Question 1

Which of the following descriptions do apply to cash equivalents?

Accepted Answer

A) Cash equivalents' values change because the interest rate changes. 
B) Cash equivalents are invested in fixed assets. 
C) Cash equivalents are highly liquid. 
D) Cash equivalents are long-term. 
A) Cash equivalents' values change because the interest rate changes. 
B) Cash equivalents are invested in fixed assets. 
C) Cash equivalents are highly liquid. 
D) Cash equivalents are long-term.

Question 2

A company uses the direct method to prepare the statement of cash flows.It presents the following amounts on its financial statements:
 
*Relates solely to the acquisition of inventory
Which of the following is correct about the accounts receivable in the operating activities category in the statement of cash flows?

Accepted Answer

A) The increase of $15,000 will be subtracted from net income. 
B) The increase of $15,000 will be subtracted from sales to determine cash received from customers. 
C) The increase of $15,000 will be added to sales to determine cash received from customers. 
D) The increase of $15,000 will be added to net income. 
A) The increase of $15,000 will be subtracted from net income. 
B) The increase of $15,000 will be subtracted from sales to determine cash received from customers. 
C) The increase of $15,000 will be added to sales to determine cash received from customers. 
D) The increase of $15,000 will be added to net income.

Question 3

The ________ reports an entity's cash receipts and cash payments during the period.

Accepted Answer

A) income statement 
B) statement of retained earnings 
C) balance sheet 
D) statement of cash flows 
A) income statement 
B) statement of retained earnings 
C) balance sheet 
D) statement of cash flows

Question 4

If a company uses the indirect method to prepare the statement of cash flows,how will the adjustment to reflect the amount of cash payments to suppliers be presented on the statement?

Accepted Answer

A) The adjustment will be for the increase or decrease in inventory during the period and will adjust net income in the operating activities section in the statement of cash flows. 
B) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section in the statement of cash flows. 
C) The adjustment will be for the increase or decrease in other accrued expenses during the period and will adjust net income in the operating activities section in the statement of cash flows. 
D) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section in the statement of cash flows. 
A) The adjustment will be for the increase or decrease in inventory during the period and will adjust net income in the operating activities section in the statement of cash flows. 
B) The adjustment will be for the increase or decrease in accounts payable during the period and will adjust net income in the operating activities section in the statement of cash flows. 
C) The adjustment will be for the increase or decrease in other accrued expenses during the period and will adjust net income in the operating activities section in the statement of cash flows. 
D) The adjustment will be for the increase or decrease in accounts receivable during the period and will adjust net income in the operating activities section in the statement of cash flows.

Question 5

Using the direct method to prepare the statement of cash flows,cash payments for merchandise inventory is categorized on the statement of cash flows as

Accepted Answer

A) a cash payment in the operating activities section on the statement of cash flows. 
B) a cash receipt in the operating activities section on the statement of cash flows. 
C) a cash payment in the investing activities section on the statement of cash flows. 
D) a cash receipt in the investing activities section on the statement of cash flows. 
A) a cash payment in the operating activities section on the statement of cash flows. 
B) a cash receipt in the operating activities section on the statement of cash flows. 
C) a cash payment in the investing activities section on the statement of cash flows. 
D) a cash receipt in the investing activities section on the statement of cash flows.

Question 6

Investing activities include activities that affect the current asset section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

Using the direct method to prepare the statement of cash flows,how would the amount of cash payments to employees categorized on the statement of cash flows?

Accepted Answer

A) Cash payments to employees would be equal to salary expense plus the beginning balance in salaries payable. 
B) Cash payments to employees would be equal to salary expense plus the ending balance in salaries payable. 
C) Cash payments to employees would be equal to salary expense plus the decrease in salaries payable. 
D) Cash payments to employees would be equal to salary expense plus the increase in salaries payable. 
A) Cash payments to employees would be equal to salary expense plus the beginning balance in salaries payable. 
B) Cash payments to employees would be equal to salary expense plus the ending balance in salaries payable. 
C) Cash payments to employees would be equal to salary expense plus the decrease in salaries payable. 
D) Cash payments to employees would be equal to salary expense plus the increase in salaries payable.

Question 8

The balance in the ________ is used to check the accuracy on the ending balance of the statement of cash flows.

Accepted Answer

A) asset and liability accounts 
B) liability accounts 
C) cash and cash equivalent accounts 
D) asset accounts 
A) asset and liability accounts 
B) liability accounts 
C) cash and cash equivalent accounts 
D) asset accounts

Question 9

For an investment to be considered as a "cash equivalent," the investment must be

Accepted Answer

A) convertible to a known amount of cash. 
B) convertible to cash within 5 years. 
C) convertible to cash without loss of value. 
D) convertible to cash within 1 year. 
A) convertible to a known amount of cash. 
B) convertible to cash within 5 years. 
C) convertible to cash without loss of value. 
D) convertible to cash within 1 year.

Question 10

Which is not reported as an operating activity on a cash flow statement prepared using the indirect method?

Accepted Answer

A) Decreases in inventories 
B) Proceeds from the sales of investments 
C) Interest expense 
D) Increases in Accounts Payable 
A) Decreases in inventories 
B) Proceeds from the sales of investments 
C) Interest expense 
D) Increases in Accounts Payable

Question 11

The purchase of inventory would be considered a

Accepted Answer

A) cash outflow from investing activities. 
B) cash outflow from operating activities. 
C) cash outflow from financing activities. 
D) cash outflow from depreciation. 
A) cash outflow from investing activities. 
B) cash outflow from operating activities. 
C) cash outflow from financing activities. 
D) cash outflow from depreciation.

Question 12

For purposes of the statement of cash flows,"cash" includes cash on hand,cash in the bank and cash equivalents.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following activity sections on the statement of cash flows would include the acquisition of a building by issuing common stock?

Accepted Answer

A) Investing section 
B) Financing section 
C) Operating section 
D) None of the above 
A) Investing section 
B) Financing section 
C) Operating section 
D) None of the above

Question 14

Use the direct method of cash flows to answer the question.   
Compute the change in accounts payable during the year.

Accepted Answer

Increase by $7,300
E

Question 15

Investors and management use the statement of cash flows to evaluate a firm's profitability.

Accepted Answer

A) True 
 B)False

Question 16

The ________ activities section from the statement of cash flows includes cash loans paid to others and cash collections on loans from issuing long-term debt.

Accepted Answer

A) investing 
B) financing 
C) operating 
D) None of the above 
A) investing 
B) financing 
C) operating 
D) None of the above

Question 17

If a company uses the indirect method to prepare the statement of cash flows,how can depreciation be presented on the statement of cash flows?

Accepted Answer

A) Depreciation expense can be added to net income in the financing activities section on the statement of cash flows. 
B) Depreciation expense can be subtracted from net income in the operating section on the statement of cash flows. 
C) Depreciation expense can be added to net income in the investing activities section on the statement of cash flows. 
D) Depreciation expense can be added to net income in the operating activities section on the statement of cash flows. 
A) Depreciation expense can be added to net income in the financing activities section on the statement of cash flows. 
B) Depreciation expense can be subtracted from net income in the operating section on the statement of cash flows. 
C) Depreciation expense can be added to net income in the investing activities section on the statement of cash flows. 
D) Depreciation expense can be added to net income in the operating activities section on the statement of cash flows.

Question 18

All of the following are examples of cash outflows from an investing activity except

Accepted Answer

A) purchase of equity securities. 
B) loans made to another party. 
C) purchase of commercial real estate. 
D) purchase of treasury stock. 
A) purchase of equity securities. 
B) loans made to another party. 
C) purchase of commercial real estate. 
D) purchase of treasury stock.

Question 19

Which of the following would be considered an investing activity on the statement of cash flows?

