Question 1

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

Accepted Answer

A) True 
 B)False

Question 2

Which balance sheet accounts are most affected by investing activities?

Accepted Answer

A) Current assets and current liabilities 
B) Long-term assets 
C) Long-term liabilities 
D) Stockholders' equity 
A) Current assets and current liabilities 
B) Long-term assets 
C) Long-term liabilities 
D) Stockholders' equity

Question 3

Which of the following statements is false?

Accepted Answer

A) Cash equivalents are included in cash on the balance sheet and on the statement of cash flows. 
B) Investments in cash equivalents and investments in stock have the same economic effect--assets increase and decrease by the same amount. 
C) An investment is a cash equivalent if it is convertible into a known amount of cash and has an original maturity of 3 months or less when purchased. 
D) Investments in stock are reported as a financing activity on the statement of cash flows. 
A) Cash equivalents are included in cash on the balance sheet and on the statement of cash flows. 
B) Investments in cash equivalents and investments in stock have the same economic effect--assets increase and decrease by the same amount. 
C) An investment is a cash equivalent if it is convertible into a known amount of cash and has an original maturity of 3 months or less when purchased. 
D) Investments in stock are reported as a financing activity on the statement of cash flows.

Question 4

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

Accepted Answer

A) Operating activities primarily involve transactions which affect noncurrent assets. 
B) Investing activities primarily involve U.S.government securities and long-term productive assets. 
C) Financing activities primarily involve transactions which affect current liabilities. 
D) Different balance sheet accounts are affected depending on whether the direct or indirect method is used. 
A) Operating activities primarily involve transactions which affect noncurrent assets. 
B) Investing activities primarily involve U.S.government securities and long-term productive assets. 
C) Financing activities primarily involve transactions which affect current liabilities. 
D) Different balance sheet accounts are affected depending on whether the direct or indirect method is used.

Question 5

When using the direct method, how is the collection of cash from customers shown on the statement of cash flows?

Accepted Answer

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

Question 6

Dino's Italian Grille purchased $6,000 of napkins for its business.One­fourth of the bill is unpaid.Upon review of the napkins still on hand, 20% were still available.What combination of amounts would affect the income statement and statement of cash flows?

Accepted Answer

The answer of Dino's Italian Grille purchased $6,000 of napkins...

Question 7

Which of the following is not an operating activity?

Accepted Answer

A) Cash collections from credit customers. 
B) Cash payments for operating expenses. 
C) Cash receipts for interest earned. 
D) Cash payments for dividends to stockholders. 
A) Cash collections from credit customers. 
B) Cash payments for operating expenses. 
C) Cash receipts for interest earned. 
D) Cash payments for dividends to stockholders.

Question 8

The accrual-based income statement is considered to be a good indicator of current cash inflows and outflows.

Accepted Answer

A) True 
 B)False

Question 9

Two methods are available to prepare the operating activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

Accepted Answer

A) If a company uses the indirect method, it must separately disclose the cash payments made for interest and income taxes. 
B) If a company uses the direct method, it must present a separate schedule which reconciles net income to net cash from operating activities. 
C) Advocates of the direct method believe that the indirect method reveals too much by telling readers gross amounts of cash receipts and cash payments from operations. 
D) The FASB prefers the direct method, while most companies use the indirect method in practice. 
A) If a company uses the indirect method, it must separately disclose the cash payments made for interest and income taxes. 
B) If a company uses the direct method, it must present a separate schedule which reconciles net income to net cash from operating activities. 
C) Advocates of the direct method believe that the indirect method reveals too much by telling readers gross amounts of cash receipts and cash payments from operations. 
D) The FASB prefers the direct method, while most companies use the indirect method in practice.

Question 10

When using the indirect method, how is an increase in accounts receivable during the year shown on the statement of cash flows?

Accepted Answer

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

Question 11

Use the information below for Barton Shipping Corp.for 2015 and 2016 to answer the following question.   How much cash did Barton Shipping pay for dividends during 2016?

Accepted Answer

A) $ 95,000 
B) $105,000 
C) $115,000 
D) $140,000 
A) $ 95,000 
B) $105,000 
C) $115,000 
D) $140,000

Question 12

If the balance of accounts receivable decreases during the year, then cash collections will ____________________________ sales on account for the period.

Accepted Answer

The answer of If the balance of accounts receivable decreases...

Question 13

When using the indirect method, how would the retirement of bonds payable at their maturity date be shown on the statement of cash flows?

Accepted Answer

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

Question 14

Below are the transactions for the Louisville Company:   Based on these transactions, what is the net cash flow from financing activities?

Accepted Answer

A) $285,000 net cash provided by financing activities. 
B) $275,000 net cash used for financing activities. 
C) $0, because cash inflows equal cash outflows from financing activities. 
D) $440,000 net cash provided by financing activities. 
A) $285,000 net cash provided by financing activities. 
B) $275,000 net cash used for financing activities. 
C) $0, because cash inflows equal cash outflows from financing activities. 
D) $440,000 net cash provided by financing activities.

Question 15

Determining the cash flows from operating activities generally requires analyzing each item on the income statement as well as the current asset except cash) and current liability accounts.

