Question 1

Free cash flow is a commonly used measure in the management discussion and analysis section of annual reports.

Accepted Answer

A) True 
 B)False  True

Question 2

A company has surplus cash available and decides to purchase a 270-day treasury bill. The correct classification of the purchase on the Statement of Cash Flows would be

Accepted Answer

A)  as an Net change in cash equivalents. 
B)  as a cash outflow in operating activities. 
C)  as a cash outflow in investing activities. 
D)  as a cash outflow in financing activities. 
A)  as an Net change in cash equivalents. 
B)  as a cash outflow in operating activities. 
C)  as a cash outflow in investing activities. 
D)  as a cash outflow in financing activities. C

Question 3

If prepaid expenses are shown as having a positive effect on cash flow, it is because prepaid expenses increased during the year.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following would be added to net income when using the indirect approach to prepare the cash from operating activities of the Statement of Cash Flows?

Accepted Answer

A)  increase in inventory 
B)  gain on sale of investments 
C)  increase in dividends payable 
D)  decrease in accounts receivable 
A)  increase in inventory 
B)  gain on sale of investments 
C)  increase in dividends payable 
D)  decrease in accounts receivable

Question 5

Blasik Corp. books revealed the following for the current year:   What was the net cash flow from operating activities for the year?

Accepted Answer

A)  cash flow from (inflow) $8,000 
B)  cash flow from (inflow) $0 
C)  cash flow used (outflow) $2,000 
D)  cash flow used (outflow) $4,000 
A)  cash flow from (inflow) $8,000 
B)  cash flow from (inflow) $0 
C)  cash flow used (outflow) $2,000 
D)  cash flow used (outflow) $4,000

Question 6

The Statement of Cash Flows and the Statement of Income both measure a company's performance.

Accepted Answer

A) True 
 B)False

Question 7

The cash flows to total liabilities ratio is used to assess company's ability to meet its liability through its operating cash flows.

Accepted Answer

A) True 
 B)False

Question 8

The concept of free cash flow is to measure the amount of cash that a company generates

Accepted Answer

A)  from its operations that is in excess of cash required. 
B)  from its investing activities that is in excess of cash required. 
C)  from its financing activities that is in excess of cash required. 
D)  from its operations that is in below the cash required. 
A)  from its operations that is in excess of cash required. 
B)  from its investing activities that is in excess of cash required. 
C)  from its financing activities that is in excess of cash required. 
D)  from its operations that is in below the cash required.

Question 9

When analyzing a company's cash flow situation, the term "capitalization" refers to

Accepted Answer

A)  how much cash the company has to start with. 
B)  how many capital assets the company has purchased during the period. 
C)  the amount of common shares sold during the period. 
D)  the length of time in the lead/lag relationship. 
A)  how much cash the company has to start with. 
B)  how many capital assets the company has purchased during the period. 
C)  the amount of common shares sold during the period. 
D)  the length of time in the lead/lag relationship.

Question 10

Common cash flow challenges include

Accepted Answer

A)  significant increases in sales volumes. 
B)  short cash- to-cash cycle. 
C)  adequate financing. 
D)  undercapitalization. 
A)  significant increases in sales volumes. 
B)  short cash- to-cash cycle. 
C)  adequate financing. 
D)  undercapitalization.

Question 11

The information presented on the statement of cash flows enables users to

Accepted Answer

A)  assess the company's ability to generate cash flows from its core operations. 
B)  evaluate the cash flows the company has been able to obtain from investors and creditors. 
C)  Assess the extent to which the company has invested cash to replace or add revenue-generating capital assets. 
D)  all of the above 
A)  assess the company's ability to generate cash flows from its core operations. 
B)  evaluate the cash flows the company has been able to obtain from investors and creditors. 
C)  Assess the extent to which the company has invested cash to replace or add revenue-generating capital assets. 
D)  all of the above

Question 12

The term free cash flow is often referred to as

Accepted Answer

A)  IFRS non-financial measure. 
B)  IFRS financial measure. 
C)  IFRS performance measure. 
D)  non-IFRS financial measure. 
A)  IFRS non-financial measure. 
B)  IFRS financial measure. 
C)  IFRS performance measure. 
D)  non-IFRS financial measure.

Question 13

Companies can resolve the common cash flow challenges by taking all of the following measures, EXCEPT

Accepted Answer

A)  increasing the amount of capitalization. 
B)  shortening the cash-to-cash cycle. 
C)  increasing the rate of growth. 
D)  decreasing the amount of capitalization. 
A)  increasing the amount of capitalization. 
B)  shortening the cash-to-cash cycle. 
C)  increasing the rate of growth. 
D)  decreasing the amount of capitalization.

Question 14

The most common type of non-cash item is depreciation expense.

Accepted Answer

A) True 
 B)False

Question 15

Use the following chart for questions 84-88.
  
-Based on the chart above which company profile will be fit the cash flow pattern for scenario 3?

Accepted Answer

A)  Successful and growing, with growth partially financed by creditors and shareholders. 
B)  Struggling, but using cash inflows from the sale of capital assets and new borrowings to remain in operation. 
C)  Successful, with operating activities providing sufficient cash to finance growth and repay debt or pay dividends. 
D)  Struggling, but using existing cash balances to cover losses, purchase capital assets and repay creditors. 
A)  Successful and growing, with growth partially financed by creditors and shareholders. 
B)  Struggling, but using cash inflows from the sale of capital assets and new borrowings to remain in operation. 
C)  Successful, with operating activities providing sufficient cash to finance growth and repay debt or pay dividends. 
D)  Struggling, but using existing cash balances to cover losses, purchase capital assets and repay creditors.

Question 16

A negative net free cash flow is considered to be a good thing.

Accepted Answer

A) True 
 B)False

Question 17

Use the following chart for questions 84-88.
  
-Based on the chart above which company profile will be fit the cash flow pattern for scenario 8?

Accepted Answer

A)  Struggling and using cash from the sales of capital assets to repay creditors. 
B)  Struggling, but using cash inflows from the sale of capital assets and new borrowings to remain in operation. 
C)  Successful, with operating activities providing sufficient cash to finance growth and repay debt or pay dividends. 
D)  Struggling, but using existing cash balances to cover losses, purchase capital assets and repay creditors. 
A)  Struggling and using cash from the sales of capital assets to repay creditors. 
B)  Struggling, but using cash inflows from the sale of capital assets and new borrowings to remain in operation. 
C)  Successful, with operating activities providing sufficient cash to finance growth and repay debt or pay dividends. 
D)  Struggling, but using existing cash balances to cover losses, purchase capital assets and repay creditors.

Question 18

The direct method is also known as the reconciliation method.

Accepted Answer

A) True 
 B)False

Question 19

Financing activities typically involve accounts classified as

Accepted Answer

A)  current assets and current liabilities. 
B)  current liabilities and shareholders' equity. 
C)  long-term liabilities and shareholders' equity. 
D)  current liabilities and long-term liabilities. 
A)  current assets and current liabilities. 
B)  current liabilities and shareholders' equity. 
C)  long-term liabilities and shareholders' equity. 
D)  current liabilities and long-term liabilities.

Question 20

Given the following activities:   The cash outflows for investing and financing activities were

Accepted Answer

A)  investing $175,000; financing $310,000. 
B)  investing $190,000; financing $275,000. 
C)  investing $190,000; financing $310,000. 
D)  investing $175,000; financing $275,000. 
A)  investing $175,000; financing $310,000. 
B)  investing $190,000; financing $275,000. 
C)  investing $190,000; financing $310,000. 
D)  investing $175,000; financing $275,000.

Free cash flow is a commonly used measure in the management discussion and analysis section of annual reports.

A company has surplus cash available and decides to purchase a 270-day treasury bill. The correct classification of the purchase on the Statement of Cash Flows would be

If prepaid expenses are shown as having a positive effect on cash flow, it is because prepaid expenses increased during the year.

Which of the following would be added to net income when using the indirect approach to prepare the cash from operating activities of the Statement of Cash Flows?

Blasik Corp. books revealed the following for the current year: What was the net cash flow from operating activities for the year?

The Statement of Cash Flows and the Statement of Income both measure a company's performance.

The cash flows to total liabilities ratio is used to assess company's ability to meet its liability through its operating cash flows.

The concept of free cash flow is to measure the amount of cash that a company generates

When analyzing a company's cash flow situation, the term "capitalization" refers to

Common cash flow challenges include

The information presented on the statement of cash flows enables users to

The term free cash flow is often referred to as

Companies can resolve the common cash flow challenges by taking all of the following measures, EXCEPT

The most common type of non-cash item is depreciation expense.

Use the following chart for questions 84-88. -Based on the chart above which company profile will be fit the cash flow pattern for scenario 3?

A negative net free cash flow is considered to be a good thing.

Use the following chart for questions 84-88. -Based on the chart above which company profile will be fit the cash flow pattern for scenario 8?

The direct method is also known as the reconciliation method.

Financing activities typically involve accounts classified as

Given the following activities: The cash outflows for investing and financing activities were

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

The Statement of Cash Flows

Cash and Accounts

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters

Exam 5: Revenue Recognition and the Statement of Income

Free cash flow is a commonly used measure in the management discussion and analysis section of annual reports.

A company has surplus cash available and decides to purchase a 270-day treasury bill. The correct classification of the purchase on the Statement of Cash Flows would be

If prepaid expenses are shown as having a positive effect on cash flow, it is because prepaid expenses increased during the year.

Which of the following would be added to net income when using the indirect approach to prepare the cash from operating activities of the Statement of Cash Flows?

Blasik Corp. books revealed the following for the current year: What was the net cash flow from operating activities for the year?

The Statement of Cash Flows and the Statement of Income both measure a company's performance.

The cash flows to total liabilities ratio is used to assess company's ability to meet its liability through its operating cash flows.

The concept of free cash flow is to measure the amount of cash that a company generates

When analyzing a company's cash flow situation, the term "capitalization" refers to

Common cash flow challenges include

The information presented on the statement of cash flows enables users to

The term free cash flow is often referred to as

Companies can resolve the common cash flow challenges by taking all of the following measures, EXCEPT

The most common type of non-cash item is depreciation expense.

Use the following chart for questions 84-88. -Based on the chart above which company profile will be fit the cash flow pattern for scenario 3?

A negative net free cash flow is considered to be a good thing.

Use the following chart for questions 84-88. -Based on the chart above which company profile will be fit the cash flow pattern for scenario 8?

The direct method is also known as the reconciliation method.

Financing activities typically involve accounts classified as

Given the following activities: The cash outflows for investing and financing activities were

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

The Statement of Cash Flows

Cash and Accounts

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters