Question 1

A cash equivalent must be readily convertible to a known amount of cash,and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

Accepted Answer

A) True 
 B)False

Question 2

The direct method for the preparation of the operating activities section of the statement of cash flows:

Accepted Answer

A)  Separately lists each major item of operating cash receipts and cash payments.
B)  Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement.
C)  Reports a different amount of cash flows from operations than if the indirect method is used.
D)  Is required if the company is a merchandiser.
E)  Is required by the FASB.F) A) and D)
G) A) and C)

Question 3

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following items is reported on the statement of cash flows under financing activities?

Accepted Answer

A)  Declaration of a cash dividend.
B)  Payment of a cash dividend.
C)  Declaration of a stock dividend.
D)  Payment of a stock dividend.
E)  Stock split.F) C) and E)
G) B) and C)

Question 5

Financing activities include receiving cash dividends from investments in other companies' stocks.

Accepted Answer

A) True 
 B)False

Question 6

All of the following statements related to preparation of the statement of cash flows under U.S.GAAP and IFRS are true except:

Accepted Answer

A)  Both U.S.GAAP and IFRS permit the reporting of cash flows from operating activities using either the direct or indirect method.
B)  IFRS permits classification of cash outflows for interest expense under operating or financing based on which one results in better cash flows from operating activities.
C)  U.S.GAAP requires cash outflows for income tax be classified as operating activities.
D)  IFRS permits the splitting of income tax cash flows among operating,investing,and financing depending on the sources of that tax.
E)  IFRS permits classification of interest expense under operating or financing activities provided it is consistently applied across periods.F) A) and B)
G) D) and E)

Question 7

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n) :

Accepted Answer

A)  Short-term marketable equity security.
B)  Operating activity.
C)  Common stock.
D)  Cash equivalent.
E)  Financing activity.F) A) and B)
G) A) and C)

Question 8

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.

Accepted Answer

The answer of Use the following calendar-year information to prepare...

Question 9

Use the following information to calculate cash received from dividends:

Accepted Answer

A)  $26,400.
B)  $29,000.
C)  $29,800.
D)  $30,600.
E)  $32,400.F) C) and D)
G) B) and D)

Question 10

The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements.

Accepted Answer

A) True 
 B)False

Question 11

The statement of cash flows reports all but which of the following?

Accepted Answer

A)  Cash flows from operating activities.
B)  Cash flows from financing activities.
C)  Cash flows from investing activities.
D)  Significant noncash financing and investing activities.
E)  The financial position of the company at the end of the accounting period.F) C) and D)
G) A) and C)

Question 12

The reporting of investing and financing activities is _________________ under the direct and indirect methods of preparing the statement of cash flows.

Accepted Answer

The answer of The reporting of investing and financing activities...

Question 13

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Accepted Answer

A)  Operating activities.
B)  Financing activities.
C)  Investing activities.
D)  Schedule of noncash investing or financing activity.
E)  This is not reported on the statement of cash flows.F) B) and E)
G) A) and B)

Question 14

Accounting standards:

Accepted Answer

A)  Allow companies to omit the statement of cash flows from a complete set of financial statements if cash is an insignificant asset.
B)  Require that companies omit the statement of cash flows from a complete set of financial statements if the company has no investing activities.
C)  Require that companies include a statement of cash flows in a complete set of financial statements.
D)  Allow companies to include the statement of cash flows in a complete set of financial statements if the cash balance makes up more than 50% of the current assets.
E)  Allow companies to omit the statement of cash flows from a complete set of financial statements if the company has no financing activities.F) D) and E)
G) A) and B)

Question 15

Scranton,Inc.reports net income of $230,000 for the year ended December 31.It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment.Its comparative balance sheet reveals a $35,500 decrease in accounts receivable,a $15,750 increase in accounts payable,and a $12,500 decrease in wages payable.Calculate the cash provided (used) in operating activities using the indirect method.

Accepted Answer

A)  $376,450.
B)  $351,450.
C)  $356,450.
D)  $319,950.
E)  $263,750.F) All of the above
G) B) and E)

Question 16

The purchase of stock in another company is classified as a financing activity.

Accepted Answer

A) True 
 B)False

Question 17

___________________ activities generally include those transactions and events that affect long-term assets.

Accepted Answer

The answer of ___________________ activities generally include those transactions and...

