Question 1

The _____ displays (lists)  cash receipts and disbursements from operating activities.

Accepted Answer

A)  bottom-up method
B)  top-down method
C)  indirect method
D)  direct method
E)  cash method

Question 2

The first section of the statement of cash flows derives cash flow from _____ activities.The _____ method reports the amounts of cash received from customers less cash disbursed to suppliers, employees, lenders, and taxing authorities.

Accepted Answer

A)  operating; direct
B)  operating; indirect
C)  investing; direct
D)  investing; indirect
E)  financing: direct

Question 3

A mature, stable firm might show what type of cash flow pattern from operating, investing, and financing activities?

Accepted Answer

A)  operating outflow, investing outflow, and financing inflow
B)  operating inflow, investing outflow, and financing inflow
C)  operating outflow, investing inflow, and financing outflow
D)  operating inflow, investing outflow, and financing outflow
E)  operating outflow, investing inflow, and financing inflow

Question 4

U.S.GAAP requires the disclosure of the acquisition of a building by assuming a mortgage obligation

Accepted Answer

A)  as both a financing activity and an operating activity.
B)  as both an operating activity and an investing activity.
C)  as both an investing activity and a financing activity.
D)  in a separate schedule or note, but does not appear in the statement of cash flows as an operating activity, investing activity or a financing activity.
E)  as both an investing activity and a exchange activity.

Question 5

If the balance sheet shows the same beginning and ending balance for depreciable assets, there

Accepted Answer

A)  have been no financing activities during the year.
B)  have been no investing activities during the year.
C)  may have been investing activities.
D)  may have been financing activities.
E)  have been no investing and financing activities during the year.

Question 6

U.S.GAAP classifies all of the following as operating activitieson the statement of cash flows except

Accepted Answer

A)  cash outflows to pay sales employees.
B)  cash inflows from the property rental.
C)  cash outflows to shareholders for dividends.
D)  cash outflows to purchase merchandise for resale.
E)  cash inflows from sales to customers.

Question 7

Financing activities on the cash flow statement do not include

Accepted Answer

A)  issuance of stock.
B)  payment of dividends.
C)  borrowing from banks.
D)  payment of interest expense.
E)  acquiring previously issued bonds.

Question 8

The _____ for preparing the Statement of Cash Flows begins with net income and adjusts that amount for noncash items.

Accepted Answer

A)  indirect method
B)  direct method
C)  income method
D)  bottom-up method
E)  top-down method

Question 9

The method of reporting preferred by U.S.GAAP is/are

Accepted Answer

A)  the direct method.
B)  the indirect method.
C)  both the direct method and the indirect method.
D)  the schedule of cash receipts and cash disbursements.
E)  the funds flow statement.

Question 10

The income statement

Accepted Answer

A)  measures the increase (or decrease)  in net assets from selling goods and services for more (or less)  than their costs.
B)  displays the firm's sources and uses of cash.
C)  reports the balance in cash at the beginning and end of the year.
D)  helps a reader understand how a firm obtains and uses cash.
E)  includes all of the above.

Question 11

In the first month of operations (April Year 1) of the QuickClean Company, a service business, the following events occurred.
 events occurred.

a.	Issued stock for $100,000; 20,000 shares with a $1 par value.
b.	Purchased equipment with a useful life of ten years for $12,000.
c.	Purchased a building with a useful life of 20 years for $24,000.
d.	Bought office supplies for $2,400. Supplies are expected to last one year.
e.	Paid salaries of $10,000.
f.	Borrowed $15,000 from bank on last day of the month. 12% interest rate payable in 90 days.
g.	Sold services for $20,000 on account.
h.	Collected $15,000 of receivables.
i.	Recorded expense accruals of $4,000 at end of month.

Required:
Prepare a balance sheet and statement of cash flow using the indirect method for the first month of operations.

Accepted Answer

The answer of In the first month of operations (April...

