Question 1

(Appendix) An increase in Accounts Receivable represents an increase in the cash generated from sales.

Accepted Answer

A) True 
 B)False

Question 2

(Appendix) A decrease in Accounts Payable is deducted from cost of goods sold to compute the cash paid to suppliers.

Accepted Answer

A) True 
 B)False

Question 3

(Appendix) When preparing a schedule for the calculation of cash generated from operating activities under the direct method, an increase in Prepaid Insurance is

Accepted Answer

A)  subtracted from cost of goods sold. 
B)  added to cost of goods sold. 
C)  added to operating expenses. 
D)  subtracted from operating expenses. 
A)  subtracted from cost of goods sold. 
B)  added to cost of goods sold. 
C)  added to operating expenses. 
D)  subtracted from operating expenses.

Question 4

Financing activities include transactions with owners and creditors.

Accepted Answer

A) True 
 B)False

Question 5

An example of a cash inflow from operating activities is

Accepted Answer

A)  net income. 
B)  issuance of preferred stock. 
C)  buying and selling debt and equity securities. 
D)  lending money and collecting the principal on the related loans. 
A)  net income. 
B)  issuance of preferred stock. 
C)  buying and selling debt and equity securities. 
D)  lending money and collecting the principal on the related loans.

Question 6

Dividends received on investments made in the stock of other corporations is an example of a financing activity.

Accepted Answer

A) True 
 B)False

Question 7

Adjusting entries to record depreciation expense increase operating expenses and reduce net income but do not require an outflow of cash.

Accepted Answer

A) True 
 B)False

Question 8

Operating activities include transactions and events associated with selling a product or providing a service and are related to the revenues and expenses reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 9

An increase or decrease in cash results from a combination of the operating, investing, and capitalizing activities of a business.

Accepted Answer

A) True 
 B)False

Question 10

Since interest revenue, interest expense, and dividend revenue are reported on the income statement, they are also considered cash flow from operating activities.

Accepted Answer

A) True 
 B)False

Question 11

Revenues recorded during an accounting period must be converted to the amount of cash received from customers during the year in order to prepare a statement of cash flows under the direct method.

Accepted Answer

A) True 
 B)False

Question 12

The purpose of a cash flow statement is to

Accepted Answer

A)  show the profits generated. 
B)  show how cash was generated and used during a period. 
C)  show the expenses incurred in doing business. 
D)  show the revenue earned. 
A)  show the profits generated. 
B)  show how cash was generated and used during a period. 
C)  show the expenses incurred in doing business. 
D)  show the revenue earned.

Question 13

Match the terms with the definitions.
-Transactions involving the purchase and sale of long-term assets, investments in debt and equity securities, and lending money and collecting the principal on the related items.

Accepted Answer

A) cash equivalents 
B) direct method 
C) financing activities 
D) indirect method 
E) investing activities
F)noncash investing and financing activities
G)operating activities
H)statement of cash flows 
A) cash equivalents 
B) direct method 
C) financing activities 
D) indirect method 
E) investing activities
F)noncash investing and financing activities
G)operating activities
H)statement of cash flows

Question 14

(Appendix) When preparing a schedule for the calculation of cash generated from operating activities under the direct method, the decrease in Merchandise Inventory is

Accepted Answer

A)  added to cost of goods sold. 
B)  added to operating expenses. 
C)  subtracted from cost of goods sold. 
D)  subtracted from operating expenses. 
A)  added to cost of goods sold. 
B)  added to operating expenses. 
C)  subtracted from cost of goods sold. 
D)  subtracted from operating expenses.

Question 15

Under the direct method of reporting cash flows, net income is adjusted for transactions impacting both net income and cash flows, but in different ways.

Accepted Answer

A) True 
 B)False

Question 16

The income statement for Captree Landscaping is shown below. Assume that all revenues and expenses were for cash and that land was sold for $40,000. There were no other investing or financing activities during the year. The cash balances at the beginning and end of the year were $53,000 and $140,000. Prepare a statement of cash flows.

Accepted Answer

The answer of The income statement for Captree Landscaping is...

