...Ch. 14 - An increase in inventories is deducted from net...Ch. 14 - The gain on sale of equipment is deducted from net...Ch. 14 - Which of the following is an investing activity?...Ch. 14 - Which of the following is a financing activity? a....Ch. 14 - Prob. 14MCQCh. 14 - A worksheet approach to preparing the statement of...Ch. 14 - In a completed worksheet, a. the debit column...Ch. 14 - Prob. 17BEACh. 14 - Prob. 18BEACh. 14 - Prob. 19BEACh. 14 - Prob. 20BEACh. 14 - Swasey Company earned net income of 1,800,000 in...Ch. 14 - Prob. 22BEACh. 14 - Prob. 23BEACh. 14 - During 20X2, Norton Company had the following...Ch. 14 - Prob. 25BEBCh. 14 - Prob. 26BEBCh. 14 - Roberts Company provided the following partial...Ch. 14 - Prob. 28BEBCh. 14 - Prob. 29BEBCh. 14 - Prob. 30BEBCh. 14 - Prob. 31BEBCh. 14 - During 20X2, Evans Company had the following...Ch. 14 - Stillwater Designs is a private company and...Ch. 14 - Prob. 34ECh. 14 - Jarem Company showed 189,000 in prepaid rent on...Ch. 14 - During the year, Hepworth Company earned a net...Ch. 14 - During 20X1, Craig Company had the following...Ch. 14 - Tidwell Company experienced the following during...Ch. 14 - Prob. 39ECh. 14 - Oliver Company provided the following information...Ch. 14 - Prob. 41ECh. 14 - Prob. 42ECh. 14 - Prob. 43ECh. 14 - Solpoder Corporation has the following comparative...Ch. 14 - Solpoder Corporation has the following comparative...Ch. 14 - The following financial statements were provided...Ch. 14 - Prob. 47PCh. 14 - Prob. 48PCh. 14 - Booth Manufacturing has provided the following...Ch. 14 - The following balance sheets and income statement...Ch. 14 - The following balance sheets and income statement...Ch. 14 - Balance sheets for Brierwold Corporation follow:...Ch. 14 - Balance sheets for Brierwold Corporation follow:...Ch. 14 - Prob. 54PCh. 14 - Prob. 55PCh. 14 - The following balance sheets were taken from the...Ch. 14 - The following balance sheets were taken from the...Ch. 14 - The comparative balance sheets and income...
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- An increase in inventories is deducted from net income to arrive at operating cash flow because a. cash payments to customers were larger than the purchases made during the period. b. purchases are larger than the cost of goods sold by the amount that inventories increased. c. cash payments to customers were less than the purchases made during the period. d. purchases are less than the cost of goods sold by the amount that inventories increased. e. All of these.arrow_forwardWhy does a decrease in receivable turnover create the need for cash from operating activities? (4%)b. Why would ratios that include one balance sheet account and one income statement account such as receivable turnover or return on assets, be questionable if they came from quarterly or other interim financial reports?arrow_forwardWhich one of the following is a source of cash? A. decrease in accounts receivableB. decrease in accounts payable C. decrease in common stockD. increase in inventoryarrow_forward
- Which of the following is used in computing cash received from customers using the direct method? a.An increase in inventory b.A decrease in accounts receivable c.A decrease in inventory d.An increase in accounts payablearrow_forwardIf the ending balance in accounts payable increases from one period to the next, which of the following is true? Cash payments to suppliers exceeded current period purchases. Cash payments to suppliers were less than current period purchases. Â Cash receipts from customers exceeded cash payments to suppliers. Â Cash receipts from customers exceeded current period purchases.arrow_forwardWhich of the following adjustments would NOT be made to net income when computing cash from operating activities? a.add an increase in Accrued Interest Payable b.deduct the purchase of store equipment c.add the reduction in Accounts Receivable d.add the decrease in Merchandise Inventoryarrow_forward
- Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long? a.The company may need to borrow to acquire operating cash. b.The company should expand operations with its excess cash. c.Cash flows from operations may be higher than expected for the company's sales. d.The company may offer trade discounts to lengthen the collection period.arrow_forwardWhich of the following is a cash inflow? a. an increase in dividend payment b. a decrease in accrued liabilities c. a decrease in accounts receivable d. a decrease in accounts payablearrow_forwardEach of the following transactions will be shown as either an increase in cash or a decrease in cash on the Statement of Cash Flows. If not, the transaction will have no effect on cash. For each of the following transactions, determine whether it increases, decreases, or has no effect on cash.  Hint: Some items may not affect cash but are still shown as an adjustment to cash on the statement of cash flows. This question is asking how these items are shown on the statement.                                 Increase in Accounts receivable                                Net loss                                Purchase of land                                Depreciation Expense                                Decrease in interest payable                                Sale of equipment…arrow_forward
- If the balance in Prepaid Expenses increased during theyear, what action should be taken on the statement of cashflows when following the indirect method, and why?a. The change in the account balance should be subtractedfrom net income because the net increase in PrepaidExpenses did not impact net income but did reduce thecash balance.b. The change in the account balance should be added to netincome because the net increase in Prepaid Expenses didnot impact net income but did increase the cash balance.c. The net change in Prepaid Expenses should be subtractedfrom net income to reverse the income statement effectthat had no impact on cash.d. The net change in Prepaid Expenses should be added tonet income to reverse the income statement effect thathad no impact on cash.arrow_forwardThese are the selected anaswer provide to select accordingly towards the cash statement: decrease in accounts payable, decrease in accounts receivable, decrease in inventory, decrease in prepaid insurance, decrease in salaries payable, depreciation expense, gain on sale of available for sale debt securities, gain on sale of equipment, increase in accounts payable, increase in account receivable, increase in inventory, increase in prepaid insurance, increase in salaries payable, loss of sale of available for slae securities, loss of sale of equipment, payment of cash dividends, payment of notes payable, purchase of equipment, sale of available for sale debt securities, sale of bonds payable, sale of equipment/  With these selection please out them into their designed areas to changes in oprerating assests and liabilities, cash flows from investing activities, cash flow from financing activities.arrow_forwardThe estimated cash receipts include total receipts from sales on account, interest revenue less expenses.  True or  Falsearrow_forward
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