Question 1

When net income is high relative to operating cash flows,we describe the firm as having recorded

Accepted Answer

A)  income-decreasing accruals. 
B)  income-increasing accruals. 
C)  income-neutral accruals. 
D)  abnormal accruals. 
A)  income-decreasing accruals. 
B)  income-increasing accruals. 
C)  income-neutral accruals. 
D)  abnormal accruals.

Question 2

Cash flows from ____________________ activities will normally be positive during the introduction and growth phases of the product life cycle.

Accepted Answer

The answer of Cash flows from ____________________ activities will normally...

Question 3

Which of the following is the correct formula for calculating cash collections from customers?

Accepted Answer

A)  sales for the period plus accounts receivable at the beginning of the period 
B)  sales for the period plus accounts receivable at the beginning of the period minus accounts receivable at the end of the period 
C)  sales for the period plus accounts receivable at the end of the period 
D)  sales for the period plus accounts receivable at the end of the period minus accounts receivable at the beginning of the period 
A)  sales for the period plus accounts receivable at the beginning of the period 
B)  sales for the period plus accounts receivable at the beginning of the period minus accounts receivable at the end of the period 
C)  sales for the period plus accounts receivable at the end of the period 
D)  sales for the period plus accounts receivable at the end of the period minus accounts receivable at the beginning of the period

Question 4

Which of the following is a cash flow from operating activities?

Accepted Answer

A)  Sale of long-term investments in common stock. 
B)  Purchase of merchandise for resale. 
C)  Payment of a note payable. 
D)  Sale of a piece of land no longer used in operations. 
A)  Sale of long-term investments in common stock. 
B)  Purchase of merchandise for resale. 
C)  Payment of a note payable. 
D)  Sale of a piece of land no longer used in operations.

Question 5

Luke Corporation is a manufacturer of home furnishings.Selected financial information about Luke is listed below:
· Borrowed $850,000 from a bank.
 Purchased equipment for $210,000 in cash.
· Purchase investments for $285,000.
· Received dividends of $51,000 from an investment in Davis Corp.
· Paid dividends of $55,000.
· Issued shares of preferred stock for $500,000.
 Repurchased outstanding common shares using $100,000 in cash.
· Purchased land for $100,000 cash.
· Paid $36,000 interest expense on a bank loan.
· Increased Inventories by $320,000
· Increased accounts receivable by $217,000.
· Increased accounts payable $85,000.
 
Use the above information to calculate Luke's:
a.cash used or provided by investing activities
b.cash used or provided by financing activities

Accepted Answer

The answer of Luke Corporation is a manufacturer of home...

Question 6

What is working capital from operations? Discuss what types of firms will have similar net income and working capital from operations? For which types of firms will net income and working capital from operations be significantly different?

Accepted Answer

Working capital from operations is defin

Question 7

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.
investing activities

Accepted Answer

investing

Question 8

Academic research has found that market rates of return on common stock are the most highly correlated with

Accepted Answer

A)  net income. 
B)  cash flow from operations. 
C)  EBITDA. 
D)  cash flow from investing activities. 
A)  net income. 
B)  cash flow from operations. 
C)  EBITDA. 
D)  cash flow from investing activities.

Question 9

Listed below is a list of cash inflows and cash outflows for Toggle Inc.
1.Cash received from issuing debt
2.Cash received from interest earned on a bond investment
3.Cash used to purchase property
4.Cash used to repay debt
5.Cash received from collections of loans
6.Cash paid for retiring common stock
7.Cash paid to employees for salaries
8.Cash from the sale of marketable securities
9.Cash used to pay dividends
10.Cash from the sale of services to customers
11.Cash paid to government agencies for taxes
12.Cash received from the sale of equipment
For each item indicate where it should appear on Toggle's statement of cash flows.Select from:
a.Cash inflows from operating activities
b.Cash outflows from operating activities
c.Cash inflows from investing activities
d.Cash outflows from investing activities
e.Cash inflows from financing activities
f.Cash outflows from financing activities

Accepted Answer

The answer of Listed below is a list of cash...

Question 10

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

Accepted Answer

working ca

Question 11

When preparing the statement of cash flows using the indirect method,the purchase of equipment would appear as

Accepted Answer

A)  a use of cash in the investing activities section 
B)  a source of cash in the investing activities section 
C)  a use of cash in the financing activities section 
D)  a source of cash in the financing activities section 
A)  a use of cash in the investing activities section 
B)  a source of cash in the investing activities section 
C)  a use of cash in the financing activities section 
D)  a source of cash in the financing activities section

Question 12

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

Accepted Answer

The answer of Interest expense and interest revenue would be...

Question 13

Which of the following statements is false?

Accepted Answer

A)  Purchase of equipment is an investing cash outflow. 
B)  Sale of equipment creates investing cash outflow equal to its selling price. 
C)  Purchase of short-term investments is an investing cash outflow. 
D)  Purchase of a patent is an investing cash outflow. 
A)  Purchase of equipment is an investing cash outflow. 
B)  Sale of equipment creates investing cash outflow equal to its selling price. 
C)  Purchase of short-term investments is an investing cash outflow. 
D)  Purchase of a patent is an investing cash outflow.

Question 14

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Accepted Answer

investing

Question 15

While preparing a statement of cash flows,you encountered the following transaction:
February 1,2011: Galvinize Corporation acquired a small office building in exchange for 5,000 shares of its own common stock; par value $10 per share; market value $15 per share.
A. Should this transaction be shown on the statement of cash flows?
A. Yes
B. Because it is a direct exchange, it is reported on the statement of cash flows in a supplemental schedule or note as "Office building, acquired for 5,000 shares of Galvinize Corporation's common stock, $75,000."
B. Why or why not?

Accepted Answer

A.Yes
B.Because it is a direct exchange,

Question 16

Fizzzle Inc.sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale.How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

Accepted Answer

A)  A sale of equipment is a investing activity, the transaction will not affect the operating activities section. 
B)  The gain is added back to net income in the operating activities section. 
C)  The gain is subtracted from net income in the operating activities section. 
D)  The entire sales price is subtracted from net income in the operating activities section. 
A)  A sale of equipment is a investing activity, the transaction will not affect the operating activities section. 
B)  The gain is added back to net income in the operating activities section. 
C)  The gain is subtracted from net income in the operating activities section. 
D)  The entire sales price is subtracted from net income in the operating activities section.

Question 17

One rationale for the statement of cash flows is to

Accepted Answer

A)  ensure that the cash account balances at year-end. 
B)  reconcile differences between net income and cash receipts and disbursements. 
C)  calculate the company's free cash flow. 
D)  examine the cash effects of income from discontinued operations, extraordinary items and changes in accounting principles. 
A)  ensure that the cash account balances at year-end. 
B)  reconcile differences between net income and cash receipts and disbursements. 
C)  calculate the company's free cash flow. 
D)  examine the cash effects of income from discontinued operations, extraordinary items and changes in accounting principles.

Question 18

As a complement to the balance sheet and the income statement,the statement of cash flows is an informative statement for analysts for all the following reasons except:

Accepted Answer

A)  The statement of cash flows provides information to assess the financial health of a firm. Analysts increasingly recognize that cash flows do not necessarily track income flows. A firm with a healthy income statement is not necessarily financially healthy, and vice versa. Cash requirements to service debt, for example, may outstrip the ability of operations to generate cash. 
B)  The existence of negative cash flows from operations can be eliminated by using this financial statement. 
C)  The statement of cash flows highlights accounting accruals, which can provide insight into the overall sustainability and quality of a firm's reported earnings. 
D)  Analysts who understand the types of information this statement presents and the kinds of interpretations that are appropriate find that the statement of cash flows reveals information about the economic characteristics of a firm's industry, its strategy, and the stage in its life cycle. 
A)  The statement of cash flows provides information to assess the financial health of a firm. Analysts increasingly recognize that cash flows do not necessarily track income flows. A firm with a healthy income statement is not necessarily financially healthy, and vice versa. Cash requirements to service debt, for example, may outstrip the ability of operations to generate cash. 
B)  The existence of negative cash flows from operations can be eliminated by using this financial statement. 
C)  The statement of cash flows highlights accounting accruals, which can provide insight into the overall sustainability and quality of a firm's reported earnings. 
D)  Analysts who understand the types of information this statement presents and the kinds of interpretations that are appropriate find that the statement of cash flows reveals information about the economic characteristics of a firm's industry, its strategy, and the stage in its life cycle.

Question 19

Selected financial statement information for Filmco appears below:

Accepted Answer

@#IMG-DLM& Calculate the amount of cash collected

Question 20

In 2010,Lamar Industries reported the following: proceeds from short-term borrowings of $419 million; proceeds from long-term borrowings of $147 million; long-term debt repayments of $45 million; interest paid,$128 million; treasury shares repurchased,$632 million; and exercise of stock options by employees,$2 million.How much is net cash flow from financing activities in 2010?

Accepted Answer

$109 million net cash outflow

When net income is high relative to operating cash flows,we describe the firm as having recorded

Cash flows from ____________________ activities will normally be positive during the introduction and growth phases of the product life cycle.

Which of the following is the correct formula for calculating cash collections from customers?

Which of the following is a cash flow from operating activities?

What is working capital from operations? Discuss what types of firms will have similar net income and working capital from operations? For which types of firms will net income and working capital from operations be significantly different?

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________. investing activities

Academic research has found that market rates of return on common stock are the most highly correlated with

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

When preparing the statement of cash flows using the indirect method,the purchase of equipment would appear as

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

Which of the following statements is false?

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Fizzzle Inc.sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale.How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

One rationale for the statement of cash flows is to

As a complement to the balance sheet and the income statement,the statement of cash flows is an informative statement for analysts for all the following reasons except:

Selected financial statement information for Filmco appears below:

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 3: Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

When net income is high relative to operating cash flows,we describe the firm as having recorded

Cash flows from ____________________ activities will normally be positive during the introduction and growth phases of the product life cycle.

Which of the following is the correct formula for calculating cash collections from customers?

Which of the following is a cash flow from operating activities?

What is working capital from operations? Discuss what types of firms will have similar net income and working capital from operations? For which types of firms will net income and working capital from operations be significantly different?

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________. investing activities

Academic research has found that market rates of return on common stock are the most highly correlated with

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

When preparing the statement of cash flows using the indirect method,the purchase of equipment would appear as

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

Which of the following statements is false?

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Fizzzle Inc.sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale.How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

One rationale for the statement of cash flows is to

As a complement to the balance sheet and the income statement,the statement of cash flows is an informative statement for analysts for all the following reasons except:

Selected financial statement information for Filmco appears below:

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters