Deck 14: How Well Am I Doing Financial Statement Analysis

Question 1

The operation activities section of the cash flow statement will exclude changes in all noncurrent balance sheet accounts.

Answer 1

False

Question 2

A cash flow statement will be divided into separate sections reporting cash flows resulting from operating activities,investing activities,financing activities and shareholder equity activities.

Answer 2

False

Question 3

An increase in a noncash asset will be reported as a source of cash on the cash flow statement.

Answer 3

False

Question 4

Short-term highly liquid investments such as treasury bills which may be included on the balance sheet within marketable securities will be considered cash in preparation of the cash flow statement.

Question 5

If an entity acquires a capital asset and pays for it in full with the issuance of long-term debt,a use of cash will be reported under investing activities and a source of cash of the same amount will be reported under financing activities.

Question 6

Accounts receivable increased by $100,000 and accounts payable decreased by $50,000.What will be the net result in terms of cash flow?

A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $150,000.
D) Cash decreased by $150,000.

Question 7

Which of the following statements is true about the operating activities section?

A) In a direct method cash flow statement,the section starts with net income.
B) Net income is not included in an indirect method cash flow statement.
C) Regardless of the method used,net cash from operating activities is the same.
D) The indirect method results in a higher amount for cash from operating activities if there is net income and in a lower amount if there is a net loss.

Question 8

If an entity receives cash from the issuance of long-term debt during a year and also pays out cash to reduce a long-term debt,both a cash inflow and a cash outflow will be reported in the financing activities section of the cash flow statement.

Question 9

If an entity both sells capital assets and purchases capital assets during the year,only the net cash inflow or outflow will be reported in the investing section of the cash flow statement.

Question 10

In which section of the cash flow statement will dividends payable be reported?

A) Operating activities
B) Investing activities
C) Financing activities
D) In none of the sections - it is not a cash flow

Question 11

Using the indirect method,the operating activities section of the cash flow statement is constructed starting with net income and adjusting it to a cash basis.

Question 12

Since depreciation expense is added back to net income in the operating section of an indirect method cash flow statement,if depreciation expense increases cash flows will similarly increase.

Question 13

A decrease in a liability will be reported as a use of cash on the cash flow statement.

Question 14

If the direct method to prepare the operating section of the cash flow statement is used instead of the indirect method,changes will be required in the financing and investing sections too.

Question 15

Which of the following statements is correct about cash flows?

A) Net income is a use of cash.
B) Net loss is a source of cash.
C) A decrease in noncash assets is a source of cash.
D) An increase in noncash assets is a source of cash.

Question 16

When an entity uses the direct method in the operating activities section of the cash flow statement it will also have to report operating cash flows under the indirect method.

Question 17

Regardless of the basis of accounting used,dividends will always be reported as a use of cash in the financing activities section of the cash flow statement.

Question 18

In which section of the cash flow statement will the cash outflow from purchasing land be reported?

A) Operating activities
B) Investing activities
C) Financing activities
D) In none of the sections - it is not a cash flow

Question 19

Inventory decreased by $100,000 and wages payable decreased by $50,000.What will be the net result in terms of cash flow?

A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $150,000.
D) Cash decreased by $150,000.

Question 20

Accounts payable increased by $100,000 and accounts receivable decreased by $50,000.What will be the net result in terms of cash flow?

A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $150,000.
D) Cash decreased by $150,000.

Question 21

The total of wage expense to employees for the year was $600,000.Wages payable to employees at the beginning of the year were $15,000 and at the end of the year $10,000.Wage expense resulted in cash outflows of?

A) $595,000
B) $600,000
C) $605,000
D) $610,000

Question 22

Cash flow from operating activities was?

A) $343,000
B) $353,000
C) $383,000
D) $393,000

Question 23

Inventory increased by $100,000 and wages payable increased by $50,000.What will be the net result in terms of cash flow?

A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $150,000.
D) Cash decreased by $150,000.

Question 24

A business sold equipment for $15,000 in cash proceeds which had an original cost of $50,000 and accumulated depreciation at the date of sale of $40,000.Which of the statements below is true?

A) A gain of $5,000 was reported in the income statement and a cash inflow of $20,000 was reported in the cash flow statement.
B) A gain was not reported in the income statement but a cash inflow of $15,000 was reported in the cash flow statement.
C) A gain was not reported in the income statement but a cash inflow of $20,000 was reported in the cash flow statement.
D) A gain of $5,000 was reported in the income statement and a cash inflow of $15,000 was reported in the cash flow statement.

Question 25

Long-term debt on the balance sheet increased by $100,000 and dividends payable increased by $50,000.What will be the net result in cash flow?

A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $100,000.
D) Cash decreased by $150,000.

Question 26

Cash flow from investing activities was?

A) $0
B) $(20,000)
C) $(40,000)
D) $(60,000)

Question 27

Long-term debt on the balance sheet increased by $100,000 and $50,000 in cash dividends were paid.What will be the net result in cash flow?

A) Cash increased by $50,000.
B) Cash decreased by $50,000.
C) Cash increased by $150,000.
D) Cash decreased by $150,000.

Question 28

The total of wage expense to employees for the year was $600,000.Wages payable to employees at the beginning of the year were $10,000 and at the end of the year $15,000.Wage expense resulted in cash outflows of?

A) $595,000
B) $600,000
C) $605,000
D) $610,000

Question 29

During the year sales to customers were $300,000.Accounts receivable from customers at the beginning of the year were $25,000 and at the end of the year $50,000.As a result cash inflows from sales to customers totalled?

A) $275,000
B) $300,000
C) $325,000
D) $350,000

Question 30

During the year sales to customers were $300,000.Accounts receivable from customers at the beginning of the year were $50,000 and at the end of the year $25,000.As a result cash inflows from sales to customers totalled?

A) $275,000
B) $300,000
C) $325,000
D) $350,000

Question 31

Financial statements for Larned Company appear below:

Question 32

A business bought some land for future expansion at a cost of $100,000 and paid for it in full by issuing additional shares of capital stock.This will be reported in which section(s)of the cash flow statement?

A) Only in the investing activities section.
B) Only in the financing activities section.
C) In both the investing activities and financing activities sections.
D) It will not be reported in either the investing activities or the financing activities section.

Question 33

Cash flow from financing activities was?

A) $(293,000)
B) $(30,000)
C) $(20,000)
D) $10,000

Question 34

The non-current asset section of a business's balance sheet is below. These were the only depreciable assets owned by the business.During the current year the business sold equipment which it had purchased five years previously at a cost of $10,000.The accumulated depreciation on the equipment sold was $8,000 and the cash received from the sale was $3,000.There were no additions of equipment during the year.What was the depreciation expense recorded during the current year?

A) $1,000
B) $8,000
C) $9,000
D) Cannot be determined with the information provided