Question 1

Indicate where the purchase of land for cash would appear, if at all, on the indirect statement of cash flows.

Accepted Answer

A)   Operating activities section
B)   Investing activities section
C)   Financing activities section
D)   Does not represent a cash flowE) C) and D)
F) A) and C)

Question 2

A measure that describes the cash remaining from operations after adjustment for capital expenditures and dividends is

Accepted Answer

A)   adjusted cash from operations.
B)   cash provided by operations.
C)   free cash flow.
D)   net cash provided by operating activities.E) A) and B)
F) B) and D)

Question 3

Which one of the following items is not generally used in preparing a statement of cash flows?

Accepted Answer

A)   Adjusted trial balance
B)   Comparative balance sheets
C)   Current income statement
D)   Additional informationE) C) and D)
F) B) and D)

Question 4

Generally, the most important category on the statement of cash flows is cash flows from

Accepted Answer

A)   operating activities.
B)   investing activities.
C)   financing activities.
D)   significant noncash activities.E) None of the above
F) All of the above

Question 5

Which of the following transactions does not affect cash during a period?

Accepted Answer

A)   Write-off of an uncollectible account
B)   Collection of an accounts receivable
C)   Sale of treasury stock
D)   Exercise of the call option on bonds payableE) C) and D)
F) B) and D)

Question 6

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Accepted Answer

A) True 
 B)False

Question 7

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would be subtracted from net income using the indirect method?

Accepted Answer

A)   Depreciation expense
B)   An increase in accounts receivable
C)   An increase in accounts payable
D)   A decrease in prepaid expensesE) A) and D)
F) B) and D)

Question 9

Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

Accepted Answer

A) True 
 B)False

Question 10

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Accepted Answer

A)   the adjusted trial balance.
B)   the current period's balance sheet.
C)   a comparative balance sheet.
D)   a comparative income statement.E) B) and D)
F) A) and B)

Question 11

The payment of interest on bonds payable is classified as a cash outflow from operating activities.

Accepted Answer

A) True 
 B)False

Question 12

If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

Accepted Answer

A)   two cash effects can be netted and presented as one item in the investing activities section.
B)   cash inflow and cash outflow should be reported separately in the investing activities section.
C)   two cash effects can be netted and presented as one item in the financing activities section.
D)   cash inflow and cash outflow should be reported separately in the financing activities section.E) A) and B)
F) A) and C)

Question 13

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows?
1.	Declaration and payment of a cash dividend during the period.
2.	Net income for the period.

Accepted Answer

A)  	1
B)  	2
C)  	Neither 1 nor 2.
D)  	Both 1 and 2.E) A) and B)
F) None of the above

Question 14

If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Accepted Answer

A)   net increase in cash of $120,000.
B)   net decrease in cash of $120,000.
C)   increase in cash of $250,000 and a decrease in cash of $130,000.
D)   net gain on retirement of bonds of $120,000.E) A) and C)
F) A) and D)

Question 15

On the statement of cash flows using the indirect method, patent amortization expense will

Accepted Answer

A)   be added to net income in the operating section.
B)   be deducted from net income in the operating section.
C)   appear as an inflow of cash in the investing section.
D)   appear as an outflow of cash in the investing section.E) A) and C)
F) All of the above

Question 16

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

Accepted Answer

A)   cash flows from operating activities.
B)   cash flows from investing activities.
C)   cash flows from financing activities.
D)   usually different from year to year.E) A) and B)
F) A) and C)

Question 17

When equipment is sold for cash, the amount received is reflected as a cash

Accepted Answer

A)   inflow in the operating section.
B)   inflow in the financing section.
C)   inflow in the investing section.
D)   outflow in the operating section.E) A) and B)
F) None of the above

Question 18

Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?

Accepted Answer

A)   Cash receipts from customers
B)   Cash paid for income taxes
C)   Gain on sale of equipment
D)   Cash paid to employeesE) B) and D)
F) A) and B)

Question 19

Financing activities involve

Accepted Answer

A)   lending money.
B)   acquiring investments.
C)   issuing debt.
D)   acquiring long-lived assets.E) A) and D)
F) All of the above

Question 20

Indicate where the event purchase of land and a building with a mortgage would appear, if at all, on the indirect statement of cash flows.

Accepted Answer

A)   Operating activities section
B)   Investing activities section
C)   Financing activities section
D)   Does not represent a cash flowE) B) and C)
F) C) and D)

Exam 13: Statement of Cash Flows

The payment of interest on bonds payable is classified as a cash outflow from operating activities.

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Indicate where the purchase of land for cash would appear, if at all, on the indirect statement of cash flows.

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If a company has both an inflow and outflow of cash related to property, plant, and equipment, the

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Financing activities involve

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Which one of the following items is not generally used in preparing a statement of cash flows?

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Generally, the most important category on the statement of cash flows is cash flows from

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The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

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If $250,000 of bonds are issued during the year but $130,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

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Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

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Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

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Indicate where the event purchase of land and a building with a mortgage would appear, if at all, on the indirect statement of cash flows.

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A measure that describes the cash remaining from operations after adjustment for capital expenditures and dividends is

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Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?

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The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

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On the statement of cash flows using the indirect method, patent amortization expense will

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Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows? 1. Declaration and payment of a cash dividend during the period. 2. Net income for the period.

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Which of the following transactions does not affect cash during a period?

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Which of the following would be subtracted from net income using the indirect method?

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When equipment is sold for cash, the amount received is reflected as a cash

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In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Correct AnswerverifiedShow Answer

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