Question 1

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Accepted Answer

A)  $22,000 
B)  $117,000 
C)  $69,000 
D)  $37,000 
E)  $91,000 
A)  $22,000 
B)  $117,000 
C)  $69,000 
D)  $37,000 
E)  $91,000

Question 2

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

Accepted Answer

A)  Financing activities 
B)  Investing activities 
C)  Operating activities 
D)  Direct activities 
E)  Indirect activities 
A)  Financing activities 
B)  Investing activities 
C)  Operating activities 
D)  Direct activities 
E)  Indirect activities

Question 3

When preparing the operating section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

Accepted Answer

A) True 
 B)False

Question 4

The gain or loss from retirement of debt is reported under cash flows from operations on the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 5

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)  Separately lists each major item of operating cash receipts 
B)  Separately lists each major item of operating cash payments 
C)  Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities 
D)  Is required if the company is a merchandiser 
E)  Must not be used in all circumstances 
A)  Separately lists each major item of operating cash receipts 
B)  Separately lists each major item of operating cash payments 
C)  Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities 
D)  Is required if the company is a merchandiser 
E)  Must not be used in all circumstances

Question 6

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

Accepted Answer

Operating

Question 7

Explain the use of a spreadsheet in the preparation of the statement of cash flows.

Accepted Answer

The spreadsheet provides an analytical f

Question 8

The payment of cash dividends to shareholders is classified as a financing activity.

Accepted Answer

A) True 
 B)False

Question 9

Use the following information to calculate cash paid for salaries:

Accepted Answer

A)  $75,680 
B)  $82,080 
C)  $79,000 
D)  $85,400 
E)  $82,320 
A)  $75,680 
B)  $82,080 
C)  $79,000 
D)  $85,400 
E)  $82,320

Question 10

A cash based measure that is used to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.

Accepted Answer

A) True 
 B)False

Question 11

Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ______________________________.

Accepted Answer

The answer of Investments that are readily convertible to a...

Question 12

Information to prepare the statement of cash flows usually comes from three sources: (1) __________________________, (2) _______________________ and (3) ____________________.

Accepted Answer

Comparative balance

Question 13

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users on the statement of cash flows and/or in its notes.

Accepted Answer

A) True 
 B)False

Question 14

The usual first step in preparing the statement of cash flows is computing the net increase or net decrease in cash.

Accepted Answer

A) True 
 B)False

Question 15

A statement of cash flows should reconcile the differences between the beginning and ending balances of:

Accepted Answer

A)  Net income 
B)  Equity 
C)  Cash and cash equivalents 
D)  Working capital 
E)  Cash, cash equivalents and short-term investments 
A)  Net income 
B)  Equity 
C)  Cash and cash equivalents 
D)  Working capital 
E)  Cash, cash equivalents and short-term investments

Question 16

The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:

Accepted Answer

A)  Historical cost principle 
B)  Materiality principle 
C)  Full disclosure principle 
D)  Going concern principle 
E)  Business entity principle 
A)  Historical cost principle 
B)  Materiality principle 
C)  Full disclosure principle 
D)  Going concern principle 
E)  Business entity principle

Question 17

The accounting records of Miller Company provided the data below ($ in 000s). 
 
What is the net cash provided (used) by operating activities?

Accepted Answer

A)  $20,600 
B)  $27,600 
C)  $3,800 
D)  ($27,600) 
E)  $41,800 
A)  $20,600 
B)  $27,600 
C)  $3,800 
D)  ($27,600) 
E)  $41,800

Question 18

Explain how the cash flows from operating activities section of the statement of cash flows is prepared when using the indirect method.

Accepted Answer

The indirect method for preparing the op

Question 19

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

Accepted Answer

A) True 
 B)False

Question 20

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Accepted Answer

A) True 
 B)False

Exam 12: Reporting and Analyzing Cash Flows

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

When preparing the operating section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

The gain or loss from retirement of debt is reported under cash flows from operations on the statement of cash flows using the direct method.

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

Explain the use of a spreadsheet in the preparation of the statement of cash flows.

The payment of cash dividends to shareholders is classified as a financing activity.

Use the following information to calculate cash paid for salaries:

A cash based measure that is used to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.

Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ______________________________.

Information to prepare the statement of cash flows usually comes from three sources: (1) __________________________, (2) _______________________ and (3) ____________________.

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable. The entire transaction is disclosed to users on the statement of cash flows and/or in its notes.

The usual first step in preparing the statement of cash flows is computing the net increase or net decrease in cash.

A statement of cash flows should reconcile the differences between the beginning and ending balances of:

The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:

The accounting records of Miller Company provided the data below ($ in 000s). What is the net cash provided (used) by operating activities?

Explain how the cash flows from operating activities section of the statement of cash flows is prepared when using the indirect method.

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

Information to prepare the statement of cash flows usually comes from three sources: (1) ______________, (2) _ and (3) __________.