Question 1

The sale of land for cash would be classified as a cash inflow from an investing activity.

Accepted Answer

A) True 
 B)False

Question 2

Each of the following are particularly interested in the statement of cash flows except

Accepted Answer

A) creditors. 
B) employees. 
C) shareholders. 
D) government agencies.

Question 3

The statement of cash flows is prepared from all of the following except

Accepted Answer

A) the adjusted trial balance. 
B) comparative balance sheets. 
C) selected transaction data. 
D) the current income statement.

Question 4

Indicate where the issuance of common stock issued for cash would appear, if at all, on the indirect statement of cash flows.

Accepted Answer

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

Question 5

The following data are available for Sampson Corporation. $$\begin{array} { l r } 
\text { Net income } & \$ 200,000 \
\text { Depreciation expense } & 60,000 \
\text { Dividends paid } & 90,000 \
\text { Loss on sale of land } & 15,000 \
\text { Decrease in accounts receivable } & 30,000 \
\text { Decrease in accounts payable } & 45,000
\end{array}$$ Net cash provided by operating activities is:

Accepted Answer

A) $140,000. 
B) $260,000. 
C) $160,000. 
D) $240,000.

Question 6

In preparing a statement of cash flows, an increase in the Common Stock and Treasury Stock accounts during a period would be an investing activity.

Accepted Answer

A) True 
 B)False

Question 7

Bush Company reported net income of $60,000 for the year.During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded.Net cash provided by operating activities for the year is

Accepted Answer

A) $48,000. 
B) $77,000. 
C) $59,000. 
D) $55,000.

Question 8

The primary purpose of the statement of cash flows is to

Accepted Answer

A) provide information about the investing and financing activities during a period. 
B) prove that revenues exceed expenses if there is a net income. 
C) provide information about the cash receipts and cash payments during a period. 
D) facilitate banking relationships.

Question 9

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Accepted Answer

A) the financing section. 
B) the "extraordinary" section. 
C) a separate schedule or note to the financial statements. 
D) the stockholders' equity section.

Question 10

Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

Accepted Answer

A) True 
 B)False

Question 11

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

Accepted Answer

A) direct method. 
B) indirect method. 
C) working capital method. 
D) cost-benefit method.

Question 12

During a period, cost of goods sold + an increase in inventory + an increase in accounts payable = cash paid to suppliers.

Accepted Answer

A) True 
 B)False

Question 13

Vision Company purchased treasury stock with a cost of $16,000 during 2017.During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $860,000.Cash flows from financing activities for 2017 total

Accepted Answer

A) $840,000 net cash inflow. 
B) $856,000 net cash inflow. 
C) $860,000 net cash outflow. 
D) $824,000 net cash inflow.

Question 14

If a loss of $25,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

A) $65,000. 
B) $90,000. 
C) $115,000. 
D) $25,000.

Question 15

Free cash flow equals cash provided by operations less capital expenditures and cash dividends.

Accepted Answer

A) True 
 B)False

Question 16

The indirect and direct methods of preparing the statement of cash flows are identical except for the

Accepted Answer

A) significant noncash activity section. 
B) operating activities section. 
C) investing activities section. 
D) financing activities section.

Question 17

Financial statement readers can determine future investing and financing transactions by examining a company's statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 18

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Accepted Answer

A) the current year's income statement. 
B) a comparative balance sheet. 
C) additional information. 
D) all of these.

Question 19

Which of the following would be added to net income using the indirect method?

Accepted Answer

A) An increase in accounts receivable 
B) An increase in prepaid expenses 
C) Depreciation expense 
D) A decrease in accounts payable

Question 20

Investing activities include

Accepted Answer

A) collecting cash on loans made. 
B) obtaining cash from creditors. 
C) obtaining capital from owners. 
D) repaying money previously borrowed.

Exam 13: Financial Analysis: the Big Picture

The sale of land for cash would be classified as a cash inflow from an investing activity.

Each of the following are particularly interested in the statement of cash flows except

The statement of cash flows is prepared from all of the following except

Indicate where the issuance of common stock issued for cash would appear, if at all, on the indirect statement of cash flows.

In preparing a statement of cash flows, an increase in the Common Stock and Treasury Stock accounts during a period would be an investing activity.

Bush Company reported net income of $60,000 for the year.During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded.Net cash provided by operating activities for the year is

The primary purpose of the statement of cash flows is to

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

During a period, cost of goods sold + an increase in inventory + an increase in accounts payable = cash paid to suppliers.

Vision Company purchased treasury stock with a cost of $16,000 during 2017.During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $860,000.Cash flows from financing activities for 2017 total

If a loss of $25,000 is incurred in selling (for cash) office equipment having a book value of $90,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Free cash flow equals cash provided by operations less capital expenditures and cash dividends.

The indirect and direct methods of preparing the statement of cash flows are identical except for the

Financial statement readers can determine future investing and financing transactions by examining a company's statement of cash flows.

To determine the net cash provided (used) by operating activities, it is necessary to analyze

Which of the following would be added to net income using the indirect method?

Investing activities include