Question 17

Tree Top Company's comparative balance sheets as of December 31, 20-A and 20-B show the following with regard to investing and financing activities:   ​
Net income for the year 20-B was $98,000, and cash dividends of $25,000 were declared and paid. Determine the amount of cash received and paid for financing and investing activities and the cash flows as they would appear on Tree Top Company's statement of cash flows for the year ended December 31, 20-B.

Accepted Answer

The answer of Tree Top Company's comparative balance sheets as...

Question 18

Which of the following is NOT a cash inflow from a financing activity?

Accepted Answer

A)  proceeds from the issuance of stock 
B)  interest received on loans made to outsider investors 
C)  additional investments by the owners 
D)  proceeds from a mortgage 
A)  proceeds from the issuance of stock 
B)  interest received on loans made to outsider investors 
C)  additional investments by the owners 
D)  proceeds from a mortgage

Question 19

Which of the following is NOT a cash outflow from an operating activity?

Accepted Answer

A)  a withdrawal by the owners 
B)  a payment for the acquisition of inventory 
C)  a payment to the government 
D)  a payment for interest on a loan 
A)  a withdrawal by the owners 
B)  a payment for the acquisition of inventory 
C)  a payment to the government 
D)  a payment for interest on a loan

Question 20

The accuracy of the statement of cash flows can be verified by computing the change in the balance of the

Accepted Answer

A)  cash and cash equivalent accounts. 
B)  equity account. 
C)  revenue account. 
D)  asset and liability accounts. 
A)  cash and cash equivalent accounts. 
B)  equity account. 
C)  revenue account. 
D)  asset and liability accounts.

Exam 23: Statement of Cash Flows

(Appendix) An increase in Accounts Receivable represents an increase in the cash generated from sales.

(Appendix) A decrease in Accounts Payable is deducted from cost of goods sold to compute the cash paid to suppliers.

(Appendix) When preparing a schedule for the calculation of cash generated from operating activities under the direct method, an increase in Prepaid Insurance is

Financing activities include transactions with owners and creditors.

An example of a cash inflow from operating activities is

Dividends received on investments made in the stock of other corporations is an example of a financing activity.

Adjusting entries to record depreciation expense increase operating expenses and reduce net income but do not require an outflow of cash.

Operating activities include transactions and events associated with selling a product or providing a service and are related to the revenues and expenses reported on the income statement.

An increase or decrease in cash results from a combination of the operating, investing, and capitalizing activities of a business.

Since interest revenue, interest expense, and dividend revenue are reported on the income statement, they are also considered cash flow from operating activities.

Revenues recorded during an accounting period must be converted to the amount of cash received from customers during the year in order to prepare a statement of cash flows under the direct method.

The purpose of a cash flow statement is to

Match the terms with the definitions. -Transactions involving the purchase and sale of long-term assets, investments in debt and equity securities, and lending money and collecting the principal on the related items.

(Appendix) When preparing a schedule for the calculation of cash generated from operating activities under the direct method, the decrease in Merchandise Inventory is

Under the direct method of reporting cash flows, net income is adjusted for transactions impacting both net income and cash flows, but in different ways.

Which of the following is NOT a cash inflow from a financing activity?

Which of the following is NOT a cash outflow from an operating activity?

The accuracy of the statement of cash flows can be verified by computing the change in the balance of the

Introduction to Accounting

Analyzing Transactions: the Accounting Equation

The Double-Entry Framework

Journalizing and Posting Transactions

Adjusting Entries and the Work Sheet

Financial Statements and the Closing Process

Accounting for Cash

Payroll Accounting: Employee Earnings and Deductions

Payroll Accounting: Employer Taxes and Reports

Accounting for Sales and Cash Receipts

Accounting for Purchases and Cash Payments

Special Journals

Accounting for Merchandise Inventory

Adjustments and the Work Sheet for a Merchandising Business

Financial Statements and Year-End Accounting for a Merchandising Business

Accounting for Accounts Receivable

Accounting for Notes and Interest

Accounting for Long-Term Assets

Accounting for Partnerships

Corporations: Organization and Capital Stocks

Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Corporations: Bonds

Analysis of Financial Statements

Departmental Accounting

Manufacturing Accounting: The Job Order Cost System

Manufacturing Accounting: The Work Sheet and Financial Statements

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