Accepted Answer

A) An issuance of stock 
B) A sale of equipment 
C) Payment of dividends 
D) Purchase of inventory 
A) An issuance of stock 
B) A sale of equipment 
C) Payment of dividends 
D) Purchase of inventory

Question 20

The ________ is the most important section on the statement of cash flows because it reflects the day-to-day operations that determine the future of an organization.

Accepted Answer

A) operating section 
B) financing section 
C) investing section 
D) None of the above 
A) operating section 
B) financing section 
C) investing section 
D) None of the above

Which of the following descriptions do apply to cash equivalents?

The ________ reports an entity's cash receipts and cash payments during the period.

If a company uses the indirect method to prepare the statement of cash flows,how will the adjustment to reflect the amount of cash payments to suppliers be presented on the statement?

Using the direct method to prepare the statement of cash flows,cash payments for merchandise inventory is categorized on the statement of cash flows as

Investing activities include activities that affect the current asset section of the balance sheet.

Using the direct method to prepare the statement of cash flows,how would the amount of cash payments to employees categorized on the statement of cash flows?

The balance in the ________ is used to check the accuracy on the ending balance of the statement of cash flows.

For an investment to be considered as a "cash equivalent," the investment must be

Which is not reported as an operating activity on a cash flow statement prepared using the indirect method?

The purchase of inventory would be considered a

For purposes of the statement of cash flows,"cash" includes cash on hand,cash in the bank and cash equivalents.

Which of the following activity sections on the statement of cash flows would include the acquisition of a building by issuing common stock?

Use the direct method of cash flows to answer the question. Compute the change in accounts payable during the year.

Investors and management use the statement of cash flows to evaluate a firm's profitability.

The ________ activities section from the statement of cash flows includes cash loans paid to others and cash collections on loans from issuing long-term debt.

If a company uses the indirect method to prepare the statement of cash flows,how can depreciation be presented on the statement of cash flows?

All of the following are examples of cash outflows from an investing activity except

Which of the following would be considered an investing activity on the statement of cash flows?

The ________ is the most important section on the statement of cash flows because it reflects the day-to-day operations that determine the future of an organization.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Financial Statement Analysis

Sustainability

Filters

Exam 13: Statement of Cash Flows

Which of the following descriptions do apply to cash equivalents?

The ________ reports an entity's cash receipts and cash payments during the period.

If a company uses the indirect method to prepare the statement of cash flows,how will the adjustment to reflect the amount of cash payments to suppliers be presented on the statement?

Using the direct method to prepare the statement of cash flows,cash payments for merchandise inventory is categorized on the statement of cash flows as

Investing activities include activities that affect the current asset section of the balance sheet.

Using the direct method to prepare the statement of cash flows,how would the amount of cash payments to employees categorized on the statement of cash flows?

The balance in the ________ is used to check the accuracy on the ending balance of the statement of cash flows.

For an investment to be considered as a "cash equivalent," the investment must be

Which is not reported as an operating activity on a cash flow statement prepared using the indirect method?

The purchase of inventory would be considered a

For purposes of the statement of cash flows,"cash" includes cash on hand,cash in the bank and cash equivalents.

Which of the following activity sections on the statement of cash flows would include the acquisition of a building by issuing common stock?

Use the direct method of cash flows to answer the question. Compute the change in accounts payable during the year.

Investors and management use the statement of cash flows to evaluate a firm's profitability.

The ________ activities section from the statement of cash flows includes cash loans paid to others and cash collections on loans from issuing long-term debt.

If a company uses the indirect method to prepare the statement of cash flows,how can depreciation be presented on the statement of cash flows?

All of the following are examples of cash outflows from an investing activity except

Which of the following would be considered an investing activity on the statement of cash flows?

The ________ is the most important section on the statement of cash flows because it reflects the day-to-day operations that determine the future of an organization.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Financial Statement Analysis

Sustainability

Filters