Question 1

A Statement of Cash Flows is designed to help investors, creditors, and others to project a company's future cash flows.

Accepted Answer

A) True 
 B)False

Question 2

Net income was $50,000 and cost of goods sold was $150,000. Inventories increased by $10,000, and trade accounts payable increased by $12,000.
Calculate the amount of cash paid to suppliers.

Accepted Answer

The answer of Net income was $50,000 and cost of...

Question 3

As per ASPE, Dividends received from trading securities would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

Accepted Answer

A)  Operating cash flow 
B)  Investing cash flow 
C)  Financing cash flow 
D)  Item reconciling earnings and operating cash flow 
E)  Not a cash flow or reconciling item 
A)  Operating cash flow 
B)  Investing cash flow 
C)  Financing cash flow 
D)  Item reconciling earnings and operating cash flow 
E)  Not a cash flow or reconciling item

Question 4

Under IFRS, interest received may be classified as operating or financing activities.

Accepted Answer

A) True 
 B)False

Question 5

WXY reported sales revenue of $40,000 and expenses of $35,000 during the period ended December 31, 2011. During the year, accounts receivable increased by $1,500; merchandise inventory increased by $1,000; accounts payable increased by $500; dividends payable decreased by $700; and depreciation expense of $2,500 was recorded. What was the amount of net cash flow from operating activities?

Accepted Answer

A)  $4,800 
B)  $2,500 
C)  $4,500 
D)  $5,500 
E)  $6,000 
A)  $4,800 
B)  $2,500 
C)  $4,500 
D)  $5,500 
E)  $6,000

Question 6

Assume cash paid to suppliers for 2011 is $420,000; that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011. During 2011, accounts payable must have:

Accepted Answer

A)  increased by $5,000. 
B)  decreased by $5,000. 
C)  increased by $15,000. 
D)  decreased by $15,000. 
A)  increased by $5,000. 
B)  decreased by $5,000. 
C)  increased by $15,000. 
D)  decreased by $15,000.

Question 7

When preparing the Statement of Cash Flows, which of the following sources of information should be consulted after considering all others?

Accepted Answer

A)  Income statement 
B)  Comparative balance sheet in general 
C)  Remaining unexplained balance sheet account changes 
D)  Retained earnings statement 
E)  Company records 
A)  Income statement 
B)  Comparative balance sheet in general 
C)  Remaining unexplained balance sheet account changes 
D)  Retained earnings statement 
E)  Company records

Question 8

Cash from customers equals sales plus the increase in accounts receivable for the year.

Accepted Answer

A) True 
 B)False

Question 9

ABC reported sales revenue of $100,000 and expenses of $106,000 for the period ended December 31, 2011; accounts receivable decreased by $500; accounts payable increased by $2,500; accrued wages payable decreased by $1,500; short-term loans to banks increased by $600; and depreciation expense of $4,000 was recorded. What was the amount of net cash flow from operating activities for 2011?

Accepted Answer

A)  $500 inflow 
B)  $1,000 inflow 
C)  $100 Inflow 
D)  $500 outflow 
E)  $1,000 outflow 
A)  $500 inflow 
B)  $1,000 inflow 
C)  $100 Inflow 
D)  $500 outflow 
E)  $1,000 outflow

Question 10

A corporation paid $4,000 cash for rent. This payment should be reflected on the Statement of Cash Flows as a:

Accepted Answer

A)  cash inflow from operating activities. 
B)  cash outflow from operating activities. 
C)  cash outflow from investing activities. 
D)  cash outflow from financing activities. 
A)  cash inflow from operating activities. 
B)  cash outflow from operating activities. 
C)  cash outflow from investing activities. 
D)  cash outflow from financing activities.

Question 11

Under IFRS, term preferred shares near their maturity date may be classified as cash equivalents for purposes of the Statement of Cash Flows.

