Question 1

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. C

Question 2

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. C

Question 3

Normally,cash flows from investing activities will start providing cash during which phase of the product life cycle?

Accepted Answer

A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline 
A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline C

Question 4

Which of the following statements is true?

Accepted Answer

A)  A cash dividend is an operating cash outflow. 
B)  Cash paid to repurchase treasury stock is an investing cash outflow. 
C)  Cash paid to acquire stock in another company is a financing outflow. 
D)  Purchase of a patent is an investing cash outflow. 
A)  A cash dividend is an operating cash outflow. 
B)  Cash paid to repurchase treasury stock is an investing cash outflow. 
C)  Cash paid to acquire stock in another company is a financing outflow. 
D)  Purchase of a patent is an investing cash outflow.

Question 5

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.

Question 6

A firm's cash flows will differ from net income each period for all of the following reasons except:

Accepted Answer

A)  cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. 
B)  cash expenditures to employees,suppliers,and governments do not necessarily occur in the same period in which a firm recognizes expenses. 
C)  the company is sustaining losses each period. 
D)  cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement. 
A)  cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. 
B)  cash expenditures to employees,suppliers,and governments do not necessarily occur in the same period in which a firm recognizes expenses. 
C)  the company is sustaining losses each period. 
D)  cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement.

Question 7

The receipt of dividends from an investee would be classified as ____________________ activities in the statement of cash flows.

Accepted Answer

The answer of The receipt of dividends from an investee...

Question 8

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 9

Adophus,Inc.'s 2010 income statement reported total revenues of $850,000 and total expenses (including $40,000 depreciation)of $720,000.The 2010 balance sheet reported the following: accounts receivable beginning balance of $50,000 and ending balance of $40,000;accounts payable beginning balance of $22,000 and ending balance of $28,000.Therefore,based only on this information and using the indirect method,the 2010 net cash inflow from operating activities was:

Accepted Answer

A)  $126,000 
B)  $186,000 
C)  $166,000 
D)  $174,000 
A)  $126,000 
B)  $186,000 
C)  $166,000 
D)  $174,000

Question 10

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 11

Which of the following is the correct formula for calculating cash collections from customers?

Accepted Answer

A)  sales for the period plus accounts receivable at the beginning of the period 
B)  sales for the period plus accounts receivable at the beginning of the period minus accounts receivable at the end of the period 
C)  sales for the period plus accounts receivable at the end of the period 
D)  sales for the period plus accounts receivable at the end of the period minus accounts receivable at the beginning of the period 
A)  sales for the period plus accounts receivable at the beginning of the period 
B)  sales for the period plus accounts receivable at the beginning of the period minus accounts receivable at the end of the period 
C)  sales for the period plus accounts receivable at the end of the period 
D)  sales for the period plus accounts receivable at the end of the period minus accounts receivable at the beginning of the period

Question 12

As a complement to the balance sheet and the income statement,the statement of cash flows is an informative statement for analysts for all the following reasons except:

Accepted Answer

A)  The statement of cash flows provides information to assess the financial health of a firm.Analysts increasingly recognize that cash flows do not necessarily track income flows.A firm with a healthy income statement is not necessarily financially healthy,and vice versa.Cash requirements to service debt,for example,may outstrip the ability of operations to generate cash. 
B)  The existence of negative cash flows from operations can be eliminated by using this financial statement. 
C)  The statement of cash flows highlights accounting accruals,which can provide insight into the overall sustainability and quality of a firm's reported earnings. 
D)  Analysts who understand the types of information this statement presents and the kinds of interpretations that are appropriate find that the statement of cash flows reveals information about the economic characteristics of a firm's industry,its strategy,
And the stage in its life cycle. 
A)  The statement of cash flows provides information to assess the financial health of a firm.Analysts increasingly recognize that cash flows do not necessarily track income flows.A firm with a healthy income statement is not necessarily financially healthy,and vice versa.Cash requirements to service debt,for example,may outstrip the ability of operations to generate cash. 
B)  The existence of negative cash flows from operations can be eliminated by using this financial statement. 
C)  The statement of cash flows highlights accounting accruals,which can provide insight into the overall sustainability and quality of a firm's reported earnings. 
D)  Analysts who understand the types of information this statement presents and the kinds of interpretations that are appropriate find that the statement of cash flows reveals information about the economic characteristics of a firm's industry,its strategy,
And the stage in its life cycle.

Question 13

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

Accepted Answer

working ca

Question 14

Use the following information to prepare a statement of cash flows (indirect method)for Sink Industries for the year ended December 31,2010:
Net income for the year 2010 was $5,000.Accounts receivable decreased $2,000,while inventories increased $4,000,and accounts payable decreased $7,000.Depreciation expense included in net income was $8,000.
During the year,a piece of land held for future expansion was sold for its book value of $8,000 and a new service truck was purchased for $14,000.
The company borrowed $18,000 on a two-year note from the bank.Dividends of $6,000 were paid in cash.Preferred stock was issued to retire $7,000 of long-term notes payable.
The beginning cash balance was $10,000 and the ending balance was $20,000.

Accepted Answer

The answer of Use the following information to prepare a...

Question 15

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 16

Which of the following transactions would not create a cash flow?

Accepted Answer

A)  Payment of a cash dividend. 
B)  The company purchased some of its own stock from a stockholder. 
C)  Amortization of patent for the period. 
D)  Sale of equipment at book value (i.e.no gain or loss). 
A)  Payment of a cash dividend. 
B)  The company purchased some of its own stock from a stockholder. 
C)  Amortization of patent for the period. 
D)  Sale of equipment at book value (i.e.no gain or loss).

Question 17

As products move through the maturity phase,companies invest to ___________ productive capacity.

Accepted Answer

A)  increase 
B)  decrease 
C)  maintain 
D)  Not enough information to answer this question. 
A)  increase 
B)  decrease 
C)  maintain 
D)  Not enough information to answer this question.

Question 18

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Accepted Answer

operating

Question 19

Jarrett Company,home improvement retailer,reported cost of goods sold of $33,729 million for the fiscal year ended January 30,2010.It reported merchandise inventories of $9,611 million at the beginning of fiscal 2010 and $10,209 million at the end of fiscal 2010.It reported
accounts payable to suppliers of $5,713 million at the beginning of fiscal 2010 and $6,109
million at the end of fiscal 2010.Compute the amount of cash paid to merchandise suppliers
during fiscal 2010.

Accepted Answer

The answer of Jarrett Company,home improvement retailer,reported cost of goods...

Question 20

Normally,cash flows from operations will peak during which phase of the product life cycle?

Accepted Answer

A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline 
A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline

A cash inflow from financing activities includes:

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

Normally,cash flows from investing activities will start providing cash during which phase of the product life cycle?

Which of the following statements is true?

The expense incurred by issuing stock options should be:

A firm's cash flows will differ from net income each period for all of the following reasons except:

The receipt of dividends from an investee would be classified as ____________________ activities in the statement of cash flows.

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

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

Which of the following is the correct formula for calculating cash collections from customers?

As a complement to the balance sheet and the income statement,the statement of cash flows is an informative statement for analysts for all the following reasons except:

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

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?

Which of the following transactions would not create a cash flow?

As products move through the maturity phase,companies invest to ___________ productive capacity.

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Normally,cash flows from operations will peak during which phase of the product life cycle?

Overview of Financial Reporting,financial Statement Analysis,and Valuation

Asset and Liability Valuation and Income Recognition

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing Activities

Operating Activities

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

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

A cash inflow from financing activities includes:

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

Normally,cash flows from investing activities will start providing cash during which phase of the product life cycle?

Which of the following statements is true?

The expense incurred by issuing stock options should be:

A firm's cash flows will differ from net income each period for all of the following reasons except:

The receipt of dividends from an investee would be classified as ____________________ activities in the statement of cash flows.

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

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

Which of the following is the correct formula for calculating cash collections from customers?

As a complement to the balance sheet and the income statement,the statement of cash flows is an informative statement for analysts for all the following reasons except:

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

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?

Which of the following transactions would not create a cash flow?

As products move through the maturity phase,companies invest to ___________ productive capacity.

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Normally,cash flows from operations will peak during which phase of the product life cycle?

Overview of Financial Reporting,financial Statement Analysis,and Valuation

Asset and Liability Valuation and Income Recognition

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing Activities

Operating Activities

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