Question 1

The statement of cash flows

Accepted Answer

A)   is prepared instead of an income statement under generally accepted accounting principles.
B)   is used to assess an entity's ability to pay dividends and meet obligations.
C)   is prepared from comparative income statements.
D)   reflects earnings per share figures on a cash basis and on an accrual basis in the body of the statement.E) A) and D)
F) A) and C)

Question 2

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

Accepted Answer

A) True 
 B)False

Question 3

Significant noncash transactions would not include

Accepted Answer

A)   conversion of bonds into common stock.
B)   asset acquisition through bond issuance.
C)   treasury stock acquisition.
D)   exchange of plant assets.E) A) and B)
F) A) and C)

Question 4

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Accepted Answer

A) True 
 B)False

Question 5

Financing activities involve

Accepted Answer

A)   lending money to other entities and collecting on those loans.
B)   cash receipts from sales of goods and services.
C)   acquiring and disposing of productive long-lived assets.
D)   long-term liability and owners' equity items.E) All of the above
F) A) and B)

Question 6

Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

Accepted Answer

A) True 
 B)False

Question 7

Using the indirect method, if equipment is sold at a gain, the

Accepted Answer

A)   sale proceeds received are deducted in the operating activities section.
B)   sale proceeds received are added in the operating activities section.
C)   amount of the gain is added in the operating activities section.
D)   amount of the gain is deducted in the operating activities section.E) All of the above
F) A) and D)

Question 8

If accounts payable have increased during a period,

Accepted Answer

A)   revenues on an accrual basis are less than revenues on a cash basis.
B)   expenses on an accrual basis are less than expenses on a cash basis.
C)   expenses on an accrual basis are greater than expenses on a cash basis.
D)   expenses on an accrual basis are the same as expenses on a cash basis.E) None of the above
F) A) and D)

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.E) C) and D)
F) B) and D)

Question 10

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.E) A) and C)
F) C) and D)

Question 11

Indicate where the payment of income taxes would appear, if at all, on the statement of cash flows.

Accepted Answer

A)   Operating activities section
B)   Investing activities section
C)   Financing activities section
D)   Does not represent a cash flowE) A) and B)
F) C) and D)

Question 12

A statement of cash flows indicates the sources and uses of cash during a period.

Accepted Answer

A) True 
 B)False

Question 13

Which one of the following items is not necessary in preparing a statement of cash flows?

Accepted Answer

A)   Determine the change in cash
B)   Determine the cash provided by operations
C)   Determine cash from financing and investing activities
D)   Determine the cash in all bank accountsE) A) and C)
F) None of the above

Question 14

Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

Accepted Answer

A) True 
 B)False

Question 15

Using the indirect method, patent amortization expense for the period

Accepted Answer

A)   is deducted from net income.
B)   causes cash to increase.
C)   causes cash to decrease.
D)   is added to net income.E) B) and D)
F) B) and C)

Question 16

Lending money and collecting the loans are

Accepted Answer

A)   operating activities.
B)   investing activities.
C)   financing activities.
D)   Non-cash investing and financing activities.E) A) and D)
F) A) and C)

Question 17

Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?

Accepted Answer

A)   Gain on Sale of Equipment
B)   Depreciation Expense
C)   Patent Amortization Expense
D)   Depletion ExpenseE) A) and B)
F) All of the above

Question 18

If a company reports a net loss, it

Accepted Answer

A)   may still have a net increase in cash.
B)   will not be able to pay cash dividends.
C)   will not be able to get a loan.
D)   will not be able to make capital expenditures.E) A) and B)
F) B) and D)

Question 19

The order of presentation of activities on the statement of cash flows is

Accepted Answer

A)   operating, investing, and financing.
B)   operating, financing, and investing.
C)   financing, operating, and investing.
D)   financing, investing, and operating.E) B) and C)
F) A) and D)

Question 20

The statement of cash flows reports each of the following except

Accepted Answer

A)   cash receipts from operating activities.
B)   cash payments from investing activities.
C)   the net change in cash.
D)   cash sales.E) A) and B)
F) A) and C)

Exam 13: Statement of Cash Flows

Lending money and collecting the loans are

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

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The primary purpose of the statement of cash flows is to

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Significant noncash transactions would not include

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Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

Correct AnswerverifiedShow Answer

Indicate where the payment of income taxes would appear, if at all, on the statement of cash flows.

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Which one of the following items is not necessary in preparing a statement of cash flows?

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A statement of cash flows indicates the sources and uses of cash during a period.

Correct AnswerverifiedShow Answer

The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.

Correct AnswerverifiedShow Answer

Using the indirect method, patent amortization expense for the period

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The statement of cash flows

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Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?

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Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

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The statement of cash flows reports each of the following except

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If a company reports a net loss, it

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Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

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Financing activities involve

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Using the indirect method, if equipment is sold at a gain, the

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The order of presentation of activities on the statement of cash flows is

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If accounts payable have increased during a period,

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