Question 1

Which of the following would not be a cash flow from investing activities?

Accepted Answer

A)  Sale of a patent. 
B)  Collection of interest revenue on a long-term note receivable. 
C)  Collection of principal of a note receivable. 
D)  Purchase of long-term investments. 
A)  Sale of a patent. 
B)  Collection of interest revenue on a long-term note receivable. 
C)  Collection of principal of a note receivable. 
D)  Purchase of long-term investments.

Question 2

Lag os Corp. recorded sales of $345,000 in 2010. In addition, its accounts receivable and accounts payable balances at the beginning and end of 2010 were as follows:
  How much cash did Lagos collect from customers in 2010?

Accepted Answer

A)  $345,000 
B)  $320,000 
C)  $324,000 
D)  $316,000 
A)  $345,000 
B)  $320,000 
C)  $324,000 
D)  $316,000

Question 3

A cash inflow from financing activities includes:

Accepted Answer

A)  receipt of interest payments. 
B)  proceeds from selling equipment. 
C)  proceeds from issuance of bonds payable. 
D)  proceeds from selling investments in equity securities of another company. 
A)  receipt of interest payments. 
B)  proceeds from selling equipment. 
C)  proceeds from issuance of bonds payable. 
D)  proceeds from selling investments in equity securities of another company.

Question 4

Which of the following statements is false ?

Accepted Answer

A)  Purchase of equipment is an investing cash outflow. 
B)  Sale of equipment creates investing cash outflow equal to its selling price. 
C)  Purchase of short-term investments is an investing cash outflow. 
D)  Purchase of a patent is an investing cash outflow. 
A)  Purchase of equipment is an investing cash outflow. 
B)  Sale of equipment creates investing cash outflow equal to its selling price. 
C)  Purchase of short-term investments is an investing cash outflow. 
D)  Purchase of a patent is an investing cash outflow.

Question 5

Tinker Company reported sales revenue of $500,000 and total expenses of $450,000 (including depreciation) for the year ended December 31, 2010. During 2010, accounts receivable decreased by $5,000, merchandise inventory increased by $4,000, accounts payable increased by $6,000, and depreciation expense of $10,000 was recorded. Assuming no other data is needed and using the indirect method, the net cash inflow from operating activities for 2010 was:

Accepted Answer

A)  $60,000 
B)  $67,000 
C)  $44,000 
D)  $51,000 
A)  $60,000 
B)  $67,000 
C)  $44,000 
D)  $51,000

Question 6

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Accepted Answer

investing

Question 7

Which statement is false regarding the preparation of the indirect method of the statement of cash flows?

Accepted Answer

A)  An increase in merchandise inventory is subtracted from net income. 
B)  Depreciation expense is added to net income. 
C)  An increase in accounts receivable is added to net income. 
D)  An increase in accounts payable is added to net income. 
A)  An increase in merchandise inventory is subtracted from net income. 
B)  Depreciation expense is added to net income. 
C)  An increase in accounts receivable is added to net income. 
D)  An increase in accounts payable is added to net income.

Question 8

A decrease in accounts receivable during a period indicates that a firm collected more ____________________ as the amount of revenues included in net income.

Accepted Answer

The answer of A decrease in accounts receivable during a...

Question 9

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Accepted Answer

The answer of The period in which a firm commences...

Question 10

Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

Accepted Answer

A)  $655,000 
B)  $980,000 
C)  $560,000 
D)  $620,000 
A)  $655,000 
B)  $980,000 
C)  $560,000 
D)  $620,000

Question 11

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be:

Accepted Answer

A)  greater than net income 
B)  less than net income 
C)  greater than the change in working capital from operations 
D)  greater than the change in cash 
A)  greater than net income 
B)  less than net income 
C)  greater than the change in working capital from operations 
D)  greater than the change in cash

Question 12

____________________ ___________________ equals current assets minus current liabilities

Accepted Answer

The answer of ____________________ ___________________ equals current assets minus current...

Question 13

When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as:

Accepted Answer

A)  a decrease in the operating activities section 
B)  an increase in the operating activities section 
C)  a use of cash in the investing activities section 
D)  a source of cash in the investing activities section 
A)  a decrease in the operating activities section 
B)  an increase in the operating activities section 
C)  a use of cash in the investing activities section 
D)  a source of cash in the investing activities section

Question 14

Firms with short operating cycles will experience less of a lag between the creation and delivery of their products and the collection of cash from customers because:

Accepted Answer

A)  their cash flow from operations will be much greater than their working capital from operations. 
B)  their cash flow from operations will not differ much from their working capital from operations. 
C)  their cash flow from operations will be much less than their working capital from operations. 
D)  there will be no relation between their cash flow from operations and working capital from operations. 
A)  their cash flow from operations will be much greater than their working capital from operations. 
B)  their cash flow from operations will not differ much from their working capital from operations. 
C)  their cash flow from operations will be much less than their working capital from operations. 
D)  there will be no relation between their cash flow from operations and working capital from operations.

Question 15

____________________ activities relate to the acquisition and sale of noncurrent assets, particularly property, plant and equipment.

Accepted Answer

The answer of ____________________ activities relate to the acquisition and...

Question 16

Lui Company 's 2010 income statement reported total sales revenue of $350,000. The 2009-2010 comparative balance sheets showed that accounts receivable increased by $20,000. The 2010 "cash receipts from customers" would be:

Accepted Answer

A)  $270,000 
B)  $250,000 
C)  $330,000 
D)  $40,000 
A)  $270,000 
B)  $250,000 
C)  $330,000 
D)  $40,000

Question 17

The payment of dividends would be classified as ____________________ activities in the statement of cash flows.

Accepted Answer

The answer of The payment of dividends would be classified...

Question 18

Academic research has found that market rates of return on common stock are the most highly correlated with:

Accepted Answer

A)  net income. 
B)  cash flow from operations. 
C)  EBITDA. 
D)  cash flow from investing activities. 
A)  net income. 
B)  cash flow from operations. 
C)  EBITDA. 
D)  cash flow from investing activities.

Question 19

In a statement of cash flows, interest received from sources other than a company's investments would be classified as cash inflows from:

Accepted Answer

A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities. 
A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities.

Question 20

The expense incurred by issuing stock options should be:

Accepted Answer

A)  classified as a financing activity. 
B)  added back to net income in the operating activities section. 
C)  subtracted from net income in the operating activities section. 
D)  does not appear in the statement of cash flows. 
A)  classified as a financing activity. 
B)  added back to net income in the operating activities section. 
C)  subtracted from net income in the operating activities section. 
D)  does not appear in the statement of cash flows.

Which of the following would not be a cash flow from investing activities?

Lag os Corp. recorded sales of $345,000 in 2010. In addition, its accounts receivable and accounts payable balances at the beginning and end of 2010 were as follows: How much cash did Lagos collect from customers in 2010?

A cash inflow from financing activities includes:

Which of the following statements is false ?

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Which statement is false regarding the preparation of the indirect method of the statement of cash flows?

A decrease in accounts receivable during a period indicates that a firm collected more ____________________ as the amount of revenues included in net income.

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be:

__ _ equals current assets minus current liabilities

When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as:

Firms with short operating cycles will experience less of a lag between the creation and delivery of their products and the collection of cash from customers because:

____________________ activities relate to the acquisition and sale of noncurrent assets, particularly property, plant and equipment.

Lui Company 's 2010 income statement reported total sales revenue of $350,000. The 2009-2010 comparative balance sheets showed that accounts receivable increased by $20,000. The 2010 "cash receipts from customers" would be:

The payment of dividends would be classified as ____________________ activities in the statement of cash flows.

Academic research has found that market rates of return on common stock are the most highly correlated with:

In a statement of cash flows, interest received from sources other than a company's investments would be classified as cash inflows from:

The expense incurred by issuing stock options should be:

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 3: Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Which of the following would not be a cash flow from investing activities?

Lag os Corp. recorded sales of $345,000 in 2010. In addition, its accounts receivable and accounts payable balances at the beginning and end of 2010 were as follows: How much cash did Lagos collect from customers in 2010?

A cash inflow from financing activities includes:

Which of the following statements is false ?

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Which statement is false regarding the preparation of the indirect method of the statement of cash flows?

A decrease in accounts receivable during a period indicates that a firm collected more ____________________ as the amount of revenues included in net income.

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be:

____________________ ___________________ equals current assets minus current liabilities

When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as:

Firms with short operating cycles will experience less of a lag between the creation and delivery of their products and the collection of cash from customers because:

____________________ activities relate to the acquisition and sale of noncurrent assets, particularly property, plant and equipment.

Lui Company 's 2010 income statement reported total sales revenue of $350,000. The 2009-2010 comparative balance sheets showed that accounts receivable increased by $20,000. The 2010 "cash receipts from customers" would be:

The payment of dividends would be classified as ____________________ activities in the statement of cash flows.

Academic research has found that market rates of return on common stock are the most highly correlated with:

In a statement of cash flows, interest received from sources other than a company's investments would be classified as cash inflows from:

The expense incurred by issuing stock options should be:

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

__ _ equals current assets minus current liabilities