Question 1

Which of the following would be classified as an operating activity on a cash flow statement?

Accepted Answer

A)  Purchase of a building 
B)  Purchase of inventory 
C)  Repayment of loan 
D)  Issue of shares 
A)  Purchase of a building 
B)  Purchase of inventory 
C)  Repayment of loan 
D)  Issue of shares B

Question 2

From the following information,calculate the cash flow from operating activities:
$$\begin{array} { l c } 
\text { Net Income } & 80,000 \
\text { Depreciation } & 15,000 \
\text { Increase in accounts receivable } & 5,000 \
\text { Decrease in accounts payable } & 5,000 \
\text { Increase in inventory } & 5,000
\end{array}$$

Accepted Answer

A)  £80,000 net cash inflow 
B)  £70,000 net cash inflow 
C)  £75,000 net cash inflow 
D)  £110,000 net cash inflow 
A)  £80,000 net cash inflow 
B)  £70,000 net cash inflow 
C)  £75,000 net cash inflow 
D)  £110,000 net cash inflow A

Question 3

Not all revenues are receipts of cash

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following statements is false?

Accepted Answer

A)  Payment for inventory not sold until the next period, is an example of a payment of cash which is not an expense 
B)  Borrowing money is an example of a receipt of cash which is not revenue 
C)  Discount allowed to customers for prompt payment, is an expense that is treated as a payment of cash 
D)  Depreciation is an expense which is not a payment of cash 
A)  Payment for inventory not sold until the next period, is an example of a payment of cash which is not an expense 
B)  Borrowing money is an example of a receipt of cash which is not revenue 
C)  Discount allowed to customers for prompt payment, is an expense that is treated as a payment of cash 
D)  Depreciation is an expense which is not a payment of cash

Question 5

All receipts of cash are treated as revenues

Accepted Answer

A) True 
 B)False

Question 6

The cash flow statement reports inflows and outflows of cash under which three headings?

Accepted Answer

A)  Operating activities, investing activities and expense activities 
B)  Operating activities, investing activities and equity activities 
C)  Operating activities, investing activities and finance activities 
D)  Operating activities, investing activities and debt activities 
A)  Operating activities, investing activities and expense activities 
B)  Operating activities, investing activities and equity activities 
C)  Operating activities, investing activities and finance activities 
D)  Operating activities, investing activities and debt activities

Question 7

Which of the following statements is false?

Accepted Answer

A)  Not all payments of cash are expenses 
B)  Some payments are not charged against profits 
C)  Some receipts do not add to cash 
D)  All revenues are receipts of cash 
A)  Not all payments of cash are expenses 
B)  Some payments are not charged against profits 
C)  Some receipts do not add to cash 
D)  All revenues are receipts of cash

Question 8

Which of the following statements is correct?

Accepted Answer

A)  Interest paid is an inflow of cash 
B)  Taxation paid is an inflow of cash 
C)  Decrease in trade payables is an outflow of cash 
D)  A reduction in inventory is treated as an inflow of cash 
A)  Interest paid is an inflow of cash 
B)  Taxation paid is an inflow of cash 
C)  Decrease in trade payables is an outflow of cash 
D)  A reduction in inventory is treated as an inflow of cash

Question 9

The statement of financial position and income statement are based on the accruals concept

Accepted Answer

A) True 
 B)False

Question 10

An increase in working capital would appear on the cash flow statement as a:

Accepted Answer

A)  Financing activity 
B)  Operating activity 
C)  Investing activity 
D)  Debt activity 
A)  Financing activity 
B)  Operating activity 
C)  Investing activity 
D)  Debt activity

Question 11

Generating lots of cash is a definite sign of success

Accepted Answer

A) True 
 B)False

Question 12

The redemption of a loan would appear on the cash flow statement as a:

Accepted Answer

A)  Financing activity 
B)  Operating activity 
C)  Investing activity 
D)  Debt activity 
A)  Financing activity 
B)  Operating activity 
C)  Investing activity 
D)  Debt activity

Question 13

Riff Raff plc reported the following cash flow information for year 2010:
$$\begin{array} { l c } 
\text { Cash used in operating activities } & 35,000 \
\text { Cash used in investing activities } & ( 28,000 ) \
\text { Cash generated from finance activities } & \underline { 23,000 } \
\text { Net cash outflow } & 30,000
\end{array}$$
Which of the following balance sheet extracts for Riff Raff plc is correct?

