Question 1

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Accepted Answer

The answer of Cash flow from operations should include none...

Question 2

EBITDA not only ignores four expenses but also ignores changes in __________________________________________________ accounts.

Accepted Answer

The answer of EBITDA not only ignores four expenses but...

Question 3

Listed below is a list of cash inflows and cash outflows for Toggle Inc.
1. Cash received from issuing debt
2. Cash received from interest earned on a bond investment
3. Cash used to purchase property
4. Cash used to repay debt
5. Cash received from collections of loans
6. Cash paid for retiring common stock
7. Cash paid to employees for salaries
8. Cash from the sale of marketable securities
9. Cash used to pay dividends
10. Cash from the sale of services to customers
11. Cash paid to government agencies for taxes
12. Cash received from the sale of equipment
For each item indicate where it should appear on Toggle's statement of cash flows. Select from:
a. Cash inflows from operating activities
b. Cash outflows from operating activities
c. Cash inflows from investing activities
d. Cash outflows from investing activities
e. Cash inflows from financing activities
f. Cash outflows from financing activities

Accepted Answer

The answer of Listed below is a list of cash...

Question 4

When preparing the statement of cash flows using the indirect method an increase in inventories would appear as

Accepted Answer

A)  a decrease in the operating activities section 
B)  an increase in the operating activities section 
C)  a use of cash in the investing activities section 
D)  a source of cash in the investing activities section

Question 5

Under the ______________________________ of preparing the statement of cash flow's operating activities section firms list the cash flows from selling goods and services and then subtract the cash outflows to providers of goods and services.

Accepted Answer

The answer of Under the ______________________________ of preparing the statement...

Question 6

Selected financial statement information for Filmco appears below:
   Calculate the amount of cash collected from customers and the amount of cash spent on inventory for 2006 by Filmco.

Accepted Answer

The answer of Selected financial statement information for Filmco appears...

Question 7

____________________ activities relate to transactions between the firm and its creditors and owners.

Accepted Answer

The answer of ____________________ activities relate to transactions between the...

Question 8

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.

Question 9

A company in the growth phase of its product life cycle will normally have the following pattern of cash flows

Accepted Answer

A)  Negative cash flows from operations, negative cash flows from investing and positive cash flows from financing. 
B)  Negative or positive cash flows from operations, negative cash flows from investing and positive cash flows from financing. 
C)  Positive cash flows from operations, positive cash flows from investing and positive cash flows from financing. 
D)  Negative or positive cash flows from operations, negative cash flows from investing and negative cash flows from financing.

Question 10

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

Question 11

Olive Corporation manufactures food processing equipment. Use Olive Corporation's two most recent balance sheets and most recent income statement to prepare a statement of cash flows for 2006. The company paid dividends of $6,250 during 2006.

Accepted Answer

The answer of Olive Corporation manufactures food processing equipment. Use...

Question 12

When preparing the statement of cash flows using the indirect method the payment of dividends would appear as

Accepted Answer

A)  a decrease in the operating activities section 
B)  an increase in the operating activities section 
C)  a use of cash in the financing activities section 
D)  a source of cash in the financing activities section

Question 13

Discuss the correlations that have been found between net income, net income plus or minus Type 1 adjustments ( adjustments to net income for revenues, expenses, gains and losses that are recognized in income and are associated with changes in noncurrent assets, noncurrent liabilities, and shareholders' equity, but do not affect cash by the same amounts for the period), and cash flow from operations.

Accepted Answer

The answer of Discuss the correlations that have been found...

Question 14

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be

Accepted Answer

A)  greater than net income 
B)  less than net income 
C)  greater than the change in working capital from operations 
D)  greater than the change in cash

Question 15

Cash collected from customers would appear in the operating activities section of a statement of cash flows prepared using the ____________________ method

Accepted Answer

The answer of Cash collected from customers would appear in...

Question 16

Fizzzle Inc. sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale. How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

Accepted Answer

A)  A sale of equipment is a investing activity, the transaction will not affect the operating activities section. 
B)  The gain is added back to net income in the operating activities section. 
C)  The gain is subtracted from net income in the operating activities section. 
D)  The entire sales price is subtracted from net income in the operating activities section.

Question 17

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Accepted Answer

The answer of The period in which a firm commences...

Question 18

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Accepted Answer

A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities.

Question 19

____________________ activities relate to the acquisition and sale of noncurrent assets, particularly property, plant and equipment.

Accepted Answer

The answer of ____________________ activities relate to the acquisition and...

Question 20

Which of the following is not an expense excluded when calculating EBITDA?

Accepted Answer

A)  depreciation expense 
B)  administrative expense 
C)  interest expense 
D)  tax expense

Exam 3: Income Flows Versus Cash Flows: Key Relationships in the Dynamics of a Business