Question 1

Use the following information for questions.
Ingles Corp., a private company reporting under ASPE, engaged in the following transactions. For each transaction, indicate where, if at all, it would be classified on the statement of cash flows.
-Repurchase of Ingles' own common shares on the open market:

Accepted Answer

A)   operating activities section
B)   investing activities section
C)   financing activities section
D)   does not represent a cash flowE) B) and C)
F) B) and D)

Question 2

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

Accepted Answer

A)   financing activities section.
B)   notes to the financial statements.
C)   investing activities section.
D)   shareholders' equity section.E) None of the above
F) A) and B)

Question 3

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 C)

Question 4

The acquisition of land by issuing common shares is

Accepted Answer

A)   a cash transaction and would be reported in the body of a statement of cash flows.
B)   a noncash transaction that is not reported in the body of a statement of cash flows.
C)   a noncash transaction but would be reported in the body of a statement of cash flows.
D)   only reported if the statement of cash flows is prepared using the direct method.E) A) and D)
F) A) and C)

Question 5

Use the following information for questions.
Ingles Corp., a private company reporting under ASPE, engaged in the following transactions. For each transaction, indicate where, if at all, it would be classified on the statement of cash flows.
-Issue of common shares in exchange for equipment:

Accepted Answer

A)   operating activities section
B)   investing activities section
C)   financing activities section
D)   does not represent a cash flowE) A) and D)
F) All of the above

Question 6

For a company using the direct method, both the operating activities and investing activities will report the same net amounts provided or used as the indirect method, but the amount reported under financing activities will be different.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

If accounts receivable have increased during a period,

Accepted Answer

A)   revenues on an accrual basis are less than revenues on a cash basis.
B)   revenues on an accrual basis are greater than revenues on a cash basis.
C)   revenues on an accrual basis are the same as revenues on a cash basis.
D)   expenses on an accrual basis are greater than expenses on a cash basis.E) A) and B)
F) B) and D)

Question 9

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

Accepted Answer

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

Question 10

Use the following information for questions.
Ingles Corp., a private company reporting under ASPE, engaged in the following transactions. For each transaction, indicate where, if at all, it would be classified on the statement of cash flows.
-Retirement of non-current debt (incurred for lending purposes)  with cash:

Accepted Answer

A)   operating activities section
B)   investing activities section
C)   financing activities section
D)   does not represent a cash flowE) B) and C)
F) All of the above

Question 11

Significant noncash transactions would not include

Accepted Answer

A)   conversion of preferred shares into common shares.
B)   asset acquisition through issue of a note payable.
C)   loans to other companies.
D)   exchange of equipment.E) All of the above
F) A) and B)

Question 12

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 cash receipts and cash payments during a period.
D)   report to Canada Revenue Agency.E) B) and C)
F) A) and D)

Question 13

Operating activities include the cash effects of transactions that create revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 14

Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Net income reported on the income statement for the year was $120,000. Ignoring the effect of any other adjustments, the cash flow provided (used)  by operating activities, prepared using the indirect method, is

Accepted Answer

A)   $120,000.
B)   $125,000.
C)   $155,000.
D)   $115,000.E) None of the above
F) A) and C)

Question 15

The statement of cash flows is a required statement for both public and private corporations.

Accepted Answer

A) True 
 B)False

Question 16

Cash equivalents can include both short-term and long-term investments.

Accepted Answer

A) True 
 B)False

Question 17

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Accepted Answer

A)   the adjusted trial balance.
B)   the current period's statement of retained earnings.
C)   a comparative statement of financial position.
D)   a comparative income statement.E) B) and C)
F) C) and D)

Question 18

Which of the following statements are false when using the indirect method?

Accepted Answer

A)   A loss on the sale of equipment is added to net income in calculating cash provided by operating activities.
B)   An increase in accounts receivable during a period is deducted from net income in calculating cash provided by operating activities.
C)   An increase in accounts payable during a period is added to net income in calculating cash provided by operating activities.
D)   A decrease in accumulated depreciation during a period is added to net income in calculating cash provided by operating activities.E) A) and D)
F) All of the above

Question 19

If a company has combined cash equivalents with cash, it must disclose the components of the cash equivalents, with a reconciliation of the amounts reported on the statement of cash flows with those reported on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 20

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Accepted Answer

A)   deducted from net income.
B)   added to net income.
C)   ignored because it does not affect net income.
D)   ignored because it does not affect expenses.E) C) and D)
F) A) and D)

Exam 13: Statement of Cash Flows

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Correct Answer
verified

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Correct Answer
verified

If a company has combined cash equivalents with cash, it must disclose the components of the cash equivalents, with a reconciliation of the amounts reported on the statement of cash flows with those reported on the statement of financial position.

Correct Answer
verified

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

Correct Answer
verified

Operating activities include the cash effects of transactions that create revenues and expenses.

Correct Answer
verified

The statement of cash flows is a required statement for both public and private corporations.

Correct Answer
verified

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

Correct Answer
verified

Cash equivalents can include both short-term and long-term investments.

Correct Answer
verified

The acquisition of land by issuing common shares is

Correct Answer
verified

The primary purpose of the statement of cash flows is to

Correct Answer
verified

For a company using the direct method, both the operating activities and investing activities will report the same net amounts provided or used as the indirect method, but the amount reported under financing activities will be different.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If accounts payable have increased during a period,

Correct Answer
verified

Use the following information for questions. Ingles Corp., a private company reporting under ASPE, engaged in the following transactions. For each transaction, indicate where, if at all, it would be classified on the statement of cash flows. -Issue of common shares in exchange for equipment:

Correct Answer
verified

If accounts receivable have increased during a period,

Correct Answer
verified

Which of the following statements are false when using the indirect method?

Correct Answer
verified

Significant noncash transactions would not include

Correct Answer
verified

Correct Answer
verified

Exam 13: Statement of Cash Flows

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

Correct AnswerverifiedShow Answer

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Correct AnswerverifiedShow Answer

If a company has combined cash equivalents with cash, it must disclose the components of the cash equivalents, with a reconciliation of the amounts reported on the statement of cash flows with those reported on the statement of financial position.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Operating activities include the cash effects of transactions that create revenues and expenses.

Correct AnswerverifiedShow Answer

The statement of cash flows is a required statement for both public and private corporations.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Cash equivalents can include both short-term and long-term investments.

Correct AnswerverifiedShow Answer

The acquisition of land by issuing common shares is

Correct AnswerverifiedShow Answer

The primary purpose of the statement of cash flows is to

Correct AnswerverifiedShow Answer

For a company using the direct method, both the operating activities and investing activities will report the same net amounts provided or used as the indirect method, but the amount reported under financing activities will be different.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If accounts payable have increased during a period,

Correct AnswerverifiedShow Answer

Use the following information for questions. Ingles Corp., a private company reporting under ASPE, engaged in the following transactions. For each transaction, indicate where, if at all, it would be classified on the statement of cash flows. -Issue of common shares in exchange for equipment:

Correct AnswerverifiedShow Answer

If accounts receivable have increased during a period,

Correct AnswerverifiedShow Answer

Which of the following statements are false when using the indirect method?

Correct AnswerverifiedShow Answer

Significant noncash transactions would not include

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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