Question 18

In preparing a company's statement of cash flows for the most recent year,Ransom Corp.reported the following information:  Net cash flows from financing activities for the year were:

Accepted Answer

A)  $230,000 of net cash used.
B)  $230,000 of net cash provided.
C)  $108,000 of net cash used.
D)  $138,000 of net cash used.
E)  $138,000 of net cash provideD.F) D) and E)
G) C) and D)

Question 19

A machine 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 source of cash under cash flows from investing activities is:

Accepted Answer

A)  $50,000.
B)  $5,000.
C)  $45,000.
D)  Zero.This is an operating activity.
E)  Zero.This is a financing activity.F) A) and E)
G) A) and D)

Question 20

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from investing activities generally affect:

Accepted Answer

A)  Net income,current assets,and current liabilities.
B)  Noncurrent assets.
C)  Noncurrent liability and equity accounts.
D)  Both noncurrent assets and noncurrent liabilities.
E)  Equity accounts only.F) C) and D)
G) B) and D)

Exam 16: Reporting the Statement of Cash Flows

Which of the following items is reported on the statement of cash flows under financing activities?

Correct Answer
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Correct Answer
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A machine 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 source of cash under cash flows from investing activities is:

Correct Answer
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The reporting of investing and financing activities is _________________ under the direct and indirect methods of preparing the statement of cash flows.

Correct Answer
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Accounting standards:

Correct Answer
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Financing activities include receiving cash dividends from investments in other companies' stocks.

Correct Answer
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Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.

Correct Answer
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In preparing a company's statement of cash flows for the most recent year,Ransom Corp.reported the following information: Net cash flows from financing activities for the year were:

Correct Answer
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The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements.

Correct Answer
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Use the following information to calculate cash received from dividends:

Correct Answer
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When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from investing activities generally affect:

Correct Answer
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A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Correct Answer
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The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Correct Answer
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The direct method for the preparation of the operating activities section of the statement of cash flows:

Correct Answer
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The statement of cash flows reports all but which of the following?

Correct Answer
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An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n) :

Correct Answer
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All of the following statements related to preparation of the statement of cash flows under U.S.GAAP and IFRS are true except:

Correct Answer
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A cash equivalent must be readily convertible to a known amount of cash,and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

Correct Answer
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The purchase of stock in another company is classified as a financing activity.

Correct Answer
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___________________ activities generally include those transactions and events that affect long-term assets.

Correct Answer
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Exam 16: Reporting the Statement of Cash Flows

Which of the following items is reported on the statement of cash flows under financing activities?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A machine 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 source of cash under cash flows from investing activities is:

Correct AnswerverifiedShow Answer

The reporting of investing and financing activities is _________________ under the direct and indirect methods of preparing the statement of cash flows.

Correct AnswerverifiedShow Answer

Accounting standards:

Correct AnswerverifiedShow Answer

Financing activities include receiving cash dividends from investments in other companies' stocks.

Correct AnswerverifiedShow Answer

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.

Correct AnswerverifiedShow Answer

In preparing a company's statement of cash flows for the most recent year,Ransom Corp.reported the following information: Net cash flows from financing activities for the year were:

Correct AnswerverifiedShow Answer

The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements.

Correct AnswerverifiedShow Answer

Use the following information to calculate cash received from dividends:

Correct AnswerverifiedShow Answer

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from investing activities generally affect:

Correct AnswerverifiedShow Answer

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Correct AnswerverifiedShow Answer

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Correct AnswerverifiedShow Answer

The direct method for the preparation of the operating activities section of the statement of cash flows:

Correct AnswerverifiedShow Answer

The statement of cash flows reports all but which of the following?

Correct AnswerverifiedShow Answer

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n) :

Correct AnswerverifiedShow Answer

All of the following statements related to preparation of the statement of cash flows under U.S.GAAP and IFRS are true except:

Correct AnswerverifiedShow Answer

A cash equivalent must be readily convertible to a known amount of cash,and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

Correct AnswerverifiedShow Answer

The purchase of stock in another company is classified as a financing activity.

Correct AnswerverifiedShow Answer

___________________ activities generally include those transactions and events that affect long-term assets.

Correct AnswerverifiedShow Answer

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