Question 1

Cash and cash equivalents include assets that:

Accepted Answer

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

Question 2

Depreciation Expense is not reported on the statement of cash flows when prepared using the direct method.

Accepted Answer

A) True 
 B)False

Question 3

The statement of cash flows cannot be used to determine:

Accepted Answer

A)  changes in working capital. 
B)  expenditures on long-term assets. 
C)  profitability as measured by specific revenues and expenses. 
D)  reliance on external financing. 
A)  changes in working capital. 
B)  expenditures on long-term assets. 
C)  profitability as measured by specific revenues and expenses. 
D)  reliance on external financing.

Question 4

Choose the appropriate letter to match the term and the definition.Not all definitions will be used.
Term
1._____ Cash Inflow
2._____ Property,Plant,and Equipment
3._____ Comparative Balance Sheet
4._____ Free Cash Flow
5._____ Noncash Investing and Financing Activities
6._____ Net Income
7._____ Statement of Cash Flows
8._____ Cash Outflow
Definition
A.A financial statement that tracks the flow of cash into and out of a company according to the three types of activities that generate the flows.
B.Cash flows in excess of net income.
C.Reported as supplement disclosures or in the notes section to the financial statements rather than within the body of the statement of cash flows.
D.Results from activities such as sales of goods and assets,receipt of cash dividends,and receipts of interest.
E.Cash a company receives that is not subject to income tax.
F.Purchases and sales of this are classified as investing activities.
G.The starting point for calculating operating cash flows with the direct method.
H.Cash flows from operations in excess of amount paid to replace property,plant and equipment and to pay cash dividends to stockholders.
I.The percent of a company's net cash flow that comes from investing and financing activities.
J.An adjustment made when using the indirect method of calculating cash flows from operating activities.
K.The starting point for calculating operating cash flows with the indirect method.
L.Purchases and sales of this are classified as operating activities.
M.A balance sheet that shows the starting and ending balance of the different accounts; it is used to calculate the net cash flow provided by operating activities.
N.Results from activities such as purchases of goods and assets,payment of debt,payment of cash dividends,and payment of taxes.

Accepted Answer

1.D
2.F
3.

Question 5

Which of the following represents a cash inflow from financing activities?

Accepted Answer

A)  Issuing stock in exchange for another company's stock. 
B)  Paying a bond's face value at maturity. 
C)  Issuing long-term bonds at a discount. 
D)  Receiving interest on promissory notes. 
A)  Issuing stock in exchange for another company's stock. 
B)  Paying a bond's face value at maturity. 
C)  Issuing long-term bonds at a discount. 
D)  Receiving interest on promissory notes.

Question 6

Which of the following would not be added to net income in calculating cash flows from operating activities on a statement of cash flows prepared using the indirect method?

Accepted Answer

A)  Amortization Expense 
B)  A decrease in Accounts Receivable 
C)  An increase in Salaries and Wages Payable 
D)  A gain on sale of equipment 
A)  Amortization Expense 
B)  A decrease in Accounts Receivable 
C)  An increase in Salaries and Wages Payable 
D)  A gain on sale of equipment

Question 7

The introductory phase of a company's life cycle will most likely have net cash:

Accepted Answer

A)  provided by investing activities. 
B)  used in financing activities. 
C)  used in investing activities. 
D)  provided by operating activities. 
A)  provided by investing activities. 
B)  used in financing activities. 
C)  used in investing activities. 
D)  provided by operating activities.

Question 8

Two years ago,your company bought $40,000 in bonds from another company.This month,it sold half of those bonds for $20,640 and purchased the common stock of another company for $1,000.On the statement of cash flows for this accounting period,your company would report a net cash:

Accepted Answer

A)  outflow of $19,640 from investing activities. 
B)  inflow of $19,640 from investing activities. 
C)  inflow of $20,640 from investing activities. 
D)  outflow of $20,640 from investing activities. 
A)  outflow of $19,640 from investing activities. 
B)  inflow of $19,640 from investing activities. 
C)  inflow of $20,640 from investing activities. 
D)  outflow of $20,640 from investing activities.

Question 9

When the net cash flows from operating,investing,and financing activities are combined to arrive at the overall net change in cash,a net decrease in cash is subtracted from the beginning cash balance to calculate the ending cash balance.

Accepted Answer

A) True 
 B)False

Question 10

When preparing the operating activities section of the statement of cash flows using the direct method,a gain or loss from selling equipment is reported in the operating activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 11

Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

Accepted Answer

A)  increased net income, but did not impact cash this period. 
B)  decreased net income, but did not impact cash this period. 
C)  increased net income and increased cash flow this period. 
D)  decreased net income and decreased cash flow this period. 
A)  increased net income, but did not impact cash this period. 
B)  decreased net income, but did not impact cash this period. 
C)  increased net income and increased cash flow this period. 
D)  decreased net income and decreased cash flow this period.

Question 12

Which of the following statements about classification choices is correct?

Accepted Answer

A)  GAAP classifies cash 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 cash 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 cash 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 cash 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.

Question 13

A company's income statement for the year shows a net loss of $90,000.Additional information for the year follows:
 
What is the net cash provided by (used in)operating activities?

Accepted Answer

A)  ($99,000) 
B)  $27,000 
C)  $13,000 
D)  ($45,000) 
A)  ($99,000) 
B)  $27,000 
C)  $13,000 
D)  ($45,000)

Question 14

St.Pierre Enterprises reported the following information in its financial statements:
  
-Use the information above to answer the following question.What is the amount of cash payments made to suppliers during the current year?

Accepted Answer

A)  $280,500 
B)  $269,500 
C)  $394,500 
D)  $230,500 
A)  $280,500 
B)  $269,500 
C)  $394,500 
D)  $230,500

Question 15

When preparing the operating activities section of the statement of cash flows using the indirect method,accumulated depreciation is added to net income in the operating section.

Accepted Answer

A) True 
 B)False

Question 16

Condensed financial data of Monopoly Corporation appear below:

A cash dividend was declared and paid in full to stockholders during the year.
Required:
Solve for the missing numbers and summarize your answers in the table below.Be sure to indicate in parentheses ( )if the missing number is negative (that is,a cash outflow).

Accepted Answer

The answer of Condensed financial data of Monopoly Corporation appear...

Question 17

The purchase of $100,000 of equipment by issuing a note would be reported:

Accepted Answer

A)  as a $100,000 investing inflow, and a $100,000 financing outflow. 
B)  as a$100,000 investing outflow, and a $100,000 financing inflow. 
C)  as a $100,000 operating inflow, and a $100,000 financing outflow. 
D)  in a supplementary schedule. 
A)  as a $100,000 investing inflow, and a $100,000 financing outflow. 
B)  as a$100,000 investing outflow, and a $100,000 financing inflow. 
C)  as a $100,000 operating inflow, and a $100,000 financing outflow. 
D)  in a supplementary schedule.

Question 18

Which of the following statements about cash flows from investing activities is correct?

Accepted Answer

A)  The proceeds from sales of investments are reported as cash inflows from investing activities. 
B)  Cash flows from investing activities are calculated by making adjustments to net income. 
C)  Cash paid to acquire long-lived assets is reported as a cash inflow from investing activities. 
D)  Cash received from issuing a long-term payable is reported as a cash inflow from investing activities. 
A)  The proceeds from sales of investments are reported as cash inflows from investing activities. 
B)  Cash flows from investing activities are calculated by making adjustments to net income. 
C)  Cash paid to acquire long-lived assets is reported as a cash inflow from investing activities. 
D)  Cash received from issuing a long-term payable is reported as a cash inflow from investing activities.

Question 19

What is the purpose of the statement of cash flows?

Accepted Answer

A)  It is intended to provide a cash-based view of a company. 
B)  It illustrates the profitability of a company. 
C)  It reports the financial position of a company at a specific point in time. 
D)  It outlines the changes in stockholders' equity accounts from the beginning of the period to the end of the period. 
A)  It is intended to provide a cash-based view of a company. 
B)  It illustrates the profitability of a company. 
C)  It reports the financial position of a company at a specific point in time. 
D)  It outlines the changes in stockholders' equity accounts from the beginning of the period to the end of the period.

Question 20

The advantages of the direct method include all of the following except:

Accepted Answer

A)  it allows for more detailed analysis of operating cash flows. 
B)  it provides more information than the indirect method to relate cash inflows and outflows. 
C)  it allows for more reliable prediction of future cash flows. 
D)  comparisons between companies are facilitated since most U.S. companies use the direct method. 
A)  it allows for more detailed analysis of operating cash flows. 
B)  it provides more information than the indirect method to relate cash inflows and outflows. 
C)  it allows for more reliable prediction of future cash flows. 
D)  comparisons between companies are facilitated since most U.S. companies use the direct method.

Cash and cash equivalents include assets that:

Depreciation Expense is not reported on the statement of cash flows when prepared using the direct method.

The statement of cash flows cannot be used to determine:

Which of the following represents a cash inflow from financing activities?

Which of the following would not be added to net income in calculating cash flows from operating activities on a statement of cash flows prepared using the indirect method?

The introductory phase of a company's life cycle will most likely have net cash:

Two years ago,your company bought $40,000 in bonds from another company.This month,it sold half of those bonds for $20,640 and purchased the common stock of another company for $1,000.On the statement of cash flows for this accounting period,your company would report a net cash:

When the net cash flows from operating,investing,and financing activities are combined to arrive at the overall net change in cash,a net decrease in cash is subtracted from the beginning cash balance to calculate the ending cash balance.

When preparing the operating activities section of the statement of cash flows using the direct method,a gain or loss from selling equipment is reported in the operating activities section of the statement of cash flows.

Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

Which of the following statements about classification choices is correct?

A company's income statement for the year shows a net loss of $90,000.Additional information for the year follows: What is the net cash provided by (used in)operating activities?

St.Pierre Enterprises reported the following information in its financial statements: -Use the information above to answer the following question.What is the amount of cash payments made to suppliers during the current year?

When preparing the operating activities section of the statement of cash flows using the indirect method,accumulated depreciation is added to net income in the operating section.

The purchase of $100,000 of equipment by issuing a note would be reported:

Which of the following statements about cash flows from investing activities is correct?

What is the purpose of the statement of cash flows?

The advantages of the direct method include all of the following except:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Measuring and Evaluating Financial Performance

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Exam 12: Reporting and Interpreting the Statement of Cash Flows

Cash and cash equivalents include assets that:

Depreciation Expense is not reported on the statement of cash flows when prepared using the direct method.

The statement of cash flows cannot be used to determine:

Which of the following represents a cash inflow from financing activities?

Which of the following would not be added to net income in calculating cash flows from operating activities on a statement of cash flows prepared using the indirect method?

The introductory phase of a company's life cycle will most likely have net cash:

Two years ago,your company bought $40,000 in bonds from another company.This month,it sold half of those bonds for $20,640 and purchased the common stock of another company for $1,000.On the statement of cash flows for this accounting period,your company would report a net cash:

When the net cash flows from operating,investing,and financing activities are combined to arrive at the overall net change in cash,a net decrease in cash is subtracted from the beginning cash balance to calculate the ending cash balance.

When preparing the operating activities section of the statement of cash flows using the direct method,a gain or loss from selling equipment is reported in the operating activities section of the statement of cash flows.

Subtracting a decrease in Unearned Revenue from net income eliminates the effect of recording revenue that:

Which of the following statements about classification choices is correct?

A company's income statement for the year shows a net loss of $90,000.Additional information for the year follows: What is the net cash provided by (used in)operating activities?

St.Pierre Enterprises reported the following information in its financial statements: -Use the information above to answer the following question.What is the amount of cash payments made to suppliers during the current year?

When preparing the operating activities section of the statement of cash flows using the indirect method,accumulated depreciation is added to net income in the operating section.

The purchase of $100,000 of equipment by issuing a note would be reported:

Which of the following statements about cash flows from investing activities is correct?

What is the purpose of the statement of cash flows?

The advantages of the direct method include all of the following except:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Measuring and Evaluating Financial Performance

Filters