Question 1

Which of the following statements is true?

Accepted Answer

A) GAAP classifies dividends paid as a financing activity,but IFRS allows them to be classified as either an operating or financing activity. 
B) GAAP allows interest paid to be classified as either an operating or financing activity,but IFRS requires that it be classified as a financing activity. 
C) GAAP classifies dividends received as an investing activity,but IFRS allows them to be classified as either an operating or investing activity. 
D) GAAP classifies interest received as either an operating or investing activity,but IFRS requires it to be classified as an investing activity. 
A) GAAP classifies dividends paid as a financing activity,but IFRS allows them to be classified as either an operating or financing activity. 
B) GAAP allows interest paid to be classified as either an operating or financing activity,but IFRS requires that it be classified as a financing activity. 
C) GAAP classifies dividends received as an investing activity,but IFRS allows them to be classified as either an operating or investing activity. 
D) GAAP classifies interest received as either an operating or investing activity,but IFRS requires it to be classified as an investing activity. A

Question 2

Consider the following information: The company would report net cash provided by operating activities of:

Accepted Answer

A) $17,500. 
B) $18,500. 
C) $21,500. 
D) $23,300. 
A) $17,500. 
B) $18,500. 
C) $21,500. 
D) $23,300. D

Question 3

Which of the following statements is not true?

Accepted Answer

A) The statement of cash flows does not replace the income statement. 
B) The statement of cash flows provides details as to how cash changed during a period. 
C) The statement of cash flows provides information about cash receipts and cash payments over a period of time. 
D) The statement of cash flows measures profitability. 
A) The statement of cash flows does not replace the income statement. 
B) The statement of cash flows provides details as to how cash changed during a period. 
C) The statement of cash flows provides information about cash receipts and cash payments over a period of time. 
D) The statement of cash flows measures profitability. D

Question 4

Cash and cash equivalents include:

Accepted Answer

A) assets that have stable long-term value. 
B) assets that are short-term,highly liquid,and are purchased by the entity within three months of maturity. 
C) assets that consistently grow in value over the long run. 
D) assets that are expected to be used up within a year. 
A) assets that have stable long-term value. 
B) assets that are short-term,highly liquid,and are purchased by the entity within three months of maturity. 
C) assets that consistently grow in value over the long run. 
D) assets that are expected to be used up within a year.

Question 5

Which of the following statements is not true?

Accepted Answer

A) The statement of cash flows can be used to assess the likelihood of a company paying dividends. 
B) Net cash flow is the best measure of profitability since it doesn't rely on estimates. 
C) A company can have positive net income but at the same time have negative cash flow. 
D) The statement of cash flows is the only financial statement that reports business activities. 
A) The statement of cash flows can be used to assess the likelihood of a company paying dividends. 
B) Net cash flow is the best measure of profitability since it doesn't rely on estimates. 
C) A company can have positive net income but at the same time have negative cash flow. 
D) The statement of cash flows is the only financial statement that reports business activities.

Question 6

A company issues $1 million of new stock and pays $200,000 in cash dividends during the year.In addition,the company took advantage of falling interest rates to borrow $1.5 million in a new bond issue and paid off existing bonds with a face value of $2 million.The company bought 500 of another company's $1,000 bonds at a $100,000 premium.The net cash flow from financing activities is:

Accepted Answer

A) An inflow of $500,000. 
B) An outflow of $200,000. 
C) An outflow of $100,000. 
D) An inflow of $300,000. 
A) An inflow of $500,000. 
B) An outflow of $200,000. 
C) An outflow of $100,000. 
D) An inflow of $300,000.

Question 7

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.The statement of cash flows explains the change in cash and cash equivalents from operating,investing and financing activities.

Accepted Answer

A) True 
 B)False

Question 8

If a company is to succeed over the long-term,a positive cash flow from operating activities is necessary.An established,healthy company has positive cash flows from operating activities which are sufficient to pay for replacement of current productive assets and provide additional cash flows for business growth.

Accepted Answer

A) True 
 B)False

Question 9

Flynn Corporation had the following cash flows for the current year.The company uses the direct method in preparing the statement of cash flows.Use the information above to answer the following question.What is the net cash flows provided by (used in)financing activities?

Accepted Answer

A) $620,000 
B) $410,000 
C) $610,000 
D) $490,000 
A) $620,000 
B) $410,000 
C) $610,000 
D) $490,000

Question 10

When a company uses the direct method to determine the cash flows from operating activities,cash flows from operating activities will:

Accepted Answer

A) be identical to the amount reported using the indirect method. 
B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method. 
C) always be larger than the amount reported using the indirect method. 
D) be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect methoD.The direct method and the indirect method produce the same result for net cash provided by or used in operating activities. 
A) be identical to the amount reported using the indirect method. 
B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method. 
C) always be larger than the amount reported using the indirect method. 
D) be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect methoD.The direct method and the indirect method produce the same result for net cash provided by or used in operating activities.

Question 11

If a company's cost of goods sold is $158,000 for the period,beginning and ending inventory balances are $18,000 and $13,000,respectively,and the beginning and ending accounts payable balances are $19,000 and $7,500,respectively,the cash paid to suppliers is:

Accepted Answer

A) $157,000. 
B) $163,500. 
C) $164,500. 
D) $151,500. 
A) $157,000. 
B) $163,500. 
C) $164,500. 
D) $151,500.

Question 12

When the indirect method is used,details from which of the following balance sheet accounts are used in calculating both operating and financing cash flows?

Accepted Answer

A) Bonds payable. 
B) Taxes payable. 
C) Retained earnings. 
D) Contributed capital. 
A) Bonds payable. 
B) Taxes payable. 
C) Retained earnings. 
D) Contributed capital.

Question 13

Which of the following journal entries would have an effect on cash from operating activities?

Accepted Answer

A) Recording bad debts. 
B) Recording depreciation. 
C) Recording loss on sale of investment. 
D) Recording cash paid for interest on long-term note payable. 
A) Recording bad debts. 
B) Recording depreciation. 
C) Recording loss on sale of investment. 
D) Recording cash paid for interest on long-term note payable.

Question 14

Using the indirect method,which of the following would be added to net income?

Accepted Answer

A) A decrease in supplies. 
B) An increase in prepaid insurance. 
C) A decrease in wages payable. 
D) An increase in property,plant and equipment. 
A) A decrease in supplies. 
B) An increase in prepaid insurance. 
C) A decrease in wages payable. 
D) An increase in property,plant and equipment.

Question 15

When preparing the operating activities section of the statement of cash flows using the indirect method,an increase in income taxes payable is added to net income.To convert net income to cash flows from operating activities,an increase in income taxes payable means that income tax expense on the income statement is greater than the amount of cash paid for income taxes;therefore,the increase should be added to net income.

Accepted Answer

A) True 
 B)False

Question 16

Use the information above to answer the following question.The company would report net cash provided by (used in)financing activities of:

Accepted Answer

A) $(2,500). 
B) $2,000. 
C) $5,000. 
D) $6,000. 
A) $(2,500). 
B) $2,000. 
C) $5,000. 
D) $6,000.

Question 17

Which of the following would be classified as an operating activity on the statement of cash flows using the direct method?

Accepted Answer

A) Cash dividends paid to stockholders. 
B) Cash received from selling equipment. 
C) Cash paid to retire bonds payable at maturity. 
D) Cash received from accounts receivable collections. 
A) Cash dividends paid to stockholders. 
B) Cash received from selling equipment. 
C) Cash paid to retire bonds payable at maturity. 
D) Cash received from accounts receivable collections.

Question 18

Equipment with a cost of $10,000 and a book value of $3,000 was sold during the year for cash of $9,000.Additional equipment was purchased during the year for cash.Use the information above to answer the following question.What was the amount of cash paid for purchases of equipment during the year?

Accepted Answer

A) $40,000 
B) $43,000 
C) $50,000 
D) $31,000 
A) $40,000 
B) $43,000 
C) $50,000 
D) $31,000

Question 19

Supplemental disclosures required by companies using the indirect method include all of the following except:

Accepted Answer

A) cash paid for interest. 
B) cash paid for income tax. 
C) cash paid for dividends. 
D) noncash investing and financing activities. 
A) cash paid for interest. 
B) cash paid for income tax. 
C) cash paid for dividends. 
D) noncash investing and financing activities.

Question 20

Assume a company uses the indirect method to prepare its statement of cash flows.If inventory decreases and unearned revenue increases during an accounting period,what does the company do with the changes in these accounts to calculate cash flows from operating activities?

