Question 1

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

Accepted Answer

A) True 
 B)False  True

Question 2

During 2017, Bronze Company had $130,000 in cash sales and $1,020,000 in credit sales. The accounts receivable balances were $180,000 and $212,000 at December 31, 2016 and 2017, respectively. Using the direct method of reporting cash flows from operating activities, what was the total cash collected from all customers during 2017?

Accepted Answer

A) $1,418,000. 
B) $1,642,000. 
C) $1,182,000. 
D) $1,118,000. 
A) $1,418,000. 
B) $1,642,000. 
C) $1,182,000. 
D) $1,118,000. D

Question 3

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 employees. 
A) Cash receipts from customers. 
B) Cash paid for income taxes. 
C) Gain on sale of equipment. 
D) Cash paid to employees. C

Question 4

The statement of cash flows

Accepted Answer

A) is prepared instead of an income statement under generally accepted accounting principles. 
B) is used to assess an entity's ability to pay dividends and meet obligations. 
C) is prepared from comparative income statements. 
D) reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement. 
A) is prepared instead of an income statement under generally accepted accounting principles. 
B) is used to assess an entity's ability to pay dividends and meet obligations. 
C) is prepared from comparative income statements. 
D) reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement.

Question 5

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, an inventory increase with cash would be classified on the statement of cash flows.

Accepted Answer

A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow. 
A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow.

Question 6

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

Accepted Answer

A) the cash flows from financing activities section. 
B) the cash flows from investing activities section. 
C) a separate schedule or note to the financial statements. 
D) the cash flows from operating section. 
A) the cash flows from financing activities section. 
B) the cash flows from investing activities section. 
C) a separate schedule or note to the financial statements. 
D) the cash flows from operating section.

Question 7

Noncash investing and financing transactions, such as the exchange of common stock to purchase assets, represent significant investing and financing activities and are reflected either in a schedule separate from the statement of cash flows or in a separate note to the financial statements.

Accepted Answer

A) True 
 B)False

Question 8

In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

Accepted Answer

A) the direct method only. 
B) the indirect method only. 
C) both the direct method and the indirect method. 
D) neither the direct nor the indirect method. 
A) the direct method only. 
B) the indirect method only. 
C) both the direct method and the indirect method. 
D) neither the direct nor the indirect method.

Question 9

Assume that the E-Zip Corporation uses the indirect method to depict cash flows. Indicate where, if at all, treasury stock purchased with cash would be classified on the statement of cash flows.

Accepted Answer

A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow. 
A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow.

Question 10

Which of the following activities is excluded from the statement of cash flows under IFRS?

Accepted Answer

A) Financing activities 
B) Investing activities 
C) Noncash investing and financing activities 
D) Operating activities 
A) Financing activities 
B) Investing activities 
C) Noncash investing and financing activities 
D) Operating activities

Question 11

Each of the following items may be classified as operating or financing activities under IFRS except

Accepted Answer

A) dividends paid. 
B) dividends received. 
C) interest paid. 
D) All of these answer choices may be classified as such. 
A) dividends paid. 
B) dividends received. 
C) interest paid. 
D) All of these answer choices may be classified as such.

Question 12

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, long-term debt retired with cash would be reported on the statement of cash flows.

Accepted Answer

A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow. 
A) Operating activities section. 
B) Investing activities section. 
C) Financing activities section. 
D) Does not represent a cash flow.

Question 13

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

Accepted Answer

A) True 
 B)False

Question 14

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

Accepted Answer

A) subtraction from net income. 
B) addition to net income. 
C) addition to cash flow from investing activities. 
D) subtraction from cash flow from investing activities. 
A) subtraction from net income. 
B) addition to net income. 
C) addition to cash flow from investing activities. 
D) subtraction from cash flow from investing activities.

Question 15

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Accepted Answer

A) the current year's income statement. 
B) a comparative balance sheet. 
C) additional information. 
D) All of these answer choices are correct. 
A) the current year's income statement. 
B) a comparative balance sheet. 
C) additional information. 
D) All of these answer choices are correct.

Question 16

McLaughlin Company issued common stock for proceeds of $558,000 during 2017. The company paid dividends of $99,000 and issued a long-term note payable for $375,000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $81,000. The financing section of the statement of cash flows will report net cash inflows of

Accepted Answer

A) $378,000. 
B) $834,000. 
C) $459,000. 
D) $753,000. 
A) $378,000. 
B) $834,000. 
C) $459,000. 
D) $753,000.

Question 17

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Accepted Answer

A) True 
 B)False

Question 18

Under IFRS, some companies present which section of the cash flow statement as a single line item?

Accepted Answer

A) Operating activities 
B) Investing activities 
C) Financing activities 
D) Noncash investing and financing activities 
A) Operating activities 
B) Investing activities 
C) Financing activities 
D) Noncash investing and financing activities

Question 19

Operating activities include the cash effects of transactions that create revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 20

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Accepted Answer

A) the financing section. 
B) the "extraordinary" section. 
C) a separate schedule or note to the financial statements. 
D) the stockholders' equity section. 
A) the financing section. 
B) the "extraordinary" section. 
C) a separate schedule or note to the financial statements. 
D) the stockholders' equity section.

Exam 11: Statement of Cash Flows

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

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

The statement of cash flows

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, an inventory increase with cash would be classified on the statement of cash flows.

Preferred stock issued in exchange for land would be reported in the statement of cash flows in

Noncash investing and financing transactions, such as the exchange of common stock to purchase assets, represent significant investing and financing activities and are reflected either in a schedule separate from the statement of cash flows or in a separate note to the financial statements.

In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under

Assume that the E-Zip Corporation uses the indirect method to depict cash flows. Indicate where, if at all, treasury stock purchased with cash would be classified on the statement of cash flows.

Which of the following activities is excluded from the statement of cash flows under IFRS?

Each of the following items may be classified as operating or financing activities under IFRS except

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, long-term debt retired with cash would be reported on the statement of cash flows.

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

To determine the net cash provided (used) by operating activities, it is necessary to analyze

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Under IFRS, some companies present which section of the cash flow statement as a single line item?

Operating activities include the cash effects of transactions that create revenues and expenses.

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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