Question 1

Many business decisions are based on cash flow evaluations.

Accepted Answer

A) True 
 B)False

Question 2

The increase or decrease in cash equals the current period's cash balance minus the prior period's cash balance.

Accepted Answer

A) True 
 B)False

Question 3

Decisions on whether a company can pay its existing debts as they mature can be evaluated by looking at the company's statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

The statement of cash flows reports:

Accepted Answer

A)  Operating activities. 
B)  Investing activities. 
C)  Financing activities. 
D)  Noncash financing and investing activities. 
E)  All of these answers are correct. 
A)  Operating activities. 
B)  Investing activities. 
C)  Financing activities. 
D)  Noncash financing and investing activities. 
E)  All of these answers are correct.

Question 5

Explain the value of the statement of cash flows in analyzing cash flows.

Accepted Answer

By dividing cash flows into three catego

Question 6

The direct method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)  Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. 
B)  Separately lists each major item of operating cash receipts. 
C)  Separately lists each major item of operating cash payments. 
D)  Separately lists each major item of operating cash receipts and cash payments. 
E)  All of these answers are correct. 
A)  Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. 
B)  Separately lists each major item of operating cash receipts. 
C)  Separately lists each major item of operating cash payments. 
D)  Separately lists each major item of operating cash receipts and cash payments. 
E)  All of these answers are correct.

Question 7

The direct method of preparing the statement of cash flows separately lists each major item of operating cash receipts and each major item of operating cash payments.

Accepted Answer

A) True 
 B)False

Question 8

Under the indirect method, decreases in non-cash current assets are added to net income.

Accepted Answer

A) True 
 B)False

Question 9

Under the direct method, the gain or loss from retirement of debt is reported in the operating section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 10

Using the indirect method to calculate net cash provided or used) by operating activities, which of the following is subtracted from net income?

Accepted Answer

A)  Decrease in income taxes payable. 
B)  Bad debts expense. 
C)  Amortization of intangible assets. 
D)  Depreciation expense. 
E)  None of these answers is correct. 
A)  Decrease in income taxes payable. 
B)  Bad debts expense. 
C)  Amortization of intangible assets. 
D)  Depreciation expense. 
E)  None of these answers is correct.

Question 11

A change in retained earnings can be due to payment of cash dividends.

Accepted Answer

A) True 
 B)False

Question 12

A cash equivalent is an investment that:

Accepted Answer

A)  Is within 3 months of its maturity date. 
B)  Is readily convertible to a known amount of cash. 
C)  Is highly liquid. 
D)  Is subject to an insignificant risk of changes in value. 
E)  All of these answers are correct. 
A)  Is within 3 months of its maturity date. 
B)  Is readily convertible to a known amount of cash. 
C)  Is highly liquid. 
D)  Is subject to an insignificant risk of changes in value. 
E)  All of these answers are correct.

Question 13

Under IFRS, the payment of cash dividends to shareholders can be classified as either a financing activity or operating activity.

Accepted Answer

A) True 
 B)False

Question 14

Received a settlement on a lawsuit.A - Operating activities. B - Investing activities. C - Financing activities.D - Schedule of noncash financing and investing activities. E - Not reported on the statement of cash flows.

Accepted Answer

A)  1 = C; 2 = B; 3 = A; 4 = B; 5 = A. 
B)  1 = D; 2 = A; 3 = A; 4 = B; 5 = E. 
C)  1 = D; 2 = A; 3 = B; 4 = C; 5 = A. 
D)  1 = B; 2 = A; 3 = C; 4 = B; 5 = E. 
E)  1 = C; 2 = C; 3 = B; 4 = C; 5 = E. 
A)  1 = C; 2 = B; 3 = A; 4 = B; 5 = A. 
B)  1 = D; 2 = A; 3 = A; 4 = B; 5 = E. 
C)  1 = D; 2 = A; 3 = B; 4 = C; 5 = A. 
D)  1 = B; 2 = A; 3 = C; 4 = B; 5 = E. 
E)  1 = C; 2 = C; 3 = B; 4 = C; 5 = E.

Question 15

The statement of cash flows only measures outflows of cash during a period.

Accepted Answer

A) True 
 B)False

Question 16

Both the direct and indirect methods yield the same net cash flow provided used) by investing activities.

Accepted Answer

A) True 
 B)False

Question 17

Managers use cash flow predictions to:

Accepted Answer

A)  Make decisions about acquiring new property, plant and equipment. 
B)  Keep or eliminate a product line. 
C)  Maintain or downsize a department. 
D)  Insource or outsource production of a product. 
E)  All of these answers are correct. 
A)  Make decisions about acquiring new property, plant and equipment. 
B)  Keep or eliminate a product line. 
C)  Maintain or downsize a department. 
D)  Insource or outsource production of a product. 
E)  All of these answers are correct.

Question 18

The appropriate statement of cash flow activity category for the purchase of equipment for cash is:

Accepted Answer

A)  Operating. 
B)  Financing. 
C)  Investing. 
D)  Schedule of noncash investing or financing activity. 
E)  Not reported on the statement of cash flows. 
A)  Operating. 
B)  Financing. 
C)  Investing. 
D)  Schedule of noncash investing or financing activity. 
E)  Not reported on the statement of cash flows.

Question 19

The direct method of reporting operating cash flows:

Accepted Answer

A)  Is recommended, but not required, by IFRS. 
B)  Is used by most companies. 
C)  Is recommended by IFRS. 
D)  Is not required by IFRS. 
E)  All of these answers are correct. 
A)  Is recommended, but not required, by IFRS. 
B)  Is used by most companies. 
C)  Is recommended by IFRS. 
D)  Is not required by IFRS. 
E)  All of these answers are correct.

Question 20

The appropriate statement of cash flow activity category for the payment of wages is:

Accepted Answer

A)  Operating. 
B)  Financing. 
C)  Investing. 
D)  Schedule of noncash investing or financing activity. 
E)  Not reported on the statement of cash flows. 
A)  Operating. 
B)  Financing. 
C)  Investing. 
D)  Schedule of noncash investing or financing activity. 
E)  Not reported on the statement of cash flows.

Many business decisions are based on cash flow evaluations.

The increase or decrease in cash equals the current period's cash balance minus the prior period's cash balance.

Decisions on whether a company can pay its existing debts as they mature can be evaluated by looking at the company's statement of cash flows.

The statement of cash flows reports:

Explain the value of the statement of cash flows in analyzing cash flows.

The direct method for the preparation of the operating activities section of the statement of cash flows:

The direct method of preparing the statement of cash flows separately lists each major item of operating cash receipts and each major item of operating cash payments.

Under the indirect method, decreases in non-cash current assets are added to net income.

Under the direct method, the gain or loss from retirement of debt is reported in the operating section of the statement of cash flows.

Using the indirect method to calculate net cash provided or used) by operating activities, which of the following is subtracted from net income?

A change in retained earnings can be due to payment of cash dividends.

A cash equivalent is an investment that:

Under IFRS, the payment of cash dividends to shareholders can be classified as either a financing activity or operating activity.

Received a settlement on a lawsuit.A - Operating activities. B - Investing activities. C - Financing activities.D - Schedule of noncash financing and investing activities. E - Not reported on the statement of cash flows.

The statement of cash flows only measures outflows of cash during a period.

Both the direct and indirect methods yield the same net cash flow provided used) by investing activities.

Managers use cash flow predictions to:

The appropriate statement of cash flow activity category for the purchase of equipment for cash is:

The direct method of reporting operating cash flows:

The appropriate statement of cash flow activity category for the payment of wages is:

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Analyzing Financial Statements

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Exam 16: Reporting and Analyzing Cash Flows

Many business decisions are based on cash flow evaluations.

The increase or decrease in cash equals the current period's cash balance minus the prior period's cash balance.

Decisions on whether a company can pay its existing debts as they mature can be evaluated by looking at the company's statement of cash flows.

The statement of cash flows reports:

Explain the value of the statement of cash flows in analyzing cash flows.

The direct method for the preparation of the operating activities section of the statement of cash flows:

The direct method of preparing the statement of cash flows separately lists each major item of operating cash receipts and each major item of operating cash payments.

Under the indirect method, decreases in non-cash current assets are added to net income.

Under the direct method, the gain or loss from retirement of debt is reported in the operating section of the statement of cash flows.

Using the indirect method to calculate net cash provided or used) by operating activities, which of the following is subtracted from net income?

A change in retained earnings can be due to payment of cash dividends.

A cash equivalent is an investment that:

Under IFRS, the payment of cash dividends to shareholders can be classified as either a financing activity or operating activity.

Received a settlement on a lawsuit.A - Operating activities. B - Investing activities. C - Financing activities.D - Schedule of noncash financing and investing activities. E - Not reported on the statement of cash flows.

The statement of cash flows only measures outflows of cash during a period.

Both the direct and indirect methods yield the same net cash flow provided used) by investing activities.

Managers use cash flow predictions to:

The appropriate statement of cash flow activity category for the purchase of equipment for cash is:

The direct method of reporting operating cash flows:

The appropriate statement of cash flow activity category for the payment of wages is:

Property, Plant and Equipment and Intangibles

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Analyzing Financial Statements

Filters