Question 1

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 2

If accounts receivable have increased during the period

Accepted Answer

A) revenues on an accrual basis are less than revenues on a cash basis. 
B) revenues on an accrual basis are greater than revenues on a cash basis. 
C) revenues on an accrual basis are the same as revenues on a cash basis. 
D) expenses on an accrual basis are greater than expenses on a cash basis. 
A) revenues on an accrual basis are less than revenues on a cash basis. 
B) revenues on an accrual basis are greater than revenues on a cash basis. 
C) revenues on an accrual basis are the same as revenues on a cash basis. 
D) expenses on an accrual basis are greater than expenses on a cash basis.

Question 3

During the maturity phase, cash from operations and net income are approximately the same.

Accepted Answer

A) True 
 B)False

Question 4

Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $252,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

Accepted Answer

A) $252,000. 
B) $242,000. 
C) $262,000. 
D) $332,000. 
A) $252,000. 
B) $242,000. 
C) $262,000. 
D) $332,000.

Question 5

If a loss of $9,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A) $81,000. 
B) $90,000. 
C) $99,000. 
D) $9,000. 
A) $81,000. 
B) $90,000. 
C) $99,000. 
D) $9,000.

Question 6

Using the indirect method, if equipment is sold at a gain, the

Accepted Answer

A) sale proceeds received are deducted in the operating activities section. 
B) sale proceeds received are added in the operating activities section. 
C) amount of the gain is added in the operating activities section. 
D) amount of the gain is deducted in the operating activities section. 
A) sale proceeds received are deducted in the operating activities section. 
B) sale proceeds received are added in the operating activities section. 
C) amount of the gain is added in the operating activities section. 
D) amount of the gain is deducted in the operating activities section.

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

Each of the following is an adjustment to convert net income to net cash provided by operating activities except

Accepted Answer

A) adding back noncash expenses. 
B) adding gains and deducting losses. 
C) analyzing changes to noncash current asset and current liability accounts. 
D) All of these answer choices are adjustments. 
A) adding back noncash expenses. 
B) adding gains and deducting losses. 
C) analyzing changes to noncash current asset and current liability accounts. 
D) All of these answer choices are adjustments.

Question 9

Authentic Exposure Company had the following transactions that took place during the year:
I) Paid amount owing to suppliers $2,750.
II) Purchased new equipment for $5,000 by signing a long-term note payable.
III) Purchased a patent and paid $15,000 cash for the asset.
How what is the total effect of these transactions on free cash flow?

Accepted Answer

The answer of Authentic Exposure Company had the following transactions...

Question 10

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Accepted Answer

The answer of Using the indirect method, which of the...

Question 11

Which of the following is not typically a characteristic experienced by a company during the introductory phase of the corporate life cycle?

Accepted Answer

A) Cash used in operations will exceed cash generated by operations. 
B) Considerable cash will be used to purchase productive assets. 
C) Cash from investing is positive. 
D) Cash from financing is positive. 
A) Cash used in operations will exceed cash generated by operations. 
B) Considerable cash will be used to purchase productive assets. 
C) Cash from investing is positive. 
D) Cash from financing is positive.

Question 12

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, an accounts receivable decrease 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 13

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is correct?

Accepted Answer

The answer of Using the indirect method, which of the...

Question 14

Which of the following activities would be classified as an investing activity?

Accepted Answer

A) Cash received from interest revenue. 
B) Cash paid (loaned) to a borrower as a loan. 
C) Cash received from dividend revenue. 
D) Cash paid to reacquire capital stock. 
A) Cash received from interest revenue. 
B) Cash paid (loaned) to a borrower as a loan. 
C) Cash received from dividend revenue. 
D) Cash paid to reacquire capital stock.

Question 15

All of the following adjustments are added to net income in computing net cash provided by operating activities except

Accepted Answer

A) amortization expense. 
B) a decrease in accounts receivable. 
C) an increase in accounts payable. 
D) an increase in prepaid expenses. 
A) amortization expense. 
B) a decrease in accounts receivable. 
C) an increase in accounts payable. 
D) an increase in prepaid expenses.

Question 16

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

Accepted Answer

A) True 
 B)False

Question 17

The cost of goods sold during the year was $305,000. Inventory decreased by $10,000 during the year and accounts payable decreased by $12,000 during the year. Using the direct method of reporting cash flows from operating activities, cash payments for inventory total

Accepted Answer

A) $317,000. 
B) $307,000. 
C) $283,000. 
D) $327,000. 
A) $317,000. 
B) $307,000. 
C) $283,000. 
D) $327,000.

Question 18

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 expenses. 
A) Depreciation expense. 
B) An increase in accounts receivable. 
C) An increase in accounts payable. 
D) A decrease in prepaid expenses.

Question 19

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

Accepted Answer

A) added to net income. 
B) deducted from net income. 
C) ignored because it does not affect cash. 
D) not reported on a statement of cash flows. 
A) added to net income. 
B) deducted from net income. 
C) ignored because it does not affect cash. 
D) not reported on a statement of cash flows.

Question 20

If accounts payable have increased during a period

Accepted Answer

A) revenues on an accrual basis are less than revenues on a cash basis. 
B) expenses on an accrual basis are less than expenses on a cash basis. 
C) expenses on an accrual basis are greater than expenses on a cash basis. 
D) expenses on an accrual basis are the same as expenses on a cash basis. 
A) revenues on an accrual basis are less than revenues on a cash basis. 
B) expenses on an accrual basis are less than expenses on a cash basis. 
C) expenses on an accrual basis are greater than expenses on a cash basis. 
D) expenses on an accrual basis are the same as expenses on a cash basis.

Exam 11: Statement of Cash Flows

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

If accounts receivable have increased during the period

During the maturity phase, cash from operations and net income are approximately the same.

If a loss of $9,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Using the indirect method, if equipment is sold at a gain, the

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

Each of the following is an adjustment to convert net income to net cash provided by operating activities except

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is incorrect?

Which of the following is not typically a characteristic experienced by a company during the introductory phase of the corporate life cycle?

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

Using the indirect method, which of the following adjustments to convert net income to net cash provided by operating activities is correct?

Which of the following activities would be classified as an investing activity?

All of the following adjustments are added to net income in computing net cash provided by operating activities except

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

The cost of goods sold during the year was $305,000. Inventory decreased by $10,000 during the year and accounts payable decreased by $12,000 during the year. Using the direct method of reporting cash flows from operating activities, cash payments for inventory total

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

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

If accounts payable have increased during a period

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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