Question 1

Which of the following is a cash outflow from a financing activity?

Accepted Answer

A) A purchase inventory 
B) A purchase of treasury stock 
C) A payment to buy property 
D) A loan made to a third party 
A) A purchase inventory 
B) A purchase of treasury stock 
C) A payment to buy property 
D) A loan made to a third party

Question 2

A statement of cash flows would not disclose the effect of which of the following transactions?

Accepted Answer

A) Dividends received on stock investments 
B) Receiving cash from customers on product sales 
C) Discarding an asset that had been fully depreciated 
D) None of these answers are correct. 
A) Dividends received on stock investments 
B) Receiving cash from customers on product sales 
C) Discarding an asset that had been fully depreciated 
D) None of these answers are correct.

Question 3

The activity that is probably the most important indicator of financial health is the net cash flow from:

Accepted Answer

A) buying and selling activities. 
B) financing activities. 
C) operating activities. 
D) investing activities. 
A) buying and selling activities. 
B) financing activities. 
C) operating activities. 
D) investing activities.

Question 4

Many accountants prefer which method of computing cash flow from operating activities?

Accepted Answer

A) Combination method 
B) Direct method 
C) Indirect method 
D) Adjusting method 
A) Combination method 
B) Direct method 
C) Indirect method 
D) Adjusting method

Question 5

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col 4 } \
\text { Financing }
\end{array} \
\hline \text { Net income } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 6

Discuss the purpose of a statement of cash flows,and describe its components.

Accepted Answer

A statement of cash flows summarizes the

Question 7

The section of the statement of cash flows from investing activities includes:

Accepted Answer

A) buying debts or stocks of other companies. 
B) collecting loans and/or interest. 
C) cash purchases of equipment. 
D) All of the above. 
A) buying debts or stocks of other companies. 
B) collecting loans and/or interest. 
C) cash purchases of equipment. 
D) All of the above.

Question 8

The sale of plant and equipment for cash would result in:

Accepted Answer

A) an increase in cash from investing activities. 
B) a decrease in cash from investing activities. 
C) an increase added to net income from operations. 
D) a decrease subtracted from net income from operations. 
A) an increase in cash from investing activities. 
B) a decrease in cash from investing activities. 
C) an increase added to net income from operations. 
D) a decrease subtracted from net income from operations.

Question 9

The statement of cash flows can be used for evaluating,comparing,and predicting future cash flows.

Accepted Answer

A) True 
 B)False

Question 10

A statement of cash flows is helpful in:

Accepted Answer

A) evaluating. 
B) comparing. 
C) predicting future cash flows. 
D) All of these answers are correct. 
A) evaluating. 
B) comparing. 
C) predicting future cash flows. 
D) All of these answers are correct.

Question 11

Carolina Company sold a machine for $12,000 cash,which had an original cost of $19,000 and accumulated depreciation of $6,000.The amount of cash provided by this sale is:

Accepted Answer

A) $12,000. 
B) $13,000. 
C) $18,000. 
D) $19,000. 
A) $12,000. 
B) $13,000. 
C) $18,000. 
D) $19,000.

Question 12

Operating expenses other than depreciation for the year were $400,000.Accrued expenses payable increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

A) $400,000. 
B) $435,000. 
C) $365,000. 
D) $35,000. 
A) $400,000. 
B) $435,000. 
C) $365,000. 
D) $35,000.

Question 13

A statement of cash flow's purpose is to:

Accepted Answer

A) show the revenue earned. 
B) show the profits that were generated. 
C) show the expenses that were incurred. 
D) show how cash was generated and used during an accounting period. 
A) show the revenue earned. 
B) show the profits that were generated. 
C) show the expenses that were incurred. 
D) show how cash was generated and used during an accounting period.

Question 14

A business issues 10-year bonds payable in exchange for common stock.This transaction would be reported on the statement of cash flows in:

Accepted Answer

A) operating activities. 
B) financing activities. 
C) investing activities. 
D) a separate schedule. 
A) operating activities. 
B) financing activities. 
C) investing activities. 
D) a separate schedule.

Question 15

Transactions dealing with the exchange of cash between the firm and its owners (stockholders)and creditors are called:

Accepted Answer

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

Question 16

The following information is given for Nevada Times:
 $\begin{array} { l l } 
\text { Net income } & \$ 20,000 \
\text { Depreciation expense } & 4,000 \
\text { Decrease in accounts receivable } & 2,000 \
\text { Increase in supplies on hand } & 3,000 \
\text { Sale of common stock } & 10,000 \
\text { Purchase of equipment } & 5,000 \
\text { Loan money to a customer } & 4,000 \
\text { Becrease in accounts payable } & 1,000
\end{array}$ The indirect method is used.
Required:
Answer the following questions with the information provided above.
a)The cash flow from operating activities is ________.
b)The cash flow from investing activities is ________.
c)The cash flow from financing activities is ________.

Accepted Answer

a)$20,000 + $4,000 +

Question 17

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in:

Accepted Answer

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

Question 18

When preparing the statement of cash flows by the indirect method,if current assets have increased the difference is:

Accepted Answer

A) added to net income. 
B) added to investments. 
C) deducted from net income. 
D) subtracted from investments. 
A) added to net income. 
B) added to investments. 
C) deducted from net income. 
D) subtracted from investments.

Question 19

For each of the following items, indicate (by placing an X) whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+) or decreasing (-) the cash flows.
-$$\begin{array} { | l | c | c | c | c | } 
\hline & \begin{array} { c } 
\text { Col 1 } \
\text { Operating } \
\text { Direct }
\end{array} & \begin{array} { c } 
\text { Col 2 } \
\text { Operating } \
\text { Indirect }
\end{array} & \begin{array} { c } 
\text { Col 3 } \
\text { Investing }
\end{array} & \begin{array} { c } 
\text { Col } 4 \
\text { Financing }
\end{array} \
\hline \text { Increase in accounts payable } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following items, indicate...

Question 20

According to GAAP,the statement of cash flows is an optional statement.

Accepted Answer

A) True 
 B)False

Exam 21: Statement of Cash Flows

Which of the following is a cash outflow from a financing activity?

A statement of cash flows would not disclose the effect of which of the following transactions?

The activity that is probably the most important indicator of financial health is the net cash flow from:

Many accountants prefer which method of computing cash flow from operating activities?

Discuss the purpose of a statement of cash flows,and describe its components.

The section of the statement of cash flows from investing activities includes:

The sale of plant and equipment for cash would result in:

The statement of cash flows can be used for evaluating,comparing,and predicting future cash flows.

A statement of cash flows is helpful in:

Carolina Company sold a machine for $12,000 cash,which had an original cost of $19,000 and accumulated depreciation of $6,000.The amount of cash provided by this sale is:

Operating expenses other than depreciation for the year were $400,000.Accrued expenses payable increased by $35,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

A statement of cash flow's purpose is to:

A business issues 10-year bonds payable in exchange for common stock.This transaction would be reported on the statement of cash flows in:

Transactions dealing with the exchange of cash between the firm and its owners (stockholders)and creditors are called:

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in:

When preparing the statement of cash flows by the indirect method,if current assets have increased the difference is:

According to GAAP,the statement of cash flows is an optional statement.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes: The Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, plant, equipment, and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, dividends, treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters