Question 1

The primary source of cash over the life of a business is ________.

Accepted Answer

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

Question 2

Which of the following would be presented exactly the same whether the company used the direct method or indirect method when preparing the statement of cash flows?

Accepted Answer

A) Cash from operating activities 
B) Cash from investing activities 
C) Cash from financing activities 
D) B & C would be presented the same 
A) Cash from operating activities 
B) Cash from investing activities 
C) Cash from financing activities 
D) B & C would be presented the same

Question 3

How can a company that has shown net income in recent years be required to declare bankruptcy? How can the statement of cash flows provide an advanced warning about this possibility?

Accepted Answer

Net income results when revenues exceed

Question 4

Creditor and stockholder transactions are considered ________ activities.

Accepted Answer

A) financing 
B) planning 
C) operating 
D) investing 
A) financing 
B) planning 
C) operating 
D) investing

Question 5

The ________ section from the statement of cash flows includes activities that affect the buying and selling of long term assets on the balance sheet.

Accepted Answer

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

Question 6

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:   *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?

Accepted Answer

A) The increase of $66,000 will be subtracted from net income. 
B) The increase of $66,000 will be added to net income. 
C) The increase of $66,000 will be added to sales revenue. 
D) The increase of $66,000 will be subtracted from sales revenue. 
A) The increase of $66,000 will be subtracted from net income. 
B) The increase of $66,000 will be added to net income. 
C) The increase of $66,000 will be added to sales revenue. 
D) The increase of $66,000 will be subtracted from sales revenue.

Question 7

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements:   *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to salary payable?

Accepted Answer

A) The increase of $9000 will be added to cost of goods sold. 
B) The increase of $9000 will be added to net income. 
C) The increase of $9000 will be subtracted from cost of goods sold. 
D) The increase of $9000 will be subtracted from net income. 
A) The increase of $9000 will be added to cost of goods sold. 
B) The increase of $9000 will be added to net income. 
C) The increase of $9000 will be subtracted from cost of goods sold. 
D) The increase of $9000 will be subtracted from net income.

Question 8

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

Accepted Answer

A) The decrease of $25,000 will be subtracted from net income. 
B) The decrease of $25,000 will be added to net income. 
C) The decrease of $25,000 will be subtracted from cost of goods sold to determine payments to suppliers. 
D) The decrease of $25,000 will be added to cost of goods sold to determine payments to suppliers. 
A) The decrease of $25,000 will be subtracted from net income. 
B) The decrease of $25,000 will be added to net income. 
C) The decrease of $25,000 will be subtracted from cost of goods sold to determine payments to suppliers. 
D) The decrease of $25,000 will be added to cost of goods sold to determine payments to suppliers.

Question 9

The operating activities section of the statement of cash flows includes paying dividends and paying off loans.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) The increase of $17,000 will be subtracted from net income. 
B) The increase of $17,000 will be subtracted from sales to determine cash received from customers. 
C) The increase of $17,000 will be added to sales to determine cash received from customers. 
D) The increase of $17,000 will be added to net income. 
A) The increase of $17,000 will be subtracted from net income. 
B) The increase of $17,000 will be subtracted from sales to determine cash received from customers. 
C) The increase of $17,000 will be added to sales to determine cash received from customers. 
D) The increase of $17,000 will be added to net income.

Question 11

The three major categories included on the statement of cash flows are

Accepted Answer

A) investing, capital and financing activities. 
B) investing, operating and financing activities. 
C) investing, operating and capital activities. 
D) financial, operating and capital activities. 
A) investing, capital and financing activities. 
B) investing, operating and financing activities. 
C) investing, operating and capital activities. 
D) financial, operating and capital activities.

Question 12

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 13

Which of the following items would be reported in the financing activities section on the statement of cash flows?

Accepted Answer

A) Cash paid for rent 
B) Cash received from sale of inventory 
C) Cash received from issuance of long-term debt 
D) Cash paid for land 
A) Cash paid for rent 
B) Cash received from sale of inventory 
C) Cash received from issuance of long-term debt 
D) Cash paid for land

Question 14

The managerial accountant at the Health Club is required to determine the amount of cash purchases inventory. The managerial accountant reported a beginning inventory balance of $900,000 and $8,400,000 in cost of goods sold during the year. The ending inventory balance during the year was $850,000. Calculate the amount of cash purchases of inventory during the year. Next, discuss what occurs when there is an increase in the inventory account. What occurs when there is a decrease in the inventory account.

Accepted Answer

$8,350,000
When the company pu

Question 15

Of the following, which is not a cash inflow from a financing activity?

Accepted Answer

A) Issuance of preferred stock 
B) Issuance of common stock 
C) Sale of long-term investment 
D) Proceeds from issuance of long-term debt 
A) Issuance of preferred stock 
B) Issuance of common stock 
C) Sale of long-term investment 
D) Proceeds from issuance of long-term debt

Question 16

On a cash flow statement prepared using the indirect method, which is not reported as an operating activity?

