Question 1

A company sells equipment at a loss. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

Accepted Answer

A) The sale of equipment at a loss would be presented in the investing activities section as a cash payment under both methods. 
B) The sale of equipment at a loss would be presented in the investing activities section as a cash receipt under both methods. 
C) The sale of equipment at a loss would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method. 
D) The sale of equipment at a loss would be presented in the financing activities section as a cash receipt under both methods.

Question 2

The following data relate to Whitmore Enterprises for last year:  What is the net cash provided by operating activities for last year on the statement of cash flows for Whitmore Enterprises?

Accepted Answer

A) $136,100 
B) $140,000 
C) $183,100 
D) $159,100

Question 3

On the statement of cash flows, which of the following section includes activities that increase and decrease long-term liabilities and owners' equity?

Accepted Answer

A) Operating section 
B) Financing section 
C) Investing section 
D) None of the above

Question 4

Under the direct method of cash flow, which of the following is not included in the statement of cash flows?

Accepted Answer

A) Changes in accounts receivable 
B) Changes in accounts payable 
C) Changes in inventories 
D) Changes in amortization

Question 5

Cash received from providing services would be considered a

Accepted Answer

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

Question 6

Using the direct method of cash flow, which of the following is a category in the statement of cash flows?

Accepted Answer

A) Amortization expense 
B) Loss on sale of equipment 
C) Collections from customers 
D) Net income

Question 7

When a company uses the direct method to present the statement of cash flows, cash received from the sale of treasury stock increases the amount of net cash provided by investing activities.

Accepted Answer

A) True 
 B)False

Question 8

The managerial accountant at the Organic Food Shoppe used the indirect method to prepare the Statement of Cash Flows and reported the following data:
  The managerial accountant is required to determine the amount of free cash flow at the company. Calculate the free cash flow at the company and list at least three ways the company can use the free cash flow at the business.

Accepted Answer

The answer of The managerial accountant at the Organic Food...

Question 9

All of the following are examples of cash outflows from an investing activity except

Accepted Answer

A) purchase of equity securities. 
B) loans made to another party. 
C) purchase of commercial real estate. 
D) purchase of treasury stock.

Question 10

All of the following are categories in the operating activities section using the direct method in the statement of cash flows except

Accepted Answer

A) changes in amortization 
B) changes in accounts receivable 
C) changes in inventory 
D) changes in accounts payable

Question 11

On the statement of cash flows, which of the following items would be reported in the financing activities section?

Accepted Answer

A) Cash paid for interest 
B) Cash received from customers 
C) Cash received from a sale of treasury stock 
D) Cash paid for operating expenses

Question 12

Which of the following sections from the statement of cash flows includes activities that increase and decrease long-term assets?

Accepted Answer

A) Investing section 
B) Operating section 
C) Financing section 
D) None of the above

Question 13

Comparative balance sheets analyze balance sheets by comparing the ending balances of two fiscal periods; usually highlighting the changes in each account.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following items is one of the three sections on the statement of cash flows?

Accepted Answer

A) Retained earnings 
B) Total liabilities 
C) Total stockholder's equity 
D) Cash from investing activities

Question 15

When a company uses the indirect method to present the statement of cash flows, cash received from the sale of a long-term asset increases the amount of net cash provided by investing activities.

Accepted Answer

A) True 
 B)False

Question 16

Use the direct method of cash flows to answer the following question:
  Compute the cash receivables received from customers during the year.

Accepted Answer

The answer of Use the direct method of cash flows...

Question 17

On the statement of cash flows, which of the following activities are included in the financing activities section?

Accepted Answer

A) Activities that increase or decrease long-term assets 
B) Activities that obtain the cash needed to launch and sustain the business 
C) Activities that create revenue or expenses in the entity's major line of business 
D) None of the above

Question 18

A company acquires its own stock to hold as treasury stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

Accepted Answer

A) The acquisition of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method. 
B) The acquisition of treasury stock would be presented in the non-cash investing and financing activities section under both methods. 
C) The acquisition of treasury stock would be presented in the financing activities section as a cash payment under both methods. 
D) The acquisition of treasury stock would be presented in the investing activities section as a cash payment under both methods.

Question 19

A company uses the indirect method to prepare the statement of cash flows. Which of the following items would be subtracted from net income to determine the net cash flow from operating activities on the statement of cash flows?

Accepted Answer

A) An increase in dividends payable would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows. 
B) A loss on the sale of equipment would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows. 
C) A gain on the sale of equipment would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows. 
D) Depreciation expense would be subtracted from net income to determine the net cash flow from operating activities in the statement of cash flows.

Question 20

On the statement of cash flows, which of the following items would be reported as an operating activity?

Accepted Answer

A) A purchase of treasury stock 
B) A payment of dividends 
C) A payment of interest 
D) An issuance of stock

Exam 13: Statement of Cash Flows

A company sells equipment at a loss. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

The following data relate to Whitmore Enterprises for last year: What is the net cash provided by operating activities for last year on the statement of cash flows for Whitmore Enterprises?

On the statement of cash flows, which of the following section includes activities that increase and decrease long-term liabilities and owners' equity?

Under the direct method of cash flow, which of the following is not included in the statement of cash flows?

Cash received from providing services would be considered a

Using the direct method of cash flow, which of the following is a category in the statement of cash flows?

When a company uses the direct method to present the statement of cash flows, cash received from the sale of treasury stock increases the amount of net cash provided by investing activities.

All of the following are examples of cash outflows from an investing activity except

All of the following are categories in the operating activities section using the direct method in the statement of cash flows except

On the statement of cash flows, which of the following items would be reported in the financing activities section?

Which of the following sections from the statement of cash flows includes activities that increase and decrease long-term assets?

Comparative balance sheets analyze balance sheets by comparing the ending balances of two fiscal periods; usually highlighting the changes in each account.

Which of the following items is one of the three sections on the statement of cash flows?

When a company uses the indirect method to present the statement of cash flows, cash received from the sale of a long-term asset increases the amount of net cash provided by investing activities.

Use the direct method of cash flows to answer the following question: Compute the cash receivables received from customers during the year.

On the statement of cash flows, which of the following activities are included in the financing activities section?

A company acquires its own stock to hold as treasury stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

A company uses the indirect method to prepare the statement of cash flows. Which of the following items would be subtracted from net income to determine the net cash flow from operating activities on the statement of cash flows?

On the statement of cash flows, which of the following items would be reported as an operating activity?