Question 1

Some analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income as a performance measure.

Accepted Answer

A) True 
 B)False

Question 2

Which is a source of cash?

Accepted Answer

A) increase in inventory 
B) decrease in bonds payable 
C) decrease in accounts payable 
D) decrease in accounts receivable 
E) increase in prepaid assets 
A) increase in inventory 
B) decrease in bonds payable 
C) decrease in accounts payable 
D) decrease in accounts receivable 
E) increase in prepaid assets

Question 3

The amount of cash a department store received from customers during a period equals the sales for the period, reduced by the _____ during this period or increased by the _____ during the period.

Accepted Answer

A) decrease in accounts payable; increase in accounts payable 
B) increase in accounts payable; decrease in accounts payable 
C) decrease in accounts receivable; increase in accounts receivable 
D) increase in accounts receivable; decrease in accounts receivable 
E) none of the above 
A) decrease in accounts payable; increase in accounts payable 
B) increase in accounts payable; decrease in accounts payable 
C) decrease in accounts receivable; increase in accounts receivable 
D) increase in accounts receivable; decrease in accounts receivable 
E) none of the above

Question 4

The primary difference between a cash flow statement prepared using the indirect method and one prepared using the direct method is

Accepted Answer

A) the financing section is different. 
B) the investing section is different. 
C) the operating section is different. 
D) all three sections of the cash flow statement are different. 
E) the investing and financing sections are different. 
A) the financing section is different. 
B) the investing section is different. 
C) the operating section is different. 
D) all three sections of the cash flow statement are different. 
E) the investing and financing sections are different.

Question 5

How does the statement of cash flows explain the reasons for the change in cash between balance sheet dates?

Accepted Answer

THE STATEMENT EXPLAINS THE REASONS FOR T

Question 6

The statement of cash flows

Accepted Answer

A) helps the reader judge a firm's cash flow needs and how a firm has dealt with them. 
B) reflect the cash flows for the period. 
C) reports the impact of operations on cash flows. 
D) reports the impact of investing activities on cash flows. 
E) accomplishes all of the above. 
A) helps the reader judge a firm's cash flow needs and how a firm has dealt with them. 
B) reflect the cash flows for the period. 
C) reports the impact of operations on cash flows. 
D) reports the impact of investing activities on cash flows. 
E) accomplishes all of the above.

Question 7

Firms have some choice as to when they disburse cash.Delaying payments to suppliers and others during the last several days of an accounting period conserves cash and thereby _____ cash flow from operations for that period, and _____ cash flow from operations during the second period.

Accepted Answer

A) increases; decreases 
B) increases; increases 
C) decreases; ; increases 
D) decreases; decreases 
E) increases; has no effect 
A) increases; decreases 
B) increases; increases 
C) decreases; ; increases 
D) decreases; decreases 
E) increases; has no effect

Question 8

U.S.GAAP requires that the statement of cash flows disclose the amount of cash flows arising frominvesting activities including

Accepted Answer

A) interest received on investments in bonds. 
B) interest paid on the company's bonds. 
C) cash used for the acquisition of non-current assets. 
D) cash dividends paid on the company's stock. 
E) cash dividends received on investments in other company's stock. 
A) interest received on investments in bonds. 
B) interest paid on the company's bonds. 
C) cash used for the acquisition of non-current assets. 
D) cash dividends paid on the company's stock. 
E) cash dividends received on investments in other company's stock.

Question 9

In the Statement of Cash Flows, U.S.GAAP views cash received in the form of interest and dividends as coming from _____.

Accepted Answer

A) investing activities 
B) operating activities 
C) financing activities 
D) exchange activities 
E) economic activities 
A) investing activities 
B) operating activities 
C) financing activities 
D) exchange activities 
E) economic activities

Question 10

For each of the following independent cases, solve for the unknown factor.
 $\begin{array}{lll}
& \underline{\text { CASE I }}& \underline{\text { CASE 2} }& \underline{\text { CASE 3}}\
\text {Cost of goods sold}&\$ 25,000 & \$ 20,000 & \text { C } \
\text {Inventory, beginning}&8,000 & 80,000 & \$ 25,000 \
\text {Inventory, ending}&3,000 & \text { B } & 60,000 \
\text {Accounts payable, beginning}&6,000 & 8,000 & 15,000 \
\text {Accounts payable, ending}&5,000 & 8,000 & 2,000 \
\text {Cash payments to suppliers}&\text { A } & 44,000 & 123,000
\end{array}$

Accepted Answer

A.$21,000

Question 11

Firms have some choice as to when they disburse cash.A firm may delay making payments to suppliers, employees, and others during the last several days of an accounting period and then make the cash payments during the early part of the next period.The firm

Accepted Answer

A) decreases cash flow from financing during the first period but increases cash flow from financing during the second period. 
B) increases cash flow from operations during the first period but decreases cash flow from operations during the second period. 
C) decreases cash flow from operations during the first period but increases cash flow from operations during the second period. 
D) increases cash flow from financing during the first period but decreases cash flow from financing during the second period. 
E) increases cash flow from investing during the first period but decreases cash flow from investing during the second period. 
A) decreases cash flow from financing during the first period but increases cash flow from financing during the second period. 
B) increases cash flow from operations during the first period but decreases cash flow from operations during the second period. 
C) decreases cash flow from operations during the first period but increases cash flow from operations during the second period. 
D) increases cash flow from financing during the first period but decreases cash flow from financing during the second period. 
E) increases cash flow from investing during the first period but decreases cash flow from investing during the second period.

Question 12

_____ usually represents a major ongoing use of cash.

Accepted Answer

A) Borrowing funds 
B) Sales of existing noncurrent assets 
C) Issuance of common shares 
D) Acquisition of noncurrent assets, particularly property, plant, and equipment 
E) All of the above are major ongoing uses of cash. 
A) Borrowing funds 
B) Sales of existing noncurrent assets 
C) Issuance of common shares 
D) Acquisition of noncurrent assets, particularly property, plant, and equipment 
E) All of the above are major ongoing uses of cash.

Question 13

Which method of preparing the statement of cash flows is required by U.S.GAAP?

Accepted Answer

A) direct 
B) indirect 
C) funds flow 
D) either direct or indirect may be used if appropriate note disclosure is included 
E) either direct or funds flow may be used if appropriate note disclosure is included 
A) direct 
B) indirect 
C) funds flow 
D) either direct or indirect may be used if appropriate note disclosure is included 
E) either direct or funds flow may be used if appropriate note disclosure is included

Question 14

On the statement of cash flows, cash purchase of land is treated as a/an

Accepted Answer

A) investing activity. 
B) financing activity. 
C) outflow of cash from operations. 
D) expenditure not requiring the use of cash. 
E) none of the above. 
A) investing activity. 
B) financing activity. 
C) outflow of cash from operations. 
D) expenditure not requiring the use of cash. 
E) none of the above.

Question 15

Firms receive cash inflows and disburse cash outflows for financing activities such as to

Accepted Answer

A) acquire property, plant, and equipment. 
B) pay dividends to shareholders. 
C) purchase intellectual property. 
D) pay interest on borrowings. 
E) all of the above. 
A) acquire property, plant, and equipment. 
B) pay dividends to shareholders. 
C) purchase intellectual property. 
D) pay interest on borrowings. 
E) all of the above.

Question 16

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest on debt as an operating activity but classifies cash expenditures for dividends to shareholders as a financing activity.

Accepted Answer

A) True 
 B)False

Question 17

Describe the various presentation formats for the Statement of Cash Flows.

Accepted Answer

PRESENTATION FORMATS FOR THE STATEMENT O

Question 18

On the statement of cash flows, cash sale of property, plant and equipment used for the last 5 years in the company's operations is treated as a/an

Accepted Answer

A) investing activity. 
B) financing activity. 
C) operating activity. 
D) exchange transaction. 
E) funds flow activity. 
A) investing activity. 
B) financing activity. 
C) operating activity. 
D) exchange transaction. 
E) funds flow activity.

Question 19

U.S.GAAP

Accepted Answer

A) permits firms to report cash flow from operations using the direct or indirect method. 
B) requires firms to report cash flow from operations using the direct method. 
C) requires firms to report cash flow from operations using the indirect method. 
D) permits firms to use the cash receipts and disbursements statement. 
E) permits firms to use the funds flow statement. 
A) permits firms to report cash flow from operations using the direct or indirect method. 
B) requires firms to report cash flow from operations using the direct method. 
C) requires firms to report cash flow from operations using the indirect method. 
D) permits firms to use the cash receipts and disbursements statement. 
E) permits firms to use the funds flow statement.

Question 20

The direct method of reporting

Accepted Answer

A) is preferred by U.S.GAAP. 
B) shows a reconciliation between net income and cash flow from operations either at the bottom of the statement of cash flows or in a separate note. 
C) reports the amounts of cash received from customers less cash disbursed to various suppliers, employees, lenders for interest payments, and taxing authorities. 
D) includes all of the above. 
E) includes none of the above. 
A) is preferred by U.S.GAAP. 
B) shows a reconciliation between net income and cash flow from operations either at the bottom of the statement of cash flows or in a separate note. 
C) reports the amounts of cash received from customers less cash disbursed to various suppliers, employees, lenders for interest payments, and taxing authorities. 
D) includes all of the above. 
E) includes none of the above.

Some analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income as a performance measure.

Which is a source of cash?

The amount of cash a department store received from customers during a period equals the sales for the period, reduced by the _ during this period or increased by the _ during the period.

The primary difference between a cash flow statement prepared using the indirect method and one prepared using the direct method is

How does the statement of cash flows explain the reasons for the change in cash between balance sheet dates?

The statement of cash flows

Firms have some choice as to when they disburse cash.Delaying payments to suppliers and others during the last several days of an accounting period conserves cash and thereby _ cash flow from operations for that period, and _ cash flow from operations during the second period.

U.S.GAAP requires that the statement of cash flows disclose the amount of cash flows arising frominvesting activities including

In the Statement of Cash Flows, U.S.GAAP views cash received in the form of interest and dividends as coming from _____.

Firms have some choice as to when they disburse cash.A firm may delay making payments to suppliers, employees, and others during the last several days of an accounting period and then make the cash payments during the early part of the next period.The firm

_____ usually represents a major ongoing use of cash.

Which method of preparing the statement of cash flows is required by U.S.GAAP?

On the statement of cash flows, cash purchase of land is treated as a/an

Firms receive cash inflows and disburse cash outflows for financing activities such as to

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest on debt as an operating activity but classifies cash expenditures for dividends to shareholders as a financing activity.

Describe the various presentation formats for the Statement of Cash Flows.

On the statement of cash flows, cash sale of property, plant and equipment used for the last 5 years in the company's operations is treated as a/an

U.S.GAAP

The direct method of reporting

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

Exam 6: Statement of Cash Flows

Some analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income as a performance measure.

Which is a source of cash?

The amount of cash a department store received from customers during a period equals the sales for the period, reduced by the _____ during this period or increased by the _____ during the period.

The primary difference between a cash flow statement prepared using the indirect method and one prepared using the direct method is

How does the statement of cash flows explain the reasons for the change in cash between balance sheet dates?

The statement of cash flows

Firms have some choice as to when they disburse cash.Delaying payments to suppliers and others during the last several days of an accounting period conserves cash and thereby _____ cash flow from operations for that period, and _____ cash flow from operations during the second period.

U.S.GAAP requires that the statement of cash flows disclose the amount of cash flows arising frominvesting activities including

In the Statement of Cash Flows, U.S.GAAP views cash received in the form of interest and dividends as coming from _____.

Firms have some choice as to when they disburse cash.A firm may delay making payments to suppliers, employees, and others during the last several days of an accounting period and then make the cash payments during the early part of the next period.The firm

_____ usually represents a major ongoing use of cash.

Which method of preparing the statement of cash flows is required by U.S.GAAP?

On the statement of cash flows, cash purchase of land is treated as a/an

Firms receive cash inflows and disburse cash outflows for financing activities such as to

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest on debt as an operating activity but classifies cash expenditures for dividends to shareholders as a financing activity.

Describe the various presentation formats for the Statement of Cash Flows.

On the statement of cash flows, cash sale of property, plant and equipment used for the last 5 years in the company's operations is treated as a/an

U.S.GAAP

The direct method of reporting

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

The Basics of Record Keeping and Financial Statement Preparation: Balance Sheet

The Basics of Record Keeping and Financial Statement Preparation: Income Statement

Balance Sheet: Presenting and Analyzing Resources and Financing

Income Statement: Reporting Results of Operating Activities

Introduction to Financial Statement Analysis

Revenue Recognition, Receivables, and Advances From Customers

Working Capital

Long-Lived Tangible and Intangible Assets

Notes, Bonds, and Leases

Liabilities: Off-Balance Sheet Financing, Retirement Benefits, and Income Taxes

Marketable Securities and Derivatives

Intercorporate Investments in Common Stock

Shareholders Equity: Capital Contributions and Distributions

Statement of Cash Flows: Another Look

Synthesis and Extensions

Filters

The amount of cash a department store received from customers during a period equals the sales for the period, reduced by the _ during this period or increased by the _ during the period.

Firms have some choice as to when they disburse cash.Delaying payments to suppliers and others during the last several days of an accounting period conserves cash and thereby _ cash flow from operations for that period, and _ cash flow from operations during the second period.