Accepted Answer

A) Both are added to net income. 
B) The change in inventory is added to net income;the change in unearned revenue is subtracted. 
C) Both are subtracted from net income. 
D) The change in unearned revenue is added to net income;the change in inventory is subtracteD.Using the indirect method,both decreases in current assets and increases in current liabilities are added to net income to convert to cash flows from operating activities. 
A) Both are added to net income. 
B) The change in inventory is added to net income;the change in unearned revenue is subtracted. 
C) Both are subtracted from net income. 
D) The change in unearned revenue is added to net income;the change in inventory is subtracteD.Using the indirect method,both decreases in current assets and increases in current liabilities are added to net income to convert to cash flows from operating activities.

Which of the following statements is true?

Consider the following information: The company would report net cash provided by operating activities of:

Which of the following statements is not true?

Cash and cash equivalents include:

Which of the following statements is not true?

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.The statement of cash flows explains the change in cash and cash equivalents from operating,investing and financing activities.

Flynn Corporation had the following cash flows for the current year.The company uses the direct method in preparing the statement of cash flows.Use the information above to answer the following question.What is the net cash flows provided by (used in)financing activities?

When a company uses the direct method to determine the cash flows from operating activities,cash flows from operating activities will:

If a company's cost of goods sold is $158,000 for the period,beginning and ending inventory balances are $18,000 and $13,000,respectively,and the beginning and ending accounts payable balances are $19,000 and $7,500,respectively,the cash paid to suppliers is:

When the indirect method is used,details from which of the following balance sheet accounts are used in calculating both operating and financing cash flows?

Which of the following journal entries would have an effect on cash from operating activities?

Using the indirect method,which of the following would be added to net income?

Use the information above to answer the following question.The company would report net cash provided by (used in)financing activities of:

Which of the following would be classified as an operating activity on the statement of cash flows using the direct method?

Equipment with a cost of $10,000 and a book value of $3,000 was sold during the year for cash of $9,000.Additional equipment was purchased during the year for cash.Use the information above to answer the following question.What was the amount of cash paid for purchases of equipment during the year?

Supplemental disclosures required by companies using the indirect method include all of the following except:

Assume a company uses the indirect method to prepare its statement of cash flows.If inventory decreases and unearned revenue increases during an accounting period,what does the company do with the changes in these accounts to calculate cash flows from operating activities?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost Behavior

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Measuring and Evaluating Financial Performance

Filters

Exam 12: Statement of Cash Flows

Which of the following statements is true?

Consider the following information: The company would report net cash provided by operating activities of:

Which of the following statements is not true?

Cash and cash equivalents include:

Which of the following statements is not true?

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.The statement of cash flows explains the change in cash and cash equivalents from operating,investing and financing activities.

Flynn Corporation had the following cash flows for the current year.The company uses the direct method in preparing the statement of cash flows.Use the information above to answer the following question.What is the net cash flows provided by (used in)financing activities?

When a company uses the direct method to determine the cash flows from operating activities,cash flows from operating activities will:

If a company's cost of goods sold is $158,000 for the period,beginning and ending inventory balances are $18,000 and $13,000,respectively,and the beginning and ending accounts payable balances are $19,000 and $7,500,respectively,the cash paid to suppliers is:

When the indirect method is used,details from which of the following balance sheet accounts are used in calculating both operating and financing cash flows?

Which of the following journal entries would have an effect on cash from operating activities?

Using the indirect method,which of the following would be added to net income?

Use the information above to answer the following question.The company would report net cash provided by (used in)financing activities of:

Which of the following would be classified as an operating activity on the statement of cash flows using the direct method?

Equipment with a cost of $10,000 and a book value of $3,000 was sold during the year for cash of $9,000.Additional equipment was purchased during the year for cash.Use the information above to answer the following question.What was the amount of cash paid for purchases of equipment during the year?

Supplemental disclosures required by companies using the indirect method include all of the following except:

Assume a company uses the indirect method to prepare its statement of cash flows.If inventory decreases and unearned revenue increases during an accounting period,what does the company do with the changes in these accounts to calculate cash flows from operating activities?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost Behavior

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variances

Decentralized Performance Evaluation

Capital Budgeting

Measuring and Evaluating Financial Performance

Filters