Accepted Answer

A) True 
 B)False

Question 16

The following items were reported on the balance sheets and income statement for Centerton Inc., a service company:   What amount would be reported in the operating activities section of the statement of cash flows for payments for operating expenses under the direct method?

Accepted Answer

A) $186,000 
B) $154,000 
C) $180,000 
D) $170,000 
A) $186,000 
B) $154,000 
C) $180,000 
D) $170,000

Question 17

Under the indirect method, the first line in the operating activities section of the statement of cash flows is the net income or loss for the period.

Accepted Answer

A) True 
 B)False

Question 18

Cash flows from borrowing and paying off a 90-day bank loan are classified as

Accepted Answer

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

Question 19

If the December 31, 2016, balance of accounts payable is higher than the January 1, 2016, balance, then the amount of cash payments will exceed the purchases on account for the year.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following financing activities results in a cash inflow?

Accepted Answer

A) Buying treasury stock 
B) Issuing bonds 
C) Repaying a bank loan 
D) Paying cash dividends 
A) Buying treasury stock 
B) Issuing bonds 
C) Repaying a bank loan 
D) Paying cash dividends

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

Which balance sheet accounts are most affected by investing activities?

Which of the following statements is false?

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

When using the direct method, how is the collection of cash from customers shown on the statement of cash flows?

Dino's Italian Grille purchased $6,000 of napkins for its business.Onefourth of the bill is unpaid.Upon review of the napkins still on hand, 20% were still available.What combination of amounts would affect the income statement and statement of cash flows?

Which of the following is not an operating activity?

The accrual-based income statement is considered to be a good indicator of current cash inflows and outflows.

Two methods are available to prepare the operating activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

When using the indirect method, how is an increase in accounts receivable during the year shown on the statement of cash flows?

Use the information below for Barton Shipping Corp.for 2015 and 2016 to answer the following question. How much cash did Barton Shipping pay for dividends during 2016?

If the balance of accounts receivable decreases during the year, then cash collections will ____________________________ sales on account for the period.

When using the indirect method, how would the retirement of bonds payable at their maturity date be shown on the statement of cash flows?

Below are the transactions for the Louisville Company: Based on these transactions, what is the net cash flow from financing activities?

Determining the cash flows from operating activities generally requires analyzing each item on the income statement as well as the current asset except cash) and current liability accounts.

The following items were reported on the balance sheets and income statement for Centerton Inc., a service company: What amount would be reported in the operating activities section of the statement of cash flows for payments for operating expenses under the direct method?

Under the indirect method, the first line in the operating activities section of the statement of cash flows is the net income or loss for the period.

Cash flows from borrowing and paying off a 90-day bank loan are classified as

If the December 31, 2016, balance of accounts payable is higher than the January 1, 2016, balance, then the amount of cash payments will exceed the purchases on account for the year.

Which of the following financing activities results in a cash inflow?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 12: The Statement of Cash Flows

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

Which balance sheet accounts are most affected by investing activities?

Which of the following statements is false?

Operating, investing, and financing activities affect certain balance sheet accounts.Which of the following statements is true?

When using the direct method, how is the collection of cash from customers shown on the statement of cash flows?

Dino's Italian Grille purchased $6,000 of napkins for its business.One­fourth of the bill is unpaid.Upon review of the napkins still on hand, 20% were still available.What combination of amounts would affect the income statement and statement of cash flows?

Which of the following is not an operating activity?

The accrual-based income statement is considered to be a good indicator of current cash inflows and outflows.

Two methods are available to prepare the operating activities section of a statement of cash flows.Which of the following statements regarding these two methods is false?

When using the indirect method, how is an increase in accounts receivable during the year shown on the statement of cash flows?

Use the information below for Barton Shipping Corp.for 2015 and 2016 to answer the following question. How much cash did Barton Shipping pay for dividends during 2016?

If the balance of accounts receivable decreases during the year, then cash collections will ____________________________ sales on account for the period.

When using the indirect method, how would the retirement of bonds payable at their maturity date be shown on the statement of cash flows?

Below are the transactions for the Louisville Company: Based on these transactions, what is the net cash flow from financing activities?

Determining the cash flows from operating activities generally requires analyzing each item on the income statement as well as the current asset except cash) and current liability accounts.

The following items were reported on the balance sheets and income statement for Centerton Inc., a service company: What amount would be reported in the operating activities section of the statement of cash flows for payments for operating expenses under the direct method?

Under the indirect method, the first line in the operating activities section of the statement of cash flows is the net income or loss for the period.

Cash flows from borrowing and paying off a 90-day bank loan are classified as

If the December 31, 2016, balance of accounts payable is higher than the January 1, 2016, balance, then the amount of cash payments will exceed the purchases on account for the year.

Which of the following financing activities results in a cash inflow?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

International Financial Reporting Standards

Filters

Dino's Italian Grille purchased $6,000 of napkins for its business.Onefourth of the bill is unpaid.Upon review of the napkins still on hand, 20% were still available.What combination of amounts would affect the income statement and statement of cash flows?