Question 1

Normally,cash flows from financing will start using cash during which phase of the product life cycle?

Accepted Answer

A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline 
A)  Introduction 
B)  Growth 
C)  Maturity 
D)  Decline

Question 2

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

Accepted Answer

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

Question 3

Lagos Corp.recorded sales of $345,000 in 2010.In addition,its accounts receivable and accounts payable balances at the beginning and end of 2010 were as follows:
$\begin{array}{lll}
&\text {Jan. 1, 2010 }&\text { Dec. 31,2010 }\
\text { Accounts Receivable } & \$ 65,000 & \$ 90,000 \
\text { Accounts Payable } & \$ 32,000 & \$ 28,000
\end{array}$

How much cash did Lagos collect from customers in 2010?

Accepted Answer

A)  $345,000 
B)  $320,000 
C)  $324,000 
D)  $316,000 
A)  $345,000 
B)  $320,000 
C)  $324,000 
D)  $316,000

Question 4

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 5

The calculation of cash flow from operations under the indirect method involves two types of adjustments.Discuss each type of adjustment and provide an example of each type of adjustment.

Accepted Answer

1.Adjusting revenues and expenses for ch

Question 6

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

1.e

Question 7

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

Accepted Answer

working ca

Question 8

An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is:

Accepted Answer

A)  depreciation expense. 
B)  compensation expense related to stock option plans. 
C)  income from an investment accounted for using the equity method. 
D)  unrealized losses on trading investments 
A)  depreciation expense. 
B)  compensation expense related to stock option plans. 
C)  income from an investment accounted for using the equity method. 
D)  unrealized losses on trading investments

Question 9

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 10

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 11

____________________ activities relate to the acquisition and sale of noncurrent assets,particularly property,plant and equipment.

Accepted Answer

The answer of ____________________ activities relate to the acquisition and...

Question 12

In 2010,Lamar Industries reported the following: Sales $700,000; Accounts receivable beginning of 2010 $450,000; Accounts receivable end of 2010 $369,200; Depreciation expense $55,400; Rent Expense $30,000.What is the net cash provided (used)by operating activities

Accepted Answer

The answer of In 2010,Lamar Industries reported the following: Sales...

Question 13

Tinker Company reported sales revenue of $500,000 and total expenses of $450,000 (including depreciation)for the year ended December 31,2010.During 2010,accounts receivable decreased by $5,000,merchandise inventory increased by $4,000,accounts payable increased by $6,000,and depreciation expense of $10,000 was recorded.Assuming no other data is needed and using the indirect method,the net cash inflow from operating activities for 2010 was:

Accepted Answer

A)  $60,000 
B)  $67,000 
C)  $44,000 
D)  $51,000 
A)  $60,000 
B)  $67,000 
C)  $44,000 
D)  $51,000

Question 14

When net income is low 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 15

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Accepted Answer

operating

Question 16

Use the following information to prepare a statement of cash flows (indirect method)for Sink Industries for the year ended December 31,2010:
Net income for the year 2010 was $5,000.Accounts receivable decreased $2,000,while inventories increased $4,000,and accounts payable decreased $7,000.Depreciation expense included in net income was $8,000.
During the year,a piece of land held for future expansion was sold for its book value of $8,000 and a new service truck was purchased for $14,000.
The company borrowed $18,000 on a two-year note from the bank.Dividends of $6,000 were paid in cash.Preferred stock was issued to retire $7,000 of long-term notes payable.
The beginning cash balance was $10,000 and the ending balance was $20,000.

Accepted Answer

None

Question 17

Norton Company reported total sales revenue of $55,000,total expenses of $45,000,and net income of $10,000 on its income statement for the year ended December 31,2010.During 2010,accounts receivable increased by $4,000,merchandise inventory increased by $6,000,accounts payable decreased by $2,000,and depreciation of $18,000 was recorded.Therefore,based only on this information,the net cash flow from operating activities using the indirect method for 2010 was:

Accepted Answer

A)  $30,000 
B)  $10,000 
C)  $16,000 
D)  $19,000 
A)  $30,000 
B)  $10,000 
C)  $16,000 
D)  $19,000

Question 18

Which of the following statements about the statement of cash flows is correct?

Accepted Answer

A)  A purchase of equipment is classified as a cash inflow from investing activities. 
B)  Cash dividends paid are classified as cash flows from operating activities. 
C)  Cash dividends received on stock investments are classified as cash flows from operating activities. 
D)  A company with a net loss on the income statement will always have a net cash outflow from operating activities. 
A)  A purchase of equipment is classified as a cash inflow from investing activities. 
B)  Cash dividends paid are classified as cash flows from operating activities. 
C)  Cash dividends received on stock investments are classified as cash flows from operating activities. 
D)  A company with a net loss on the income statement will always have a net cash outflow from operating activities.

Question 19

A firm's cash flows will differ from net income each period for all of the following reasons except:

Accepted Answer

A)  cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. 
B)  cash expenditures to employees, suppliers, and governments do not necessarily occur in the same period in which a firm recognizes expenses. 
C)  the company is sustaining losses each period. 
D)  cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement. 
A)  cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. 
B)  cash expenditures to employees, suppliers, and governments do not necessarily occur in the same period in which a firm recognizes expenses. 
C)  the company is sustaining losses each period. 
D)  cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement.

Question 20

Which statement is false regarding the preparation of the indirect method of the statement of cash flows?

Accepted Answer

A)  An increase in merchandise inventory is subtracted from net income. 
B)  Depreciation expense is added to net income. 
C)  An increase in accounts receivable is added to net income. 
D)  An increase in accounts payable is added to net income. 
A)  An increase in merchandise inventory is subtracted from net income. 
B)  Depreciation expense is added to net income. 
C)  An increase in accounts receivable is added to net income. 
D)  An increase in accounts payable is added to net income.

Normally,cash flows from financing will start using cash during which phase of the product life cycle?

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

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:

The calculation of cash flow from operations under the indirect method involves two types of adjustments.Discuss each type of adjustment and provide an example of each type of adjustment.

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

An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is:

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?

Which of the following statements is false?

____________________ activities relate to the acquisition and sale of noncurrent assets,particularly property,plant and equipment.

In 2010,Lamar Industries reported the following: Sales $700,000; Accounts receivable beginning of 2010 $450,000; Accounts receivable end of 2010 $369,200; Depreciation expense $55,400; Rent Expense $30,000.What is the net cash provided (used)by operating activities

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

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Which of the following statements about the statement of cash flows is correct?

A firm's cash flows will differ from net income each period for all of the following reasons except:

Which statement is false regarding the preparation of the indirect method of the statement of cash flows?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing Activities

Operating Activities

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

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

Normally,cash flows from financing will start using cash during which phase of the product life cycle?

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

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:

The calculation of cash flow from operations under the indirect method involves two types of adjustments.Discuss each type of adjustment and provide an example of each type of adjustment.

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

An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is:

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?

Which of the following statements is false?

____________________ activities relate to the acquisition and sale of noncurrent assets,particularly property,plant and equipment.

In 2010,Lamar Industries reported the following: Sales $700,000; Accounts receivable beginning of 2010 $450,000; Accounts receivable end of 2010 $369,200; Depreciation expense $55,400; Rent Expense $30,000.What is the net cash provided (used)by operating activities

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

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Which of the following statements about the statement of cash flows is correct?

A firm's cash flows will differ from net income each period for all of the following reasons except:

Which statement is false regarding the preparation of the indirect method of the statement of cash flows?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing Activities

Operating Activities

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