Question 1

Receiving cash from a lender would result in:

Accepted Answer

A) an increase of cash flow from investing activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) a decrease of cash flow from financing activities. 
A) an increase of cash flow from investing activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) a decrease of cash flow from financing activities. C

Question 2

Indicate the effect that each of the following transactions has on the cash balance.Use (I)for increase, (D)for decrease,and (N)for no change.
a)________ Issued common stock for cash
b)________ Acquired land for cash
c)________ Purchase equipment on account
d)________ Paid a cash dividend
e)________ Purchased supplies on account
f)________ Received payment on account
g)________ Borrowed money by issuance of a long-term debt
h)________ Purchased equipment on account to be paid within one year

Accepted Answer

a)I,b)D,c)N,d)D,e)N,f)I,g)I,h)N

Question 3

Dividends paid to shareholders is an example of a financing activity.

Accepted Answer

A) True 
 B)False  True

Question 4

The income statement shows the financial condition of the company.

Accepted Answer

A) True 
 B)False

Question 5

Which would go into the operating activities section of a statement of cash flows using the direct method?

Accepted Answer

A) Depreciation expense 
B) Cash paid for inventory 
C) Selling of plant,property and equipment 
D) All of the above 
A) Depreciation expense 
B) Cash paid for inventory 
C) Selling of plant,property and equipment 
D) All of the above

Question 6

Of the following,which has a negative effect on the computation of cash flow from operations using the indirect method?

Accepted Answer

A) Decrease in Inventory 
B) Increase in Accounts Payable 
C) Increase in Accounts Receivable 
D) Decrease in Prepaid Insurance 
A) Decrease in Inventory 
B) Increase in Accounts Payable 
C) Increase in Accounts Receivable 
D) Decrease in Prepaid Insurance

Question 7

Using the indirect method for cash flows,depreciation expense is added to net income to determine the:

Accepted Answer

A) cash flow from investing activities. 
B) cash flow from financing activities. 
C) cash flow from operating activities. 
D) cash flow from fixed asset activities. 
A) cash flow from investing activities. 
B) cash flow from financing activities. 
C) cash flow from operating activities. 
D) cash flow from fixed asset activities.

Question 8

A cash inflow from a financing activity would be:

Accepted Answer

A) paying cash dividends. 
B) issuing stock or bonds. 
C) paying interest on notes payable. 
D) making payments for additional inventory. 
A) paying cash dividends. 
B) issuing stock or bonds. 
C) paying interest on notes payable. 
D) making payments for additional inventory.

Question 9

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col } 4 \
\text { Financing }
\end{array} \
\hline \text { Increase in accounts payable } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 10

Generally Accepted Accounting Principles prefer which method of computing cash flow from operating activities?

Accepted Answer

A) Combination method 
B) Direct method 
C) Indirect method 
D) Adjusting method 
A) Combination method 
B) Direct method 
C) Indirect method 
D) Adjusting method

Question 11

The board of directors is considering approving a declaration and payment of dividends for the second quarter of the year.How will this decision affect the period's cash flows from operations-indirect method?

Accepted Answer

A) It will increase this period's cash flows from operations. 
B) It will decrease this period's cash flows from operations. 
C) It will not affect this period's cash flows from operations. 
D) This does not affect cash flows from operations. 
A) It will increase this period's cash flows from operations. 
B) It will decrease this period's cash flows from operations. 
C) It will not affect this period's cash flows from operations. 
D) This does not affect cash flows from operations.

Question 12

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Increase in prepaid expenses } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 13

Activities that pay and collect interest on loans are:

Accepted Answer

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

Question 14

Which of the following statements is true as it pertains to the statement of cash flows?

Accepted Answer

A) It has three main sections: net cash flow from operating,investing,and financing activities. 
B) It may only be computed directly. 
C) It is a statement used to better understand the equity of a company. 
D) All of the above are correct. 
A) It has three main sections: net cash flow from operating,investing,and financing activities. 
B) It may only be computed directly. 
C) It is a statement used to better understand the equity of a company. 
D) All of the above are correct.

Question 15

Big Toy Corporation's records show net income of $20,000;depreciation expense of $10,000;and cash dividends declared and paid of $4,000.The amount of cash provided by operating activities using the indirect method is:

Accepted Answer

A) $40,000. 
B) $30,000. 
C) $20,000. 
D) $10,000. 
A) $40,000. 
B) $30,000. 
C) $20,000. 
D) $10,000.

Question 16

If Accounts Receivable increases on a comparative balance sheet,this means:

Accepted Answer

A) collections were more than sales. 
B) credit sales are decreasing. 
C) credit sales are increasing more than collections. 
D) None of these answers is correct. 
A) collections were more than sales. 
B) credit sales are decreasing. 
C) credit sales are increasing more than collections. 
D) None of these answers is correct.

Question 17

When preparing the statement of cash flows by the indirect method,if current liabilities decrease,the difference is:

Accepted Answer

A) added to net income. 
B) added to investments. 
C) deducted from net income. 
D) subtracted from investments. 
A) added to net income. 
B) added to investments. 
C) deducted from net income. 
D) subtracted from investments.

Question 18

Cash paid for insurance and rent would be reported in the statement of cash flows (direct method)in:

Accepted Answer

A) a separate schedule. 
B) operating activities. 
C) financing activities. 
D) investing activities. 
A) a separate schedule. 
B) operating activities. 
C) financing activities. 
D) investing activities.

Question 19

Discuss the purpose of a statement of cash flows,and describe its components.

Accepted Answer

A statement of cash flows summarizes the

Question 20

Which of the following would NOT be included in the net cash flows from operating activities section of a cash flow statement using the indirect method?

Accepted Answer

A) Decrease in Accounts Payable 
B) Increase in Inventory 
C) Decrease in Accounts Receivable. 
D) Increase in Notes Payable. 
A) Decrease in Accounts Payable 
B) Increase in Inventory 
C) Decrease in Accounts Receivable. 
D) Increase in Notes Payable.

Exam 21: Statement of Cash Flows

Receiving cash from a lender would result in:

Dividends paid to shareholders is an example of a financing activity.

The income statement shows the financial condition of the company.

Which would go into the operating activities section of a statement of cash flows using the direct method?

Of the following,which has a negative effect on the computation of cash flow from operations using the indirect method?

Using the indirect method for cash flows,depreciation expense is added to net income to determine the:

A cash inflow from a financing activity would be:

Generally Accepted Accounting Principles prefer which method of computing cash flow from operating activities?

The board of directors is considering approving a declaration and payment of dividends for the second quarter of the year.How will this decision affect the period's cash flows from operations-indirect method?

Activities that pay and collect interest on loans are:

Which of the following statements is true as it pertains to the statement of cash flows?

Big Toy Corporation's records show net income of $20,000;depreciation expense of $10,000;and cash dividends declared and paid of $4,000.The amount of cash provided by operating activities using the indirect method is:

If Accounts Receivable increases on a comparative balance sheet,this means:

When preparing the statement of cash flows by the indirect method,if current liabilities decrease,the difference is:

Cash paid for insurance and rent would be reported in the statement of cash flows (direct method)in:

Discuss the purpose of a statement of cash flows,and describe its components.

Which of the following would NOT be included in the net cash flows from operating activities section of a cash flow statement using the indirect method?

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Corporations and Bonds Payable

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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