Accepted Answer

A) Interest expense 
B) Interest revenue 
C) Proceeds from the sale of equipment 
D) Dividend revenue 
A) Interest expense 
B) Interest revenue 
C) Proceeds from the sale of equipment 
D) Dividend revenue

Question 17

The beginning and ending balances of long-term debt are $69,000 and $40,200, respectively, and, cash payments for long-term debt during the year were $39,100. How much new long-term debt was issued during the year?

Accepted Answer

A) New long-term debt issued during the year was $1100. 
B) New long-term debt issued during the year was $10,300. 
C) New long-term debt issued during the year was $28,800. 
D) New long-term debt issued during the year was $79,300. 
A) New long-term debt issued during the year was $1100. 
B) New long-term debt issued during the year was $10,300. 
C) New long-term debt issued during the year was $28,800. 
D) New long-term debt issued during the year was $79,300.

Question 18

The following information is available for three companies. The information relates to the companies' plant assets. For each of the companies, determine the unknown amounts.

Accepted Answer

a. $860,000 + $240,600 - $55,300 - $950,

Question 19

A company uses the indirect method to prepare the statement of cash flows. How can amortization be presented on the statement of cash flows?

Accepted Answer

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

Question 20

In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it pays to employees is computed as

Accepted Answer

A) salary expense plus the ending balance salaries payable. 
B) salary expense plus the decrease in salaries payable. 
C) salary expense plus the increase in salaries payable. 
D) salary expense plus the beginning balance in salaries payable. 
A) salary expense plus the ending balance salaries payable. 
B) salary expense plus the decrease in salaries payable. 
C) salary expense plus the increase in salaries payable. 
D) salary expense plus the beginning balance in salaries payable.

The primary source of cash over the life of a business is ________.

Which of the following would be presented exactly the same whether the company used the direct method or indirect method when preparing the statement of cash flows?

How can a company that has shown net income in recent years be required to declare bankruptcy? How can the statement of cash flows provide an advanced warning about this possibility?

Creditor and stockholder transactions are considered ________ activities.

The ________ section from the statement of cash flows includes activities that affect the buying and selling of long term assets on the balance sheet.

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements: *Relates solely to the acquisition of inventory What will appear in the operating activities section related to accounts receivable?

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements: *Relates solely to the acquisition of inventory What will appear in the operating activities section related to salary payable?

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

The operating activities section of the statement of cash flows includes paying dividends and paying off loans.

The three major categories included on the statement of cash flows are

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?

Which of the following items would be reported in the financing activities section on the statement of cash flows?

Of the following, which is not a cash inflow from a financing activity?

On a cash flow statement prepared using the indirect method, which is not reported as an operating activity?

The beginning and ending balances of long-term debt are $69,000 and $40,200, respectively, and, cash payments for long-term debt during the year were $39,100. How much new long-term debt was issued during the year?

The following information is available for three companies. The information relates to the companies' plant assets. For each of the companies, determine the unknown amounts.

A company uses the indirect method to prepare the statement of cash flows. How can amortization be presented on the statement of cash flows?

In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it pays to employees is computed as

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 Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Financial Statement Analysis

Sustainability

Filters

Exam 13: Statement of Cash Flows

The primary source of cash over the life of a business is ________.

Which of the following would be presented exactly the same whether the company used the direct method or indirect method when preparing the statement of cash flows?

How can a company that has shown net income in recent years be required to declare bankruptcy? How can the statement of cash flows provide an advanced warning about this possibility?

Creditor and stockholder transactions are considered ________ activities.

The ________ section from the statement of cash flows includes activities that affect the buying and selling of long term assets on the balance sheet.

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements: *Relates solely to the acquisition of inventory What will appear in the operating activities section related to accounts receivable?

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements: *Relates solely to the acquisition of inventory What will appear in the operating activities section related to salary payable?

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

The operating activities section of the statement of cash flows includes paying dividends and paying off loans.

The three major categories included on the statement of cash flows are

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?

Which of the following items would be reported in the financing activities section on the statement of cash flows?

Of the following, which is not a cash inflow from a financing activity?

On a cash flow statement prepared using the indirect method, which is not reported as an operating activity?

The beginning and ending balances of long-term debt are $69,000 and $40,200, respectively, and, cash payments for long-term debt during the year were $39,100. How much new long-term debt was issued during the year?

The following information is available for three companies. The information relates to the companies' plant assets. For each of the companies, determine the unknown amounts.

A company uses the indirect method to prepare the statement of cash flows. How can amortization be presented on the statement of cash flows?

In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it pays to employees is computed as

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 Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Financial Statement Analysis

Sustainability

Filters