Question 1

The primary purpose of the statement of cash flows is to

Accepted Answer

A) provide information about the investing and financing activities during a period. 
B) prove that revenues exceed expenses if there is a net income. 
C) provide information about cash receipts and cash payments during a period. 
D) report to Canada Revenue Agency. 
A) provide information about the investing and financing activities during a period. 
B) prove that revenues exceed expenses if there is a net income. 
C) provide information about cash receipts and cash payments during a period. 
D) report to Canada Revenue Agency.

Question 2

In the investing activities section of the statement of cash flows, all the cash payments for purchase of non-current assets should be totalled and reported as one number.

Accepted Answer

A) True 
 B)False

Question 3

Net income reported for the current year was $222,000.Depreciation expense was $35,000.Accounts Receivable and Inventories increased $4,000 and $7,000, respectively.Prepaid Expenses and Accounts Payable decreased $3,000 and $9,000, respectively.Using the indirect method, how much cash was provided by operating activities?

Accepted Answer

A) $170,000 
B) $180,000 
C) $240,000 
D) $258,000 
A) $170,000 
B) $180,000 
C) $240,000 
D) $258,000

Question 4

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

Accepted Answer

A) cash flows provided (used)by financing activities. 
B) cash flows provided (used)by investing activities. 
C) cash flows provided (used)by operating activities. 
D) usually different from year to year. 
A) cash flows provided (used)by financing activities. 
B) cash flows provided (used)by investing activities. 
C) cash flows provided (used)by operating activities. 
D) usually different from year to year.

Question 5

Use the following information for questions 
Ingles Corp., a private company reporting under ASPE, engaged in the following transactions.For each transaction, indicate where, if at all, it would be classified on the statement of cash flows.
-Purchase of another company's common shares on the open market:

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

The indirect and direct methods of preparing the statement of cash flows are identical except for the

Accepted Answer

A) significant noncash activity section. 
B) operating activities section. 
C) investing activities section. 
D) financing activities section. 
A) significant noncash activity section. 
B) operating activities section. 
C) investing activities section. 
D) financing activities section.

Question 7

If a company reports a loss, it

Accepted Answer

A) may still have a net increase in cash. 
B) will not be able to pay cash dividends. 
C) will not be able to get a loan. 
D) will not be able to make capital expenditures. 
A) may still have a net increase in cash. 
B) will not be able to pay cash dividends. 
C) will not be able to get a loan. 
D) will not be able to make capital expenditures.

Question 8

Use the following information for questions 
Ingles Corp., a private company reporting under ASPE, engaged in the following transactions.For each transaction, indicate where, if at all, it would be classified on the statement of cash flows.
-Declaration and issue of a stock dividend:

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 9

Land costing $65,000 was sold for $125,000 cash.The gain on the sale was reported on the statement of income as an operating expense.On the statement of cash flows, what amount should be reported as an investing activity from the sale of the land?

Accepted Answer

A) $5,000 
B) $60,000 
C) $65,000 
D) $125,000 
A) $5,000 
B) $60,000 
C) $65,000 
D) $125,000

Question 10

Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively.Net income reported on the statement of income for the year was $120,000.Ignoring the effect of any other adjustments, the cash flow provided (used) by operating activities, prepared using the indirect method, is

Accepted Answer

A) $120,000. 
B) $125,000. 
C) $155,000. 
D) $115,000. 
A) $120,000. 
B) $125,000. 
C) $155,000. 
D) $115,000.

Question 11

The direct method is considered to be more informative and easier to compare with the other financial statements.

Accepted Answer

A) True 
 B)False

Question 12

For external reporting, a company must prepare either an statement of income or a statement of cash flows, but not both.

Accepted Answer

A) True 
 B)False

Question 13

During the year, Omega Limited reported credit sales of $600,000.Beginning Accounts Receivable was $70,000 and ending Accounts Receivable was $160,000.What were the cash collections from customers during the year?

Accepted Answer

A) $830,000 
B) $690,000 
C) $510,000 
D) $370,000 
A) $830,000 
B) $690,000 
C) $510,000 
D) $370,000

Question 14

Cash provided by operating activities is generally the same as the net income reported on the statement of income.

Accepted Answer

A) True 
 B)False

Question 15

During the year, Cost of Goods Sold was $65,000, Inventory decreased by $4,000, and Accounts Payable decreased by $2,000.What were the cash payments for merchandise during the year?

