Question 1

Which would NOT be subtracted from net income in the operating section of an indirect cash flow statement?

Accepted Answer

A)  An increase in prepaid expenses 
B)  An increase in accounts payable 
C)  A decrease in accounts payable 
D)  An increase in notes receivable 
E)  An decrease in inventory 
A)  An increase in prepaid expenses 
B)  An increase in accounts payable 
C)  A decrease in accounts payable 
D)  An increase in notes receivable 
E)  An decrease in inventory

Question 2

In the direct method, each line of the income statement is converted from the accrual basis to cash basis.

Accepted Answer

A) True 
 B)False

Question 3

In order to prepare a cash flow statement using the indirect method, you need the income statement only.

Accepted Answer

A) True 
 B)False

Question 4

Dividends received by a company appear in the __________ activities section of a direct method cash flow statement.

Accepted Answer

The answer of Dividends received by a company appear in...

Question 5

A cash flow statement shows the company's sources of cash, but does not detail how the cash was used by the company.

Accepted Answer

A) True 
 B)False

Question 6

An increase in long-term mortgage payable would mean an increase in cash flow from __________ activities.

Accepted Answer

The answer of An increase in long-term mortgage payable would...

Question 7

Under the indirect method, which of the following is NOT a proper adjustment to net income under operating activities?

Accepted Answer

A)  Adding a decrease in inventory 
B)  Subtracting an increase in salaries payable 
C)  Deducting an increase in prepaid expenses 
D)  Subtracting a gain on the sale of equipment 
E)  Adding a decrease in accounts receivable 
A)  Adding a decrease in inventory 
B)  Subtracting an increase in salaries payable 
C)  Deducting an increase in prepaid expenses 
D)  Subtracting a gain on the sale of equipment 
E)  Adding a decrease in accounts receivable

Question 8

If $10,000 was generated from operations, $4,000 was used for investing activities, and $6,000 was generated from financing activities, how much would the cash balance increase?

Accepted Answer

The answer of If $10,000 was generated from operations, $4,000...

Question 9

Identify the various sources and uses of cash in preparing the operating activities of the cash flow statement using the direct method.

Accepted Answer

Cash receipts from customers, interest r

Question 10

What is the difference when comparing net cash provided by operations using the direct method versus indirect method. Explain why this difference exists.

Accepted Answer

The direct and indirect method

Question 11

Business transactions that do NOT involve the payment or receipt of cash are considered to be __________ transactions.

Accepted Answer

The answer of Business transactions that do NOT involve the...

Question 12

Why is the direct method preferred over the indirect method?

Accepted Answer

The direct method provides cle

Question 13

A transaction that exchanged a building for shares of stock would be an investing activity and would appear on the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 14

Which would be added back to net income in the operating section of an indirect cash flow statement?

Accepted Answer

A)  A decrease in accounts payable 
B)  Depreciation 
C)  An increase in accounts receivable 
D)  An increase in inventory 
E)  A gain on the sale of a vehicle 
A)  A decrease in accounts payable 
B)  Depreciation 
C)  An increase in accounts receivable 
D)  An increase in inventory 
E)  A gain on the sale of a vehicle

Question 15

A cash flow statement would NOT disclose:

Accepted Answer

A)  stock dividends declared. 
B)  bonds payable issued. 
C)  purchase of treasury shares. 
D)  capital shares issued. 
E)  payment of dividends. 
A)  stock dividends declared. 
B)  bonds payable issued. 
C)  purchase of treasury shares. 
D)  capital shares issued. 
E)  payment of dividends.

Question 16

A transaction acquiring land by issuing a note for the full purchase price would not appear on the cash flow statement because no cash was involved, but it may be disclosed in a separate section.

Accepted Answer

A) True 
 B)False

Question 17

What types of expenses are not reported on the direct method cash flow statement?

Accepted Answer

Depreciation, deplet

Question 18

From the income statement and balance sheet information listed below, what amount of cash is paid for salaries and wages?

Accepted Answer

The answer of From the income statement and balance sheet...

Question 19

Inca Corporation declared a stock dividend. What would be the impact on the cash flow statement?

Accepted Answer

A stock dividend has

Question 20

Isaiah Corporation's Accounts Receivable increased by $35,000 and its Accounts Payable decreased by $18,000. What is the net effect on cash from operations under the indirect method?

