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Exam 5: Cash Flow Statement

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Question 1

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Which of the following would cause a outflow of cash?

A) Sale of inventory for cash.
B) The sale of an investment for a loss
C) Issuing common shares to acquire capital assets
D) Purchase of a temporary investment

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Question 2

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Which of the following statements is true regarding a company's management of its debt?

A) Companies try to pay off all their debt as quickly as possible.
B) There is no maximum amount of debt a company can borrow.
C) A company will try to replace old debt with new debt to maintain an optimal level of debt.
D) The process of replacing old debt with new debt is called turnover.

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Question 3

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Which of the following would be considered a continuing source of cash?

Operating activities typically involve balance sheet accounts classified as:

Cash equivalents includes everything, except:

Which of the following is a deduction from net income when using the indirect approach to prepare the cash from operations section of the cash flow statement?

An analyst reviewing a company's cash flow statement noticed that the company reported a large increase in inventory, but no increase in accounts receivable.Which of the following is not a possible explanation for this?

Which of the following statements is true concerning how interest paid on debt is classified on the cash flow statement for U.S.GAAP and International Financial Reporting Standards IFRS) ?

Miriam Co.reported a cash position of $35,000 and as of December 31, after its first year of operations.Miriam also reported the following: Net Income $\$ 23,000$ Amortization Expense $\$ 17,000$ Gain on the sale of equipment $\$ 5,000$ Cash from operating activities $\$ 42,000$ Cash used in investing activities $\$ 100,000$ How much cash was provided through Miriam's financing activties?

Financing activities typically involve balance sheet accounts classified as:

Which of the following is normally disclosed as supplementary information on the cash flow statement?

If a company has made arrangements with a bank to borrow money in the months when they have a negative cash balance, this arrangement is a:

The _______________statement is used by shareholders to assess company profitability.

Hayden Co.reported $26,000 of cash provided by operating activities and the following data: $\begin{array} { l r } \text { Amortization } & \$ 45,000 \\\text { Increase in accountspayable } & 12,000 \\\text { Increase in wagespayable } & 8,000 \\\text { Increase in inventory } & 9,000 \\\text { Decrease in taxes payable } & 2,000\end{array}$ Hayden's net income\loss for the period was:

Under the indirect approach adjustments must be made to net income in the operations section for all of the following items, except:

On the cash flow statement, which of the following would equal cash paid for income taxes?

A banker contemplating a loan to a company should focus on which sections) of the cash flow statement in order to determine the company's ability to repay the loan?

Companies can raise an unlimited amount of cash from financing activities as long as they are willing to pay higher interest rates.

The income statement reflects the lead\lag relationships in cash flows.

The activities of a corporation that are directed to investing the resources of the corporation over extended periods of time in long-term assets is considered part of which of these activities on the cash flow statement?