Accepted Answer

A) $63,000 
B) $65,000 
C) $67,000 
D) $71,000 
A) $63,000 
B) $65,000 
C) $67,000 
D) $71,000

Question 16

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 17

In calculating cash flows provided (used) by 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 18

Significant noncash transactions would not include

Accepted Answer

A) conversion of preferred shares into common shares. 
B) asset acquisition through issue of a note payable. 
C) loans to other companies. 
D) exchange of equipment. 
A) conversion of preferred shares into common shares. 
B) asset acquisition through issue of a note payable. 
C) loans to other companies. 
D) exchange of equipment.

Question 19

Using the indirect method, which of the following would be subtracted from net income?

Accepted Answer

A) depreciation expense 
B) increase in accounts receivable 
C) increase in accounts payable 
D) decrease in prepaid expenses 
A) depreciation expense 
B) increase in accounts receivable 
C) increase in accounts payable 
D) decrease in prepaid expenses

Question 20

A statement of cashflow is

Accepted Answer

A) not required for publicly traded companies. 
B) not required for privately held companies. 
C) is required for both publicly traded and privately held companies. 
D) not required for both publicly traded and privately held companies. 
A) not required for publicly traded companies. 
B) not required for privately held companies. 
C) is required for both publicly traded and privately held companies. 
D) not required for both publicly traded and privately held companies.

The primary purpose of the statement of cash flows is to

In the investing activities section of the statement of cash flows, all the cash payments for purchase of non-current assets should be totalled and reported as one number.

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

The indirect and direct methods of preparing the statement of cash flows are identical except for the

If a company reports a loss, it

Use the following information for questions Ingles Corp., a private company reporting under ASPE, engaged in the following transactions.For each transaction, indicate where, if at all, it would be classified on the statement of cash flows. -Declaration and issue of a stock dividend:

Land costing $65,000 was sold for $125,000 cash.The gain on the sale was reported on the statement of income as an operating expense.On the statement of cash flows, what amount should be reported as an investing activity from the sale of the land?

The direct method is considered to be more informative and easier to compare with the other financial statements.

For external reporting, a company must prepare either an statement of income or a statement of cash flows, but not both.

During the year, Omega Limited reported credit sales of $600,000.Beginning Accounts Receivable was $70,000 and ending Accounts Receivable was $160,000.What were the cash collections from customers during the year?

Cash provided by operating activities is generally the same as the net income reported on the statement of income.

During the year, Cost of Goods Sold was $65,000, Inventory decreased by $4,000, and Accounts Payable decreased by $2,000.What were the cash payments for merchandise during the year?

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

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

Significant noncash transactions would not include

Using the indirect method, which of the following would be subtracted from net income?

A statement of cashflow is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Performance Measurement

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Exam 13: Statement of Cash Flows

The primary purpose of the statement of cash flows is to

In the investing activities section of the statement of cash flows, all the cash payments for purchase of non-current assets should be totalled and reported as one number.

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

The indirect and direct methods of preparing the statement of cash flows are identical except for the

If a company reports a loss, it

Use the following information for questions Ingles Corp., a private company reporting under ASPE, engaged in the following transactions.For each transaction, indicate where, if at all, it would be classified on the statement of cash flows. -Declaration and issue of a stock dividend:

Land costing $65,000 was sold for $125,000 cash.The gain on the sale was reported on the statement of income as an operating expense.On the statement of cash flows, what amount should be reported as an investing activity from the sale of the land?

The direct method is considered to be more informative and easier to compare with the other financial statements.

For external reporting, a company must prepare either an statement of income or a statement of cash flows, but not both.

During the year, Omega Limited reported credit sales of $600,000.Beginning Accounts Receivable was $70,000 and ending Accounts Receivable was $160,000.What were the cash collections from customers during the year?

Cash provided by operating activities is generally the same as the net income reported on the statement of income.

During the year, Cost of Goods Sold was $65,000, Inventory decreased by $4,000, and Accounts Payable decreased by $2,000.What were the cash payments for merchandise during the year?

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

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

Significant noncash transactions would not include

Using the indirect method, which of the following would be subtracted from net income?

A statement of cashflow is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Performance Measurement

Filters