Question 1

An example of a noncash expense would be depreciation.

Accepted Answer

A) True 
 B)False

Question 2

Which would not go into the operating activities section of a statement of cash flows using the direct method?

Accepted Answer

A) Depreciation expense 
B) Payment for dividends 
C) Selling of plant,property and equipment 
D) All of the above

Question 3

The statement of cash flows provides information about all of the following except:

Accepted Answer

A) organizing activities. 
B) investing activities. 
C) operating activities. 
D) financing activities.

Question 4

The final cash amount on the statement of cash flows must match the cash balance shown on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

An increase in long-term note payable would mean:

Accepted Answer

A) an increase of cash flow from investing activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) a decrease of cash flow from financing activities.

Question 6

Cash flows from financing activities would include:

Accepted Answer

A) issuance of long-term notes. 
B) cash purchase of stocks and bonds. 
C) cash from sale of stock investments. 
D) All of these answers are correct.

Question 7

If $12,000 was generated from operations,$6,000 was used for investing activities,and $4,000 was provided by financing activities,the cash balance would:

Accepted Answer

A) increase by $14,000. 
B) decrease by $20,000. 
C) increase by $10,000. 
D) increase by $2,000.

Question 8

The following information is given for Tripp Company,which uses the indirect method.
 $\begin{array} { l l } 
\text { Net income } & \$ 20,000 \
\text { Depreciation expense } & 3,000 \
\text { Increase in accounts receivable } & 2,000 \
\text { Payment of dividends } & 2,000 \
\text { Proceeds from sale of equipment } & 6,000 \
\text { Increase in accounts payable } & 4,000 \
\text { Decrease in inventory } & 3,000
\end{array}$ From the information provided,answer the following questions:
a)The cash flow from operating activities is ________.
b)The cash flow from investing activities is ________.
c)The cash flow from financing activities is ________.

Accepted Answer

The answer of The following information is given for Tripp...

Question 9

When a corporation pays dividends it:

Accepted Answer

A) does not affect the cash flow statement. 
B) is shown as an investing activity. 
C) is shown as a financing activity. 
D) is shown as an operating activity.

Question 10

For a statement of cash flows to be produced,an accountant needs to compare changes in the related income statements.

Accepted Answer

A) True 
 B)False

Question 11

Payments of cash dividends to stockholders would result in:

Accepted Answer

A) a decrease of cash flow from operating activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) a decrease of cash flow from financing activities.

Question 12

Even though the cost of fuel oil is rising,management is considering using up the business's reserves and not ordering any more this period.How will this decision affect the period's cash flows from operations-indirect method?

Accepted Answer

A) It will increase this period's cash flows from operations. 
B) It will decrease this period's cash flows from operations. 
C) It will not affect this period's cash flows from operations. 
D) This does not affect cash flows from operations.

Question 13

Depreciation is shown only when using the direct method of preparing a statement of cash flow.

Accepted Answer

A) True 
 B)False

Question 14

The cash flows from operating activities are reported by the direct method on the statement of cash flows.Determine the following:
a.If accrued expenses showed $50,000 on the income statement and payables increased from $15,000 to $18,500 on the balance sheet,what was the amount of cash paid?
b.If insurance expense showed $10,000 on the income statement and Prepaid Insurance increased from $10,000 to $12,000 on the balance sheet,what was the amount of cash paid for insurance?

Accepted Answer

The answer of The cash flows from operating activities are...

Question 15

The Accounts Payable balance has decreased during the year.How would this event affect the statement of cash flows operations section-indirect method?

Accepted Answer

A) It is already included in the net income. 
B) It would affect the operations section positively. 
C) It would affect the operations section negatively. 
D) Does not affect the cash flow from operations.

Question 16

Loaning cash to borrowers would result in:

Accepted Answer

A) an increase of cash flow from investing activities. 
B) a decrease of cash flow from investing activities. 
C) an increase of cash flow from financing activities. 
D) a decrease of cash flow from financing activities.

Question 17

Using the indirect method for cash flows,depreciation expense is added to net income to determine the:

Accepted Answer

A) cash flow from investing activities. 
B) cash flow from financing activities. 
C) cash flow from operating activities. 
D) cash flow from fixed asset activities.

Question 18

Rick Corporation's Accounts Receivable decreased by $25,000 during the year.What is the adjustment to the cash flow statement when it is prepared by the indirect method?

Accepted Answer

A) Subtract the decrease from the net income in operating activities. 
B) Add the decrease to the net income in operating activities. 
C) Add the decrease in the investing activities section. 
D) Subtract the decrease in the financing activities.

Question 19

Of the following,which has a positive effect on the computation of cash flow from operations using the indirect method?

Accepted Answer

A) Increase in Inventory 
B) Decrease in Accounts Payable 
C) Increase in Accounts Receivable 
D) Decrease in Prepaid Insurance

Question 20

The following information is given for Sunny Corporation:
 $\begin{array} { l l } 
\text { Net income } & \$ 45,000 \
\text { Depreciation expense } & 8,000 \
\text { Decrease in accounts receivable  } & 3,000 \
\text {Increase in supplies on hand } & 1,000 \
\text { Sale of common stock } &50,000 \
\text { Purchase of equipment } & 45,000 \
\text {  Payment of dividends } & 6,000\
\text { Decrease in accounts payable}&5,000
\end{array}$ The indirect method is used.The beginning Cash balance is $23,000.
Required:
Answer the following questions with the information provided above.
a)The cash flow from operating activities is ________.
b)The cash flow from investing activities is ________.
c)The cash flow from financing activities is ________.
d)The net change in cash is ________.
e)The ending balance of cash is ________.

Accepted Answer

The answer of The following information is given for Sunny...

Exam 21: Statement of Cash Flows

An example of a noncash expense would be depreciation.

Which would not go into the operating activities section of a statement of cash flows using the direct method?

The statement of cash flows provides information about all of the following except:

The final cash amount on the statement of cash flows must match the cash balance shown on the balance sheet.

An increase in long-term note payable would mean:

Cash flows from financing activities would include:

If $12,000 was generated from operations,$6,000 was used for investing activities,and $4,000 was provided by financing activities,the cash balance would:

When a corporation pays dividends it:

For a statement of cash flows to be produced,an accountant needs to compare changes in the related income statements.

Payments of cash dividends to stockholders would result in:

Even though the cost of fuel oil is rising,management is considering using up the business's reserves and not ordering any more this period.How will this decision affect the period's cash flows from operations-indirect method?

Depreciation is shown only when using the direct method of preparing a statement of cash flow.

The Accounts Payable balance has decreased during the year.How would this event affect the statement of cash flows operations section-indirect method?

Loaning cash to borrowers would result in:

Using the indirect method for cash flows,depreciation expense is added to net income to determine the:

Rick Corporation's Accounts Receivable decreased by $25,000 during the year.What is the adjustment to the cash flow statement when it is prepared by the indirect method?

Of the following,which has a positive effect on the computation of cash flow from operations using the indirect method?