Question 1

Under the direct method,gains and losses on the sale of a fixed asset are reported in the investing section of the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 2

Aspen Corp.sold an asset with a book value of $56,000 for $35,000 cash.Which of the following is a TRUE statement?

Accepted Answer

A)  Loss on sale equals $35,000 and Cash inflow equals $35,000.
B)  Loss on sale equals $56,000 and Cash inflow equals $56,000.
C)  Loss on sale equals $21,000 and Cash inflow equals $35,000.
D)  Loss on sale equals $35,000 and Cash inflow equals $21,000.E) None of the above
F) B) and D)

Question 3

On its Statement of Cash Flows,Mike's Motors reported cash flow from operating activities of $107,000,cash flow from investing activities of $88,000,and cash flow from financing activities of ($62,000) .Mike's Motors invested $54,000 cash in long-term assets.Mike's Motors' free cash flow is:

Accepted Answer

A)  $34,000.
B)  $8,000.
C)  $53,000.
D)  $79,000.E) C) and D)
F) None of the above

Question 4

Which of the following is NOT a part of investing activities?

Accepted Answer

A)  Buying a building
B)  Collecting on a loan receivable
C)  Borrowing money
D)  Selling off equipmentE) A) and B)
F) All of the above

Question 5

Business transactions that do NOT involve the payment or receipt of cash are considered to be non-cash transactions.

Accepted Answer

A) True 
 B)False

Question 6

The Balance Sheet reports the ending cash,but does not include cash equivalents.

Accepted Answer

A) True 
 B)False

Question 7

The records of Eclectic Lighting showed a net loss of $30,000;depreciation expense of $25,000;and an increase in supplies on hand of $5,000.The amount of net cash flow from operating activities using the indirect method is:

Accepted Answer

A)  ($15,000) .
B)  ($10,000) .
C)  $15,000.
D)  $20,000.E) A) and D)
F) A) and B)

Question 8

Which of the following activities is computed differently using the two methods of formatting a Statement of Cash Flows?

Accepted Answer

A)  Operating activities
B)  Financing activities
C)  Investing activities
D)  Both operating activities and investing activitiesE) None of the above
F) C) and D)

Question 9

Gains and losses on the sale of plant,property and equipment are ignored in the direct method of preparing a Statement of Cash Flows.

Accepted Answer

A) True 
 B)False

Question 10

Cash receipts from the sale of long-term assets,such as equipment and vehicles,are:

Accepted Answer

A)  added to operating activities.
B)  subtracted from operating activities.
C)  added to investing activities.
D)  subtracted from investing activities.E) A) and D)
F) All of the above

Question 11

The FASB recommends use of the direct method,rather than the indirect method,of preparing a cash flow statement.

Accepted Answer

A) True 
 B)False

Question 12

Depreciation of factory equipment under the direct method would be reported as a(n) :

Accepted Answer

A)  investing activity.
B)  operating activity.
C)  financing activity.
D)  It is not reported.E) B) and D)
F) A) and D)

Question 13

The three types of business activities on a Statement of Cash Flows are operating,investing,and management activities.

Accepted Answer

A) True 
 B)False

Question 14

Changes in long-term liabilities belong in the financing section of a cash flow statement using the indirect method.

Accepted Answer

A) True 
 B)False

Question 15

Which would NOT be subtracted from net income in the operating section of an indirect cash flow statement?

Accepted Answer

A)  An increase in prepaid expenses
B)  An increase in Accounts Payable
C)  A decrease in Accounts Payable
D)  An increase in notes receivableE) A) and B)
F) A) and C)

Question 16

A Statement of Cash Flows would NOT disclose:

Accepted Answer

A)  stock dividends declared.
B)  bonds payable issued.
C)  purchase of treasury stock.
D)  capital stock issued.E) A) and C)
F) A) and B) A

Question 17

Operating expenses-other than depreciation-for the year were $280,000.Prepaid expenses increased by $16,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Accepted Answer

A)  $296,000.
B)  $16,000.
C)  $264,000.
D)  $280.000.E) All of the above
F) A) and B)

Question 18

Some investing and financing activities involve no Cash Flows,so they:

Accepted Answer

A)  represent no significant financial change.
B)  should be included in the three main sections of the Statement of Cash Flows.
C)  should be reported in a separate section of the cash flow statement.
D)  must be converted to cash at the end of the accounting period.E) All of the above
F) None of the above C

Question 19

A Statement of Cash Flows shows the company's sources of cash,but does not detail how the cash was used by the company.

Accepted Answer

A) True 
 B)False

Question 20

Days -sales-in-inventory is calculated by dividing cost of goods sold by 365.

Accepted Answer

A) True 
 B)False  False

Exam 11: The Statement of Cash Flows

Under the direct method,gains and losses on the sale of a fixed asset are reported in the investing section of the cash flow statement.

Correct AnswerverifiedShow Answer

Aspen Corp.sold an asset with a book value of $56,000 for $35,000 cash.Which of the following is a TRUE statement?

Correct AnswerverifiedShow Answer

On its Statement of Cash Flows,Mike's Motors reported cash flow from operating activities of $107,000,cash flow from investing activities of $88,000,and cash flow from financing activities of ($62,000) .Mike's Motors invested $54,000 cash in long-term assets.Mike's Motors' free cash flow is:

Correct AnswerverifiedShow Answer

Which of the following is NOT a part of investing activities?

Correct AnswerverifiedShow Answer

Business transactions that do NOT involve the payment or receipt of cash are considered to be non-cash transactions.

Correct AnswerverifiedShow Answer

The Balance Sheet reports the ending cash,but does not include cash equivalents.

Correct AnswerverifiedShow Answer

The records of Eclectic Lighting showed a net loss of $30,000;depreciation expense of $25,000;and an increase in supplies on hand of $5,000.The amount of net cash flow from operating activities using the indirect method is:

Correct AnswerverifiedShow Answer

Which of the following activities is computed differently using the two methods of formatting a Statement of Cash Flows?

Correct AnswerverifiedShow Answer

Gains and losses on the sale of plant,property and equipment are ignored in the direct method of preparing a Statement of Cash Flows.

Correct AnswerverifiedShow Answer

Cash receipts from the sale of long-term assets,such as equipment and vehicles,are:

Correct AnswerverifiedShow Answer

The FASB recommends use of the direct method,rather than the indirect method,of preparing a cash flow statement.

Correct AnswerverifiedShow Answer

Depreciation of factory equipment under the direct method would be reported as a(n) :

Correct AnswerverifiedShow Answer

The three types of business activities on a Statement of Cash Flows are operating,investing,and management activities.

Correct AnswerverifiedShow Answer

Changes in long-term liabilities belong in the financing section of a cash flow statement using the indirect method.

Correct AnswerverifiedShow Answer

Which would NOT be subtracted from net income in the operating section of an indirect cash flow statement?

Correct AnswerverifiedShow Answer

A Statement of Cash Flows would NOT disclose:

Correct AnswerverifiedA

Operating expenses-other than depreciation-for the year were $280,000.Prepaid expenses increased by $16,000.Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

Correct AnswerverifiedShow Answer

Some investing and financing activities involve no Cash Flows,so they:

Correct AnswerverifiedC

A Statement of Cash Flows shows the company's sources of cash,but does not detail how the cash was used by the company.

Correct AnswerverifiedShow Answer

Days -sales-in-inventory is calculated by dividing cost of goods sold by 365.

Correct AnswerverifiedFalse

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified
False