Accepted Answer

A) True 
 B)False

Question 12

Under IFRS, dividends paid may be classified as:

Accepted Answer

A)  Operating activities. 
B)  Financing Activities. 
C)  Investing Activities. 
D)  Operating activities or financing activities. 
E)  Operating activities or investing activities. 
A)  Operating activities. 
B)  Financing Activities. 
C)  Investing Activities. 
D)  Operating activities or financing activities. 
E)  Operating activities or investing activities.

Question 13

The records of BCD provided the following information for the year ended December 31, 2011:
(1) $\begin{array} { | l | r | r | } 
\hline \text { Balance sheet: } & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 0 } \
\hline \text { Cash } & \$ 18,000 & \$ 20,000 \
\hline \text { Accounts receivable (net) } & 26,000 & 22,000 \
\hline \text { Inventory } & 30,000 & 27,000 \
\hline \text { Capital assets (net) } & 75,000 & 76,000 \
\hline \text { Payable (short term) } &41,000 & 40,000  \
\text { Bonds payable }&50,000&60,000\
\hline \text { Common stock } &30,000&30,000  \
\hline\text { Retained earnings }&18,000&?\
\hline
\end{array}$ (2) Cash dividends of $5,000 were declared in 2010 and paid in 2011, and cash dividends of $2,000 were declared and paid in 2011.
(3) Net loss in 2011, $1,000.
(4) Depreciation expense for 2011, $5,000.
Calculate the amount of net cash from operating activities during 2011.

Accepted Answer

None

Question 14

A corporation has paid $20,000 in cash dividends each year on its common shares. Although during year 1 the company had a cash shortage, it declared the dividend. However, it was stipulated that the $20,000 cash dividend would not be paid until year 2. This dividend will affect the year 1 Statement of Cash Flows by:

Accepted Answer

A)  increasing the cash from operating activities. 
B)  increasing the cash from financing activities. 
C)  decreasing the cash from financing activities. 
D)  decreasing the cash from operating activities. 
E)  will not affect the Statement of Cash Flows. 
A)  increasing the cash from operating activities. 
B)  increasing the cash from financing activities. 
C)  decreasing the cash from financing activities. 
D)  decreasing the cash from operating activities. 
E)  will not affect the Statement of Cash Flows.

Question 15

In a Statement of Cash Flows:

Accepted Answer

A)  net cash flow from operating activities is always the same as net income. 
B)  net cash flow from operating activities must be the same as net increase in cash during the period. 
C)  net cash flow from operating activities is always greater than net income. 
D)  net cash flow from operating activities is always less than net income. 
E)  net cash flow from operating activities may be less than or greater than net income. 
A)  net cash flow from operating activities is always the same as net income. 
B)  net cash flow from operating activities must be the same as net increase in cash during the period. 
C)  net cash flow from operating activities is always greater than net income. 
D)  net cash flow from operating activities is always less than net income. 
E)  net cash flow from operating activities may be less than or greater than net income.

Question 16

A loss on the sale of machinery in the ordinary course of business should be presented in a Statement of Cash Flows as a(n):

Accepted Answer

A)  Adjustment to net income in the reconciliation of net income to cash from operating activities. 
B)  Inflow from operating activities. 
C)  Inflow from investing activities. 
D)  Outflow from investing activities. 
A)  Adjustment to net income in the reconciliation of net income to cash from operating activities. 
B)  Inflow from operating activities. 
C)  Inflow from investing activities. 
D)  Outflow from investing activities.

Question 17

The records of WXY provided the following information for the year ended December 31, 2011: 
(1) Purchased a warehouse and paid for it by issuing 1,000 common shares; market value was $35 per share.
(2) Inventory increased by $4,000.
(3) Accounts payable decreased by $6,000.
(4) Declared a cash dividend, $5,000.
(5) Depreciation expense, $2,000.
(6) Net income, $19,000.
(7) Loss on sale of machine, $3,000.
(8) On December 31, 2011, paid insurance premium on all assets, for 2012 and 2013, $800. There was no prepaid insurance on January 1, 2011.
What was the net cash inflow from operating activities for 2011?

Accepted Answer

A)  $7,200 
B)  $13,200 
C)  $16,200 
D)  $21,200 
A)  $7,200 
B)  $13,200 
C)  $16,200 
D)  $21,200

Question 18

How is depreciation expense treated in the Statement of Cash Flows and related disclosures when the statement is prepared using the indirect format?

Accepted Answer

A)  added to net income 
B)  subtracted from net income 
C)  placed into the investing section 
D)  does not appear because it is not a cash flow 
A)  added to net income 
B)  subtracted from net income 
C)  placed into the investing section 
D)  does not appear because it is not a cash flow

Question 19

The purchase of securities available for sale but not considered cash equivalents would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

Accepted Answer

A)  Operating cash flow 
B)  Investing cash flow 
C)  Financing cash flow 
D)  Item reconciling earnings and operating cash flow 
E)  Not a cash flow or reconciling item 
A)  Operating cash flow 
B)  Investing cash flow 
C)  Financing cash flow 
D)  Item reconciling earnings and operating cash flow 
E)  Not a cash flow or reconciling item

Question 20

Which of the following would cause an inflow of cash?

Accepted Answer

A)  Payment of a long-term bond 
B)  Sale for cash of a short-term investment at its cost 
C)  Payment of accounts payable 
D)  Repurchase of common stock for cash 
E)  Accrual of a dividend 
A)  Payment of a long-term bond 
B)  Sale for cash of a short-term investment at its cost 
C)  Payment of accounts payable 
D)  Repurchase of common stock for cash 
E)  Accrual of a dividend

A Statement of Cash Flows is designed to help investors, creditors, and others to project a company's future cash flows.

Net income was $50,000 and cost of goods sold was $150,000. Inventories increased by $10,000, and trade accounts payable increased by $12,000. Calculate the amount of cash paid to suppliers.

As per ASPE, Dividends received from trading securities would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

Under IFRS, interest received may be classified as operating or financing activities.

Assume cash paid to suppliers for 2011 is $420,000; that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011. During 2011, accounts payable must have:

When preparing the Statement of Cash Flows, which of the following sources of information should be consulted after considering all others?

Cash from customers equals sales plus the increase in accounts receivable for the year.

A corporation paid $4,000 cash for rent. This payment should be reflected on the Statement of Cash Flows as a:

Under IFRS, term preferred shares near their maturity date may be classified as cash equivalents for purposes of the Statement of Cash Flows.

Under IFRS, dividends paid may be classified as:

In a Statement of Cash Flows:

A loss on the sale of machinery in the ordinary course of business should be presented in a Statement of Cash Flows as a(n):

How is depreciation expense treated in the Statement of Cash Flows and related disclosures when the statement is prepared using the indirect format?

The purchase of securities available for sale but not considered cash equivalents would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

Which of the following would cause an inflow of cash?

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 5: The Statement of Cash Flows

A Statement of Cash Flows is designed to help investors, creditors, and others to project a company's future cash flows.

Net income was $50,000 and cost of goods sold was $150,000. Inventories increased by $10,000, and trade accounts payable increased by $12,000. Calculate the amount of cash paid to suppliers.

As per ASPE, Dividends received from trading securities would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

Under IFRS, interest received may be classified as operating or financing activities.

Assume cash paid to suppliers for 2011 is $420,000; that merchandise inventory increased by $20,000 during the year, and that cost of goods sold was $415,000 for 2011. During 2011, accounts payable must have:

When preparing the Statement of Cash Flows, which of the following sources of information should be consulted after considering all others?

Cash from customers equals sales plus the increase in accounts receivable for the year.

A corporation paid $4,000 cash for rent. This payment should be reflected on the Statement of Cash Flows as a:

Under IFRS, term preferred shares near their maturity date may be classified as cash equivalents for purposes of the Statement of Cash Flows.

Under IFRS, dividends paid may be classified as:

In a Statement of Cash Flows:

A loss on the sale of machinery in the ordinary course of business should be presented in a Statement of Cash Flows as a(n):

How is depreciation expense treated in the Statement of Cash Flows and related disclosures when the statement is prepared using the indirect format?

The purchase of securities available for sale but not considered cash equivalents would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

Which of the following would cause an inflow of cash?

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters