Accounting 231 Exam 3 Question and
answers already passed 2025/2026
Indicate whether the statement is true or false.
____ 1. The statement of cash flows explains how a company generates and uses cash during an
accounting period. - correct answer ✔True
Which of the following is an example of a cash flow from operations?
a. the sale of used office equipment for cash
b. the sale of long-term investments in capital stock
c. the sale of merchandise inventory for cash
d. None of the choices provided in this question are examples of cash flows from operations.
e. All of the choices provided in this question are examples of cash flows from operations. - correct
answer ✔c. the sale of merchandise inventory for cash
In the terminology of the statement of cash flows, which of the following is an example of an investing
activity?
a. the repayment of long-term debt
b. the purchase of land for a new factory
c. the purchase of merchandise inventory with cash
d. None of the choices provided in this question are examples of investment activities.
e. All of the choices provided in this question are examples of investment activities. - correct answer
✔b. the purchase of land for a new factory
,In the terminology of the statement of cash flows, which of the following is an example of a financing
activity?
a. the repayment of long-term debt
b. the purchase of land for a new factory
c. the purchase of merchandise inventory with cash
d. None of the choices provided in this question are examples of financing activities.
e. All of the choices provided in this question are examples of financing activities. - correct answer ✔a.
the repayment of long-term debt
On the statement of cash flows, the payment of $50,000 in dividends would be classified as a(n)
a. operating activity.
b. investing activity.
c. financing activity.
d. The transaction would not appear on the statement of cash flows. - correct answer ✔c. financing
activity.
On the statement of cash flows, the payment of $40,000 in interest would be classified as a(n)
a. operating activity.
b. investing activity.
c. financing activity.
d. The transaction would not appear on the statement of cash flows. - correct answer ✔a. operating
activity.
, A company sells a piece of equipment and realizes a gain of $15,000. At the time of the sale, the
equipment,which had been purchased for $185,000, had accumulated depreciation which totaled
$120,000. The proceeds from the sale must have been:
a. $50,000
b. $65,000
c. $80,000
d. $120,000 - correct answer ✔c. $80,000
Book value + gain = cash received
book value = $185,000-120,000=65,000
Cash received = 65,000+15,000= 80,000
A balance in deferred tax expense due within three years would be reported as what on the balance
sheet?
a. income tax payable
b. current liability
c. long term liability
d. income tax expense - correct answer ✔c. long term liability
A company offers customers a one year warranty and sales totaled $950,000 for the year. The estimated
product warranty is 2% of sales and the company incurred repair costs of $14,000 this year. Which entry
would be made to record accrued product warranty
.
a. Warranty Expense 14,000
Cash, Supplies, etc. 14,000
b. Warranty Expense 14,000
answers already passed 2025/2026
Indicate whether the statement is true or false.
____ 1. The statement of cash flows explains how a company generates and uses cash during an
accounting period. - correct answer ✔True
Which of the following is an example of a cash flow from operations?
a. the sale of used office equipment for cash
b. the sale of long-term investments in capital stock
c. the sale of merchandise inventory for cash
d. None of the choices provided in this question are examples of cash flows from operations.
e. All of the choices provided in this question are examples of cash flows from operations. - correct
answer ✔c. the sale of merchandise inventory for cash
In the terminology of the statement of cash flows, which of the following is an example of an investing
activity?
a. the repayment of long-term debt
b. the purchase of land for a new factory
c. the purchase of merchandise inventory with cash
d. None of the choices provided in this question are examples of investment activities.
e. All of the choices provided in this question are examples of investment activities. - correct answer
✔b. the purchase of land for a new factory
,In the terminology of the statement of cash flows, which of the following is an example of a financing
activity?
a. the repayment of long-term debt
b. the purchase of land for a new factory
c. the purchase of merchandise inventory with cash
d. None of the choices provided in this question are examples of financing activities.
e. All of the choices provided in this question are examples of financing activities. - correct answer ✔a.
the repayment of long-term debt
On the statement of cash flows, the payment of $50,000 in dividends would be classified as a(n)
a. operating activity.
b. investing activity.
c. financing activity.
d. The transaction would not appear on the statement of cash flows. - correct answer ✔c. financing
activity.
On the statement of cash flows, the payment of $40,000 in interest would be classified as a(n)
a. operating activity.
b. investing activity.
c. financing activity.
d. The transaction would not appear on the statement of cash flows. - correct answer ✔a. operating
activity.
, A company sells a piece of equipment and realizes a gain of $15,000. At the time of the sale, the
equipment,which had been purchased for $185,000, had accumulated depreciation which totaled
$120,000. The proceeds from the sale must have been:
a. $50,000
b. $65,000
c. $80,000
d. $120,000 - correct answer ✔c. $80,000
Book value + gain = cash received
book value = $185,000-120,000=65,000
Cash received = 65,000+15,000= 80,000
A balance in deferred tax expense due within three years would be reported as what on the balance
sheet?
a. income tax payable
b. current liability
c. long term liability
d. income tax expense - correct answer ✔c. long term liability
A company offers customers a one year warranty and sales totaled $950,000 for the year. The estimated
product warranty is 2% of sales and the company incurred repair costs of $14,000 this year. Which entry
would be made to record accrued product warranty
.
a. Warranty Expense 14,000
Cash, Supplies, etc. 14,000
b. Warranty Expense 14,000