Accepted Answer

The answer of Isaiah Corporation's Accounts Receivable increased by $35,000...

Which would NOT be subtracted from net income in the operating section of an indirect cash flow statement?

In the direct method, each line of the income statement is converted from the accrual basis to cash basis.

In order to prepare a cash flow statement using the indirect method, you need the income statement only.

Dividends received by a company appear in the __________ activities section of a direct method cash flow statement.

A cash flow statement shows the company's sources of cash, but does not detail how the cash was used by the company.

An increase in long-term mortgage payable would mean an increase in cash flow from __________ activities.

Under the indirect method, which of the following is NOT a proper adjustment to net income under operating activities?

If $10,000 was generated from operations, $4,000 was used for investing activities, and $6,000 was generated from financing activities, how much would the cash balance increase?

Identify the various sources and uses of cash in preparing the operating activities of the cash flow statement using the direct method.

What is the difference when comparing net cash provided by operations using the direct method versus indirect method. Explain why this difference exists.

Business transactions that do NOT involve the payment or receipt of cash are considered to be __________ transactions.

Why is the direct method preferred over the indirect method?

A transaction that exchanged a building for shares of stock would be an investing activity and would appear on the cash flow statement.

Which would be added back to net income in the operating section of an indirect cash flow statement?

A cash flow statement would NOT disclose:

A transaction acquiring land by issuing a note for the full purchase price would not appear on the cash flow statement because no cash was involved, but it may be disclosed in a separate section.

What types of expenses are not reported on the direct method cash flow statement?

From the income statement and balance sheet information listed below, what amount of cash is paid for salaries and wages?

Inca Corporation declared a stock dividend. What would be the impact on the cash flow statement?

Isaiah Corporation's Accounts Receivable increased by $35,000 and its Accounts Payable decreased by $18,000. What is the net effect on cash from operations under the indirect method?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Ethics, Internal Control, and Cash

Accounting for a Merchandising Business

Inventory

Sales and Receivables

Long-Term Assets

Current Liabilities and Long-Term Debt

Corporations: Share Capital and Retained Earnings

Financial Statement Analysis

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Exam 11: The Cash Flow Statement

Which would NOT be subtracted from net income in the operating section of an indirect cash flow statement?

In the direct method, each line of the income statement is converted from the accrual basis to cash basis.

In order to prepare a cash flow statement using the indirect method, you need the income statement only.

Dividends received by a company appear in the __________ activities section of a direct method cash flow statement.

A cash flow statement shows the company's sources of cash, but does not detail how the cash was used by the company.

An increase in long-term mortgage payable would mean an increase in cash flow from __________ activities.

Under the indirect method, which of the following is NOT a proper adjustment to net income under operating activities?

If $10,000 was generated from operations, $4,000 was used for investing activities, and $6,000 was generated from financing activities, how much would the cash balance increase?

Identify the various sources and uses of cash in preparing the operating activities of the cash flow statement using the direct method.

What is the difference when comparing net cash provided by operations using the direct method versus indirect method. Explain why this difference exists.

Business transactions that do NOT involve the payment or receipt of cash are considered to be __________ transactions.

Why is the direct method preferred over the indirect method?

A transaction that exchanged a building for shares of stock would be an investing activity and would appear on the cash flow statement.

Which would be added back to net income in the operating section of an indirect cash flow statement?

A cash flow statement would NOT disclose:

A transaction acquiring land by issuing a note for the full purchase price would not appear on the cash flow statement because no cash was involved, but it may be disclosed in a separate section.

What types of expenses are not reported on the direct method cash flow statement?

From the income statement and balance sheet information listed below, what amount of cash is paid for salaries and wages?

Inca Corporation declared a stock dividend. What would be the impact on the cash flow statement?

Isaiah Corporation's Accounts Receivable increased by $35,000 and its Accounts Payable decreased by $18,000. What is the net effect on cash from operations under the indirect method?

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Ethics, Internal Control, and Cash

Accounting for a Merchandising Business

Inventory

Sales and Receivables

Long-Term Assets

Current Liabilities and Long-Term Debt

Corporations: Share Capital and Retained Earnings

Financial Statement Analysis

Filters