Exam 5: Communicating and Interpreting Accounting Information

If there is a change in cash,there will be a change in one or more noncash accounts.

Which of the following would not be a cash equivalent?

In 2012,C Co.disclosed cash paid for property,plant and equipment of $1.069 million and cash flow from operations of $3.883 million.Their average property,plant and equipment from the comparative statement of financial position was $3.968 million.Compute C Co.'s capital acquisitions ratio for 2012.

The quality of earnings ratio (Cash Flow from Operating Activities ¸ Profit)measures the portion of profit that was generated in cash.

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

Restless Company's 20B income statement reported total sales revenue of $100,000.The 20A-20B,comparative statements of financial position showed that trade receivables decreased by $10,000.What were the 20B "cash receipts from customers"?

Matlock Company reported total sales revenue of $55,000 and total expenses amounting to $45,000 on its income statement for the year ended December 31,20B.During 20B,trade receivables decreased by $4,000,merchandise inventory decreased by $6,000,trade payables increased by $2,000 and depreciation of $8,000 was recorded.Therefore,based only on this information,the net cash flow from operating activities for 20B was which of the following?

For an investment to qualify as a cash equivalent,it must be readily convertible to a known amount of cash and which of the following?

The amortization of a patent is treated in a similar manner to depreciation of a building when preparing the operating activities section of the statement of cash flows using the indirect method.

Nelson Company collected the following data in its accounting records in 20B: No new equipment was purchased during the year.What was the cash inflow from the sale of equipment in 20B?

Non-cash investing and financing activities are disclosed only as supplemental disclosures to the statement of cash flows in either narrative or schedule form.

Which of the following is not true of the direct method of preparing a statement of cash flows?

The date in the heading of a statement of cash flows should say,"At December 31,20A," rather than "For the Year Ended December 31,20A."

The purchase of a piece of equipment in exchange for common shares must be reported on the statement of cash flows.

Assume the 20D income statement reported total sales revenue of $160,000.The 20C-20D,comparative statements of financial position showed that trade receivables increased by $10,000.What was the "cash inflow from customers" for 20D?

Travis Company reported a profit for 20B of $20,000,building depreciation expense of $6,000,and amortization expense (patent)of $5,000.Also,trade payables increased by $7,000 and inventory decreased by $2,000.What was the amount of "cash flows from operating activities" for 20B?

Very few companies use the direct method for disclosing their cash flows from operating activities.

Short-term investments in marketable equity securities are considered the equivalent of cash (i.e.,they are combined with cash)in preparing the statement of cash flows.

Which statement regarding the indirect method is false?

Indicate the proper classification for each of the transactions by inserting the proper letter in the space to the left. Classifications A.Operating Activities B.Investing Activities C.Financing Activities D.Schedule of non-cash transactions E.Not included in the statement of cash flows Transaction ____ 1.Declared a cash dividend. ____ 2.Paid a previously declared cash dividend. ____ 3.Issued shares for a new machine. ____ 4.Borrowed cash on a short-term note. ____ 5.Borrowed cash on a long-term note. ____ 6.Purchased treasury shares for cash. ____ 7.Paid interest on a note payable. ____ 8.Purchased treasury shares and gave a long-term note payable. ____ 9.Purchased land with a short-term note payable. ___ 10.Purchased shares in another company. ___ 11.Purchased land for cash.