Filters
Question type
Study Flashcards

Which of the following journal entries would change the Net Cash Flows from Operating Activities line of the statement of cash flows?


A) Recording bad debts.
B) Recording depreciation.
C) Recording loss on sale of investment.
D) Recording cash paid for interest on long-term note payable.

E) None of the above
F) C) and D)

Correct Answer

verifed

verified

Free cash flow is a positive cash flow:


A) beyond what is needed to replace current property, plant, and equipment and pay dividends.
B) across all three activity components of the statement of cash flows.
C) beyond what has been allotted for future property, plant, and equipment replacement and expansion.
D) across both financing and investing activities.

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is:


A) $50,000.
B) $5,000.
C) $45,000
D) $0. This is a financing activity.

E) All of the above
F) A) and B)

Correct Answer

verifed

verified

Which of the following would be classified as an investing activity on the statement of cash flows?


A) Cash received from sale of land.
B) Cash paid for interest.
C) Cash received from stock issuance.
D) Dividends paid.

E) None of the above
F) All of the above

Correct Answer

verifed

verified

Which of the following represent cash inflows from financing activities?


A) Issuing stock in exchange for another company's stock.
B) Paying a bond's face value at maturity.
C) Issuing long-term bonds at a discount.
D) Receiving interest on promissory notes.

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

Correct Answer

verifed

verified

If Insurance Expense is $7,000 and the beginning and ending balances of Prepaid Insurance are $1,500 and $2,000, respectively, the cash paid for insurance


A) $7,000
B) $6,500
C) $5,000
D) $7,500

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

The following information is taken from the 2011 income statement of Muir Company: The following information is taken from the 2011 income statement of Muir Company: Based on this information, what is the net cash flows from operating activities? A) $149,000 B) $140,000 C) $99,000 D) $134,000 Based on this information, what is the net cash flows from operating activities?


A) $149,000
B) $140,000
C) $99,000
D) $134,000

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Corporation X has no short-term investments, carries only a minimal amount of cash, and has a capital acquisitions ratio of 0.7. Which of the following is suggested by these facts?


A) The corporation probably needed external financing to fund property, plant, and equipment replacement this period.
B) The corporation is efficient at managing debt; each $.70 of debt generates $1 of asset value.
C) The corporation is efficient at generating cash; each $1 of assets acquired generates $.70 of cash.
D) The corporation is likely to need to replace equipment at a rate of 70% of its net income.

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

Cash and cash equivalents include:


A) assets that have stable long-term value.
B) assets that are short-term, highly liquid, and are purchased within three months of maturity.
C) assets that consistently grow in value over the long run.
D) assets that are expected to be used up within a year.

E) C) and D)
F) All of the above

Correct Answer

verifed

verified

Suppose a company generally records revenues and expenses before receiving or making cash payments. Which of the following statements is NOT true?


A) If sales are falling, net losses could occur even though the company reports net cash inflows from operating activities.
B) If sales are rising, net profits could occur even though the company reports net cash outflows from operating activities.
C) Net income and cash flows will always agree because even though revenues and expenses can be recorded in different time periods than their related cash flows the differences will cancel out and the results will be the same.
D) When the indirect method is used, net cash flows from operating activities includes adjustments for non-cash expenses such as depreciation which would cause net cash from operating activities to be different from net

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

When the indirect method is used, if prepaid expenses decrease during the accounting period, the change in prepaid expenses is:


A) added to the change in the cash account.
B) subtracted from net income.
C) added to net income.
D) subtracted from the change in the cash account.

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

The starting and ending balances for relevant asset and liability accounts that changed during the year are presented below. Net income was $650,000 for the year and dividends paid were $150,000. Depreciation expense for 2011 was $7,000, and all other changes in accumulated depreciation and property, plant, and equipment related to the sale of property at book value. No other non-cash transactions occurred. Use this information to calculate the net cash inflows (outflows) from investing and financing activities in 2011.

Correct Answer

verifed

verified

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in stock of other companies.

A) True
B) False

Correct Answer

verifed

verified

A growing, start-up company may have a cash flow pattern of borrowing cash to offset a cash shortage from the cash flows from operating activities and to purchase additional productive assets.

A) True
B) False

Correct Answer

verifed

verified

A company's income statement for the year shows a net loss of $90,000. Additional information for the year follows: A company's income statement for the year shows a net loss of $90,000. Additional information for the year follows: What is the net cash flows from operating activities? A) ($99,000) B) $27,000 C) $13,000 D) ($45,000) What is the net cash flows from operating activities?


A) ($99,000)
B) $27,000
C) $13,000
D) ($45,000)

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

Correct Answer

verifed

verified

At certain times of the year, many retail companies experience a rapid increase in inventory as they prepare for a period of high sales. All other things equal, this would cause:


A) both the quality of income ratio and the capital acquisitions ratio to fall.
B) the quality of income ratio to fall while the capital acquisitions ratio would remain the same.
C) the quality of income ratio to rise while the capital acquisitions ratio would remain the same.
D) both the quality of income ratio and the capital acquisitions ratio to rise.

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Assume a company uses the direct method to prepare its statement of cash flows. If the company's accounts receivable increase during the accounting period, the change in accounts receivable Is:


A) added to the change in the cash account to calculate cash collected from customers.
B) subtracted from sales revenue to calculate the cash collected from customers.
C) added to sales revenue to calculate the cash collected from customers.
D) subtracted from the change in the cash account to calculate cash collected from customers.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Which of the following statements regarding the reporting of operating cash flows using the direct method is true?


A) The Financial Accounting Standards Board (FASB) prefers the direct method of accounting for cash flows from operating activities.
B) The FASB prefers the indirect method of calculating cash flows fro m operations because it gives a more accurate calculation of cash provided by operating activities.
C) The direct method results in a larger amount of cash flow from operating activities than does the indirect method.
D) The direct and indirect methods use different presentations for cash flows from investing and financing activities.

E) All of the above
F) A) and C)

Correct Answer

verifed

verified

If a company uses the direct method of calculating net cash flows from operating activities, it must adjust net income for gains or losses when selling property, plant, and equipment.

A) True
B) False

Correct Answer

verifed

verified

A company has net income of $43,560 with a net cash flow from operating activities of $91,476 and a net increase in cash of $84,942. The company paid $33,524 for income taxes and $25,000 for interest during the year. The company's quality of income ratio is:


A) 2.1.
B) 1.1.
C) 1.95.
D) 0.48.

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

Correct Answer

verifed

verified

Showing 81 - 100 of 143

Related Exams

Exam 1

Business Decisions and Financial Accounting

135 Questions

Exam 2

Reporting Investing and Financing Results on the Balance Sheet

126 Questions

Exam 3

Reporting Operating Results on the Income Statement

137 Questions

Exam 4

Adjustments, Financial Statements, and Financial Results

138 Questions

Exam 5

Financial Reporting and Analysis

140 Questions

Exam 6

Internal Control and Financial Reporting for Cash and Merchandise Sales

131 Questions

Exam 7

Reporting and Interpreting Inventories and Cost of Goods Sold

138 Questions

Exam 8

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

140 Questions

Exam 9

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

141 Questions

Exam 10

Reporting and Interpreting Liabilities

133 Questions

Exam 11

Reporting and Interpreting Stockholders Equity

142 Questions

Exam 13

Measuring and Evaluating Financial Performance

143 Questions

Show Answer