Question 12

The balance sheet reports

Accepted Answer

A)  the shortfall in cash at the beginning of the year.
B)  the balance in cash at the end of the year.
C)  how cash changed during the period.
D)  how a firm obtains and uses cash.
E)  both choices a and b.

Question 13

In a statement of cash flows, payments to acquire long-term bonds or other debt instruments with maturities greater than one year of other entities should be classified as cash outflows for

Accepted Answer

A)  operating activities.
B)  financing activities.
C)  investing activities.
D)  lending activities.
E)  exchange transactions.

Question 14

Both U.S.GAAP and IFRS permit considerable flexibility with respect to the display of information in the statement of cash flows.Firms must report the beginning and ending cash balances, and the change in the cash balance. The change in cash must reconcile to the sum of the cash inflows and outflows from _____ activities.

Accepted Answer

A)  operating
B)  investing
C)  financing
D)  operating, investing, and financing
E)  none of the above

Question 15

Cash flows do not always fit unambiguously into only one of the three categories: operating, investing and financing. Explain.

Accepted Answer

Ambiguities in Classifying Cash Flows
Ca...

Question 16

Cash equivalents represent _____ in which a firm has temporarily placed excess cash.We use the term cash flows to refer to flows of both cash and cash equivalents.

Accepted Answer

A)  long-term, highly liquid investments
B)  short-term, highly liquid investments
C)  short-term, highly illiquid investments
D)  long-term, highly illiquid investments
E)  common stocks and bonds of other companies

Question 17

Under U.S.GAAP, the statement of cash flows classifies changes in accounts payable as a(n)  _____ activity and classifies changes in short-term bank borrowing as a(n)  _____ activity.

Accepted Answer

A)  operating: financing
B)  financing; operating
C)  investing; operating
D)  operating; operating
E)  financing; financing

Question 18

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest expense as a(n)  _____ activity and classifies cash expenditures to redeem debt as a(n)  _____ activity.

Accepted Answer

A)  financing; financing
B)  financing: operating
C)  operating; investing
D)  operating; operating
E)  operating; financing

Question 19

Cash equivalents represent long-term, highly liquid investments in which a firm has temporarily placed excess cash.

Accepted Answer

A) True 
 B)False

Question 20

Many analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income.A common misconception is that the management has little opportunity to manipulate transactions affecting the statement of cash flows.The manipulation possibilities arise from

Accepted Answer

A)  the amounts of cash flows.
B)  the timing of cash flows.
C)  the classification and disclosure in the statement and related notes.
D)  both choices b and c.
E)  none of the above.

Exam 6: Statement of Cash Flows

Correct Answer
verified

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest expense as a(n) _ activity and classifies cash expenditures to redeem debt as a(n) _ activity.

Correct Answer
verified

The _____ for preparing the Statement of Cash Flows begins with net income and adjusts that amount for noncash items.

Correct Answer
verified

Under U.S.GAAP, the statement of cash flows classifies changes in accounts payable as a(n) _ activity and classifies changes in short-term bank borrowing as a(n) _ activity.

Correct Answer
verified

A mature, stable firm might show what type of cash flow pattern from operating, investing, and financing activities?

Correct Answer
verified

The balance sheet reports

Correct Answer
verified

Cash equivalents represent _____ in which a firm has temporarily placed excess cash.We use the term cash flows to refer to flows of both cash and cash equivalents.

Correct Answer
verified

Correct Answer
verified

Cash flows do not always fit unambiguously into only one of the three categories: operating, investing and financing. Explain.

Correct Answer
verified
Ambiguities in Classifying Cash Flows
Ca...
View Answer

In a statement of cash flows, payments to acquire long-term bonds or other debt instruments with maturities greater than one year of other entities should be classified as cash outflows for

Correct Answer
verified

If the balance sheet shows the same beginning and ending balance for depreciable assets, there

Correct Answer
verified

The income statement

Correct Answer
verified

The first section of the statement of cash flows derives cash flow from _ activities.The _ method reports the amounts of cash received from customers less cash disbursed to suppliers, employees, lenders, and taxing authorities.

Correct Answer
verified

Many analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income.A common misconception is that the management has little opportunity to manipulate transactions affecting the statement of cash flows.The manipulation possibilities arise from

Correct Answer
verified

Cash equivalents represent long-term, highly liquid investments in which a firm has temporarily placed excess cash.

Correct Answer
verified

U.S.GAAP requires the disclosure of the acquisition of a building by assuming a mortgage obligation

Correct Answer
verified

U.S.GAAP classifies all of the following as operating activitieson the statement of cash flows except

Correct Answer
verified

Financing activities on the cash flow statement do not include

Correct Answer
verified

The _____ displays (lists) cash receipts and disbursements from operating activities.

Correct Answer
verified

The method of reporting preferred by U.S.GAAP is/are

Correct Answer
verified

Exam 6: Statement of Cash Flows

Correct AnswerverifiedShow Answer

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest expense as a(n) _____ activity and classifies cash expenditures to redeem debt as a(n) _____ activity.

Correct AnswerverifiedShow Answer

The _____ for preparing the Statement of Cash Flows begins with net income and adjusts that amount for noncash items.

Correct AnswerverifiedShow Answer

Under U.S.GAAP, the statement of cash flows classifies changes in accounts payable as a(n) _____ activity and classifies changes in short-term bank borrowing as a(n) _____ activity.

Correct AnswerverifiedShow Answer

A mature, stable firm might show what type of cash flow pattern from operating, investing, and financing activities?

Correct AnswerverifiedShow Answer

The balance sheet reports

Correct AnswerverifiedShow Answer

Cash equivalents represent _____ in which a firm has temporarily placed excess cash.We use the term cash flows to refer to flows of both cash and cash equivalents.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cash flows do not always fit unambiguously into only one of the three categories: operating, investing and financing. Explain.

Correct AnswerverifiedAmbiguities in Classifying Cash FlowsCa...View AnswerShow Answer

In a statement of cash flows, payments to acquire long-term bonds or other debt instruments with maturities greater than one year of other entities should be classified as cash outflows for

Correct AnswerverifiedShow Answer

If the balance sheet shows the same beginning and ending balance for depreciable assets, there

Correct AnswerverifiedShow Answer

The income statement

Correct AnswerverifiedShow Answer

The first section of the statement of cash flows derives cash flow from _____ activities.The _____ method reports the amounts of cash received from customers less cash disbursed to suppliers, employees, lenders, and taxing authorities.

Correct AnswerverifiedShow Answer

Many analysts focus attention on cash flow from operations, thinking it as important as, or more important than, net income.A common misconception is that the management has little opportunity to manipulate transactions affecting the statement of cash flows.The manipulation possibilities arise from

Correct AnswerverifiedShow Answer

Cash equivalents represent long-term, highly liquid investments in which a firm has temporarily placed excess cash.

Correct AnswerverifiedShow Answer

U.S.GAAP requires the disclosure of the acquisition of a building by assuming a mortgage obligation

Correct AnswerverifiedShow Answer

U.S.GAAP classifies all of the following as operating activitieson the statement of cash flows except

Correct AnswerverifiedShow Answer

Financing activities on the cash flow statement do not include

Correct AnswerverifiedShow Answer

The _____ displays (lists) cash receipts and disbursements from operating activities.

Correct AnswerverifiedShow Answer

The method of reporting preferred by U.S.GAAP is/are

Correct AnswerverifiedShow Answer

Correct Answer
verified

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest expense as a(n) _ activity and classifies cash expenditures to redeem debt as a(n) _ activity.

Correct Answer
verified

Correct Answer
verified

Under U.S.GAAP, the statement of cash flows classifies changes in accounts payable as a(n) _ activity and classifies changes in short-term bank borrowing as a(n) _ activity.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Ambiguities in Classifying Cash Flows
Ca...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The first section of the statement of cash flows derives cash flow from _ activities.The _ method reports the amounts of cash received from customers less cash disbursed to suppliers, employees, lenders, and taxing authorities.

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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