Question 1

Dividends declared but unpaid are reflected in the financing activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 2

Assume the indirect method is used to compute net cash flows from operating activities.
-For this item extracted from the financial statements-Decrease in Accrued Liabilities-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities. 
A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities.

Question 3

Lincoln Company engaged in this transaction: Received 6-month's rent in advance from a tenant in its office building.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

A) Financing activities section. 
B) Schedule of noncash investing and financing transactions. 
C) Operating activities section. 
D) Investing activities section. 
A) Financing activities section. 
B) Schedule of noncash investing and financing transactions. 
C) Operating activities section. 
D) Investing activities section.

Question 4

A U.S.Treasury bill with an original maturity of 90 days or less is considered a cash equivalent.

Accepted Answer

A) True 
 B)False

Question 5

The purchase of trading securities with cash is considered an investing activity.

Accepted Answer

A) True 
 B)False

Question 6

Investors and creditors would find the statement of cash flows least useful in assessing

Accepted Answer

A) financial position at a point in time. 
B) need for additional financing. 
C) ability to pay dividends and liabilities. 
D) ability to generate positive future cash flows. 
A) financial position at a point in time. 
B) need for additional financing. 
C) ability to pay dividends and liabilities. 
D) ability to generate positive future cash flows.

Question 7

When preparing a statement of cash flows using the indirect method,depreciation expense is added to net income to arrive at net cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 8

Assume the indirect method is used to compute net cash flows from operating activities.
-For this item extracted from the financial statements-Depletion Expense-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Accepted Answer

A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities. 
A) Add to net income to arrive at net cash flows from operating activities. 
B) Subtract from net income to arrive at net cash flows from operating activities. 
C) Not used to adjust net income to calculate net cash flows from operating activities.

Question 9

A decrease in the balance of merchandise inventory is subtracted from net income when calculating net cash flows from operating activities using the indirect method.

Accepted Answer

A) True 
 B)False

Question 10

The income statement indicates a business's success or failure in earning an income from its operating activities,but it does not reflect the inflow and outflow of cash from operating activities.

Accepted Answer

A) True 
 B)False

Question 11

What does it mean when a company has positive free cash flow? What does it mean when a company has negative free cash flow?

Accepted Answer

Positive free cash flow means that the c

Question 12

If net cash flows from operating activities were $296,000,net income were $200,000,and sales were $2,000,000,cash flows to sales would equal (Round amounts to one decimal place)

Accepted Answer

A) 10.0 percent. 
B) $96,000. 
C) 14.8 percent. 
D) 0.7 times. 
A) 10.0 percent. 
B) $96,000. 
C) 14.8 percent. 
D) 0.7 times.

Question 13

When preparing a statement of cash flows using the indirect method,an increase in wages payable is subtracted from net income.

Accepted Answer

A) True 
 B)False

Question 14

Free cash flow is measured in terms of dollars.

Accepted Answer

A) True 
 B)False

Question 15

The activity on the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.

Accepted Answer

A) True 
 B)False

Question 16

Match between columns
                        Premises: Firm sold 8,000 shares of its own common stock for cash.
Paid $120,000 dividend.
Sold $200,000 worth of products for cash.
Exchanged 6,000 shares of stock for 15-year bonds.
Paid $121,000 to the U.S.Treasury for income taxes.
Received $1,500 in interest income.

Accepted Answer

The Answer of financing activity and investing activity and noncash is...

Question 17

Cash equivalents include money market accounts,commercial paper,and U.S.Treasury bills.

Accepted Answer

A) True 
 B)False

Question 18

To determine whether a company's operations are covering its dividend payments,it is best to focus on which of the following sections of the statement of cash flows?

Accepted Answer

A) Operating activities 
B) Financing activities 
C) Investing activities and financing activities 
D) Operating activities and investing activities 
A) Operating activities 
B) Financing activities 
C) Investing activities and financing activities 
D) Operating activities and investing activities

Question 19

Determining net cash flows from operating activities using the indirect method reveals cash collected from customers.

Accepted Answer

A) True 
 B)False

Question 20

A cash flow yield of 2.5 times is considered better than one of 3.0 times.

Accepted Answer

A) True 
 B)False

Exam 13: The Statement of Cash Flows

Dividends declared but unpaid are reflected in the financing activities section of the statement of cash flows.

Assume the indirect method is used to compute net cash flows from operating activities. -For this item extracted from the financial statements-Decrease in Accrued Liabilities-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Lincoln Company engaged in this transaction: Received 6-month's rent in advance from a tenant in its office building. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

A U.S.Treasury bill with an original maturity of 90 days or less is considered a cash equivalent.

The purchase of trading securities with cash is considered an investing activity.

Investors and creditors would find the statement of cash flows least useful in assessing

When preparing a statement of cash flows using the indirect method,depreciation expense is added to net income to arrive at net cash flows from operating activities.

Assume the indirect method is used to compute net cash flows from operating activities. -For this item extracted from the financial statements-Depletion Expense-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

A decrease in the balance of merchandise inventory is subtracted from net income when calculating net cash flows from operating activities using the indirect method.

The income statement indicates a business's success or failure in earning an income from its operating activities,but it does not reflect the inflow and outflow of cash from operating activities.

What does it mean when a company has positive free cash flow? What does it mean when a company has negative free cash flow?

If net cash flows from operating activities were $296,000,net income were $200,000,and sales were $2,000,000,cash flows to sales would equal (Round amounts to one decimal place)

When preparing a statement of cash flows using the indirect method,an increase in wages payable is subtracted from net income.

Free cash flow is measured in terms of dollars.

The activity on the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.

Cash equivalents include money market accounts,commercial paper,and U.S.Treasury bills.

To determine whether a company's operations are covering its dividend payments,it is best to focus on which of the following sections of the statement of cash flows?

Determining net cash flows from operating activities using the indirect method reveals cash collected from customers.

A cash flow yield of 2.5 times is considered better than one of 3.0 times.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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