Accepted Answer

A) $\begin{array} { c c c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 7,000 & 27,000
\end{array}$ 
B) B. $\begin{array} { l r r } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & ( 7,000 ) & 23,000
\end{array}$ 
C) C. $\begin{array} { l r r } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 10,000 & 30,000
\end{array}$ 
D) D.$\begin{array} { c c r } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 10,000 & ( 20,000 )
\end{array}$ 
A) $\begin{array} { c c c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 7,000 & 27,000
\end{array}$ 
B) B. $\begin{array} { l r r } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & ( 7,000 ) & 23,000
\end{array}$ 
C) C. $\begin{array} { l r r } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 10,000 & 30,000
\end{array}$ 
D) D.$\begin{array} { c c r } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 10,000 & ( 20,000 )
\end{array}$

Question 14

B.Scott Ltd reported the following cash flow information for year 2010: $$\begin{array} { l c } 
\text { Cash used in operating activities } & ( 4,000 ) \
\text { Cash used in investing activities } & ( 36,000 ) \
\text { Cash generated from finance activities } & \underline { 32,000 } \
\text { Net cash outflow } & ( 8,000 )
\end{array}$$ Which of the following balance sheet extracts for B.Scott Ltd is correct?

Accepted Answer

A) 
$\begin{array} { l l c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 16,000 & 24,000
\end{array}$ 
B) $$\begin{array} { l l c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 16,000 & 48,000
\end{array}$$ 
C) 
$$\begin{array} { c c c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 4,000 & ( 4,000 )
\end{array}$$ 
D) 
$$\begin{array} { c r r } 
& 2009 & 2010 \
\text { Cash } & 4,000 & ( 8,000 )
\end{array}$$ 
A) 
$\begin{array} { l l c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 16,000 & 24,000
\end{array}$ 
B) $$\begin{array} { l l c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 16,000 & 48,000
\end{array}$$ 
C) 
$$\begin{array} { c c c } 
& \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\text { Cash } & 4,000 & ( 4,000 )
\end{array}$$ 
D) 
$$\begin{array} { c r r } 
& 2009 & 2010 \
\text { Cash } & 4,000 & ( 8,000 )
\end{array}$$

Question 15

If net cash from operating activities is £350,000 and the dividend paid is £140,000,what is the dividend cover?

Accepted Answer

A)  0.4 times 
B)  2.5 times 
C)  1.6 times 
D)  0.6 times 
A)  0.4 times 
B)  2.5 times 
C)  1.6 times 
D)  0.6 times

Question 16

Using the following information,calculate the cash flow from operating activities:
Cash from trade receivables £80,000,cash sales £30,000; depreciation expense £3,000; rent paid £2,000

Accepted Answer

A)  £105,000 net cash inflow from operating activities 
B)  £110,000 net cash inflow from operating activities 
C)  £108,000 net cash inflow from operating activities 
D)  £110,000 net cash outflow from operating activities 
A)  £105,000 net cash inflow from operating activities 
B)  £110,000 net cash inflow from operating activities 
C)  £108,000 net cash inflow from operating activities 
D)  £110,000 net cash outflow from operating activities

Question 17

The annual depreciation expense is an outflow of cash

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is false?

Accepted Answer

A)  An increase in trade receivables is treated as an outflow of cash 
B)  Interest paid is an outflow of cash 
C)  An increase in trade payables is treated as an outflow of cash 
D)  An increase in inventory is treated as an outflow of cash 
A)  An increase in trade receivables is treated as an outflow of cash 
B)  Interest paid is an outflow of cash 
C)  An increase in trade payables is treated as an outflow of cash 
D)  An increase in inventory is treated as an outflow of cash

Question 19

Using the following information,calculate the cash flow from investing activities:
Disposal of fixed assets for £9,000,with a gain of £1,000; purchase of machine for £11,000; pay-off mortgage £3,000; dividends paid £20,000

Accepted Answer

A)  £4,000 net cash outflow from investing activities 
B)  24,000 net cash outflow from investing activities 
C)  5,000 net cash inflow from investing activities 
D)  5,000 net cash outflow from investing activities 
A)  £4,000 net cash outflow from investing activities 
B)  24,000 net cash outflow from investing activities 
C)  5,000 net cash inflow from investing activities 
D)  5,000 net cash outflow from investing activities

Question 20

If the opening balance on accounts receivable was £35,000 with a closing balance of £15,000 and the income statement reported revenue of £180,000,what is the cash collected from customers?

Accepted Answer

A)  £195,000 
B)  £200,000 
C)  £20,000 
D)  £145,000 
A)  £195,000 
B)  £200,000 
C)  £20,000 
D)  £145,000

Which of the following would be classified as an operating activity on a cash flow statement?

From the following information,calculate the cash flow from operating activities: Net Income 80,000 Depreciation 15,000 Increase in accounts receivable 5,000 Decrease in accounts payable 5,000 Increase in inventory 5,000

Not all revenues are receipts of cash

Which of the following statements is false?

All receipts of cash are treated as revenues

The cash flow statement reports inflows and outflows of cash under which three headings?

Which of the following statements is false?

Which of the following statements is correct?

The statement of financial position and income statement are based on the accruals concept

An increase in working capital would appear on the cash flow statement as a:

Generating lots of cash is a definite sign of success

The redemption of a loan would appear on the cash flow statement as a:

Riff Raff plc reported the following cash flow information for year 2010: Cash used in operating activities 35,000 Cash used in investing activities (28,000) Cash generated from finance activities Net cash outflow 30,000 Which of the following balance sheet extracts for Riff Raff plc is correct?

B.Scott Ltd reported the following cash flow information for year 2010: Cash used in operating activities (4,000) Cash used in investing activities (36,000) Cash generated from finance activities Net cash outflow (8,000) Which of the following balance sheet extracts for B.Scott Ltd is correct?

If net cash from operating activities is £350,000 and the dividend paid is £140,000,what is the dividend cover?

Using the following information,calculate the cash flow from operating activities: Cash from trade receivables £80,000,cash sales £30,000; depreciation expense £3,000; rent paid £2,000

The annual depreciation expense is an outflow of cash

Which of the following statements is false?

Using the following information,calculate the cash flow from investing activities: Disposal of fixed assets for £9,000,with a gain of £1,000; purchase of machine for £11,000; pay-off mortgage £3,000; dividends paid £20,000

If the opening balance on accounts receivable was £35,000 with a closing balance of £15,000 and the income statement reported revenue of £180,000,what is the cash collected from customers?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters

Exam 6: Cash Flow Statements: Understanding and Preparation

Which of the following would be classified as an operating activity on a cash flow statement?

From the following information,calculate the cash flow from operating activities: Net Income 80,000 Depreciation 15,000 Increase in accounts receivable 5,000 Decrease in accounts payable 5,000 Increase in inventory 5,000

Not all revenues are receipts of cash

Which of the following statements is false?

All receipts of cash are treated as revenues

The cash flow statement reports inflows and outflows of cash under which three headings?

Which of the following statements is false?

Which of the following statements is correct?

The statement of financial position and income statement are based on the accruals concept

An increase in working capital would appear on the cash flow statement as a:

Generating lots of cash is a definite sign of success

The redemption of a loan would appear on the cash flow statement as a:

Riff Raff plc reported the following cash flow information for year 2010: Cash used in operating activities 35,000 Cash used in investing activities (28,000) Cash generated from finance activities Net cash outflow 30,000 Which of the following balance sheet extracts for Riff Raff plc is correct?

B.Scott Ltd reported the following cash flow information for year 2010: Cash used in operating activities (4,000) Cash used in investing activities (36,000) Cash generated from finance activities Net cash outflow (8,000) Which of the following balance sheet extracts for B.Scott Ltd is correct?

If net cash from operating activities is £350,000 and the dividend paid is £140,000,what is the dividend cover?

Using the following information,calculate the cash flow from operating activities: Cash from trade receivables £80,000,cash sales £30,000; depreciation expense £3,000; rent paid £2,000

The annual depreciation expense is an outflow of cash

Which of the following statements is false?

Using the following information,calculate the cash flow from investing activities: Disposal of fixed assets for £9,000,with a gain of £1,000; purchase of machine for £11,000; pay-off mortgage £3,000; dividends paid £20,000

If the opening balance on accounts receivable was £35,000 with a closing balance of £15,000 and the income statement reported revenue of £180,000,what is the cash collected from customers?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters