Question 1

On a statement of cash flows prepared using the indirect method,the amount representing cash paid for interest would

Accepted Answer

A) be included in the net cash flows from financing activities section. 
B) not be shown. 
C) be included in the net cash flows from investing activities section. 
D) be included in the net cash flows from operating activities section. 
A) be included in the net cash flows from financing activities section. 
B) not be shown. 
C) be included in the net cash flows from investing activities section. 
D) be included in the net cash flows from operating activities section.

Question 2

Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 
1)Sold machinery for $9,000 cash.
2)Purchased a building for $80,000 cash.
3)Issued $70,000 worth of stock to acquire an airplane.
4)Converted long-term bonds by issuing $100,000 worth of stock.
5)Declared and paid a $10,000 cash dividend.
-Transaction 2 would be found on the statement of cash flows in the

Accepted Answer

A) cash flows from operating activities section. 
B) cash flows from financing activities section. 
C) cash flows from investing activities section. 
D) noncash investing and financing transactions section. 
A) cash flows from operating activities section. 
B) cash flows from financing activities section. 
C) cash flows from investing activities section. 
D) noncash investing and financing transactions section.

Question 3

Lincoln Company engaged in this transaction: Accrued employee wages earned but not yet paid at year-end.
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) Investing activities section. 
C) Does not represent a cash flow. 
D) Operating activities section. 
A) Financing activities section. 
B) Investing activities section. 
C) Does not represent a cash flow. 
D) Operating activities section.

Question 4

When preparing a statement of cash flows using the indirect method,an increase in accounts payable is added to net income.

Accepted Answer

A) True 
 B)False

Question 5

A decrease in plant assets shown in the investing activities section of the statement of cash flows would be presented based on the amount of the resulting gain or loss incurred.

Accepted Answer

A) True 
 B)False

Question 6

The indirect method of preparing a statement of cash flows

Accepted Answer

A) eliminates the need for a schedule of noncash investing and financing transactions. 
B) provides a different result than the direct method. 
C) adjusts net income for changes in current accounts. 
D) shows collections from customers rather than the change in Accounts Receivable. 
A) eliminates the need for a schedule of noncash investing and financing transactions. 
B) provides a different result than the direct method. 
C) adjusts net income for changes in current accounts. 
D) shows collections from customers rather than the change in Accounts Receivable.

Question 7

Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 
1)Sold machinery for $9,000 cash.
2)Purchased a building for $80,000 cash.
3)Issued $70,000 worth of stock to acquire an airplane.
4)Converted long-term bonds by issuing $100,000 worth of stock.
5)Declared and paid a $10,000 cash dividend.
-Transaction 1 would be found on the statement of cash flows in the

Accepted Answer

A) cash flows from operating activities section. 
B) cash flows from financing activities section. 
C) noncash investing and financing transactions section. 
D) cash flows from investing activities section. 
A) cash flows from operating activities section. 
B) cash flows from financing activities section. 
C) noncash investing and financing transactions section. 
D) cash flows from investing activities section.

Question 8

When preparing a statement of cash flows using the indirect method,an increase in accounts receivable is added to net income.

Accepted Answer

A) True 
 B)False

Question 9

Lincoln Company engaged in this transaction: Retired long-term debt with cash.Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

A) Operating activities section. 
B) Does not represent a cash flow. 
C) Investing activities section. 
D) Financing activities section. 
A) Operating activities section. 
B) Does not represent a cash flow. 
C) Investing activities section. 
D) Financing activities section.

Question 10

Cash inflows and outflows are easier to manipulate than earnings.

Accepted Answer

A) True 
 B)False

Question 11

For purposes of preparing the statement of cash flows,cash is defined as including both cash and cash equivalents.

Accepted Answer

A) True 
 B)False

Question 12

During the year,Ollie's Outdoor Outfitters issued 20,000 shares of common stock in exchange for a prime piece of land.Two employees of the accounting department,Audrey and Neil,disagree as to the appearance of this particular transaction on the statement of cash flows.Audrey believes it to be a significant noncash transaction,and it therefore should be presented as such at the bottom of the statement.Neil contends that because this transaction did not cause any cash to flow in or out of the company,it has no place on the statement of cash flows.Who is correct and why?

Accepted Answer

Audrey is correct in her contention that

Question 13

Match between columns
                        Premises: Depreciation expense
Income taxes paid
Dividends paid
A gain on the sale of equipment
Purchase of equipment
Purchases of treasury stock
Borrowing by issuing bonds
The change in Accounts Payable during the period
Proceeds from sale of long-term investments at a loss
Collections from customers
The change in Inventory for the period
Exchange of stock for a building

Accepted Answer

The Answer of noncash transaction and investing activity and would is...

Question 14

Cash equivalents do not include

Accepted Answer

A) U.S.Treasury bills. 
B) money market accounts. 
C) marketable securities. 
D) commercial paper. 
A) U.S.Treasury bills. 
B) money market accounts. 
C) marketable securities. 
D) commercial paper.

Question 15

Lincoln Company engaged in this transaction: Paid income taxes.
Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Accepted Answer

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

Question 16

Determining cash flows from investing activities is the ________ step in preparing the statement of cash flows.

Accepted Answer

A) First 
B) Second 
C) Third 
D) Fourth 
A) First 
B) Second 
C) Third 
D) Fourth

Question 17

Cash flows to assets is measured in "times."

Accepted Answer

A) True 
 B)False

Question 18

When a statement of cash flows is prepared using the indirect method,

Accepted Answer

A) net income is the starting point in determining cash flows from operations. 
B) cash paid for dividends is not included. 
C) the increase in cash is different than when the direct method is used. 
D) the amount of cash collected from customers is calculated. 
A) net income is the starting point in determining cash flows from operations. 
B) cash paid for dividends is not included. 
C) the increase in cash is different than when the direct method is used. 
D) the amount of cash collected from customers is calculated.

Question 19

Issuance of notes,either long- or short-term,would be reflected in the financing activities section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 20

Cash flows to sales is a measure of how much operating cash flows did each dollar of sales generate.

Accepted Answer

A) True 
 B)False

Exam 13: The Statement of Cash Flows

On a statement of cash flows prepared using the indirect method,the amount representing cash paid for interest would

Lincoln Company engaged in this transaction: Accrued employee wages earned but not yet paid at year-end. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

When preparing a statement of cash flows using the indirect method,an increase in accounts payable is added to net income.

A decrease in plant assets shown in the investing activities section of the statement of cash flows would be presented based on the amount of the resulting gain or loss incurred.

The indirect method of preparing a statement of cash flows

When preparing a statement of cash flows using the indirect method,an increase in accounts receivable is added to net income.

Lincoln Company engaged in this transaction: Retired long-term debt with cash.Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Cash inflows and outflows are easier to manipulate than earnings.

For purposes of preparing the statement of cash flows,cash is defined as including both cash and cash equivalents.

Cash equivalents do not include

Lincoln Company engaged in this transaction: Paid income taxes. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Determining cash flows from investing activities is the ________ step in preparing the statement of cash flows.

Cash flows to assets is measured in "times."

When a statement of cash flows is prepared using the indirect method,

Issuance of notes,either long- or short-term,would be reflected in the financing activities section of the statement of cash flows.

Cash flows to sales is a measure of how much operating cash flows did each dollar of sales generate.

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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