Deck 3: Statement of Cash Flows

Question 1

Which heading on the statement of cash flows shows the purchase of non-current assets?

A) operating activities
B) financing activities
C) investing activities
D) cash activities

Answer 1

investing activities

Question 2

How does the statement of cash flows show the cash flow from working capital accounts?

A) as investing activities
B) as cash activities
C) as adjustments in non-cash working capital accounts
D) as financing activities

Answer 2

as adjustments in non-cash working capital accounts

Question 3

Which heading on the statement of cash flows shows the payment of dividends?

A) operating activities
B) cash activities
C) investing activities
D) financing activities

Answer 3

financing activities

Question 4

The statement of cash flows shows the following information. What is the year-end cash balance?
Increase in cash $ 5,000
Cash, beginning of year 18,000

A) $4,000
B) $14,000
C) $18,000
D) $23,000

Question 5

The statement of cash flows shows the following information. What is the cash provided by financing activities?
Payment of dividends $ 47,500
Proceeds from issue of long-term debt 200,000
Proceeds from issue of share capital 15,000

A) $167,500
B) $215,000
C) $247,500
D) $262,500

Question 6

The statement of cash flows shows the following information. What is the cash from operating activities?
Profit for the year $ 97,500
Depreciation 40,000
Adjustments in non-cash working capital accounts (11,000)

A) $46,500
B) $97,500
C) $126,500
D) $148,500

Question 7

What is the source of the cash balance at the beginning and end of the year, as shown on the statement of cash flows?

A) the statement of income
B) the statement of financial position
C) the statement of changes in equity
D) the cash budget

Question 8

What heading on the statement of cash flows shows the profit for the year as a cash inflow?

A) cash activities
B) investing activities
C) operating activities
D) financing activities

Question 9

How does the purchase of non-current assets appear on the statement of cash flows?

A) as an outflow of cash under operating activities
B) as an inflow of cash under operating activities
C) as an inflow of cash under investing activities
D) as an outflow of cash under investing activities

Question 10

Which of the following is shown on the statement of cash flows?

A) retained earnings
B) cost of goods sold
C) goodwill
D) operating activities

Question 11

The statement of cash flows shows the following information. What is the impact on cash?
Cash inflow from operating activities $ 126,500
Cash inflow from financing activities 167,500
Cash outflow for investing activities 290,000

A) It decreases by $ 4,000.
B) It decreases by $ 294,000.
C) It increases by $ 4,000.
D) It increases by $ 294,000.

Question 12

What adjustments are made to calculate cash flow from operating activities?

A) Depreciation is deducted from net profit for the year.
B) Income tax expense is added back to net profit for the year.
C) Depreciation is added back to net profit for the year.
D) Dividends are deducted from retained earnings.

Question 13

What is the source of the cash at the beginning of the year on the statement of cash flows?

A) the previous year's statement of financial position
B) the previous year's statement of changes in equity
C) the current year's statement of financial position
D) the current year's statement of changes in equity

Question 14

How is depreciation shown on the statement of cash flows?

A) as cash outflow under operating activities
B) as cash inflow under operating activities
C) as cash outflow under investing activities
D) as cash inflow under investing activities

Question 15

What source of financing is shown under financing activities?

A) obtaining a short-term bank loan to buy investment securities
B) using cash to buy a machine that will last for 10 years
C) issuing share capital to buy land
D) borrowing money on a short-term basis to finance trade receivables

Question 16

What is the source of the cash at the end of the year on the statement of cash flows?

A) the previous year's statement of financial position
B) the current year's statement of changes in equity
C) the current year's statement of financial position
D) the previous year's statement of changes in equity

Question 17

Which of the following is included in the "adjustments in non-cash working capital accounts"?

A) an increase in share capital
B) an increase in long-term debt
C) a decrease in long-term debt
D) a decrease in trade and other payables

Question 18

Which of the following results in a cash inflow?

Question 19

Which of the following is a cash outflow?

Question 20

What is the source of the profit for the year?

A) the statement of cash flows
B) the statement of income
C) the statement of changes in equity
D) the statement of financial position

Question 21

Which of the following is shown in the "adjustments in non-cash working capital accounts"?

A) depreciation
B) trade and other payables
C) long-term debt
D) retained earnings

Question 22

Which accounts show the cash flow changes in the "adjustments in non-cash working capital accounts"?

A) working capital accounts other than cash
B) capital asset accounts
C) long-term debt accounts
D) share capital accounts

Question 23

What does cash from investing activities include?

A) Cash from/to all short-term debt items.
B) Cash from/to all items from the statement of changes in equity.
C) Cash from/to all non-cash working capital items.
D) Cash from/to all capital assets items.

Question 24

Which of the following is shown as a financing activity in the statement of cash flows?

A) long-term borrowings
B) trade receivables
C) term deposits
D) short-term borrowings

Question 25

Profit before taxes $46,000
Net profit for the year 34,000
Depreciation 40,000
Adjustments in non-cash working capital 17,000 outflow
Accounts
Using the information above, what was the change in cash flow under operating activities?

A) a decrease of $ 24,000
B) an increase of $ 17,000
C) an increase of $ 57,000
D) an increase of $ 90,000

Question 26

Which of the following is shown as an investing activity in the statement of cash flows?

A) the purchase of marketable securities
B) the purchase of raw material inventory
C) the purchase of equipment
D) the sale of common shares

Question 27

Which of the following is shown in the statement of cash flows?

A) Dividends paid are part of the operating activities in the statement of cash flows.
B) Prepaid expenses are part of the financing activities in the statement of cash flows.
C) The purchase of non-current assets is part of the operating activities in the statements of cash flows.
D) Share capital transactions are part of the financing activities in the statement of cash flows.

Question 28

Which of the following is shown as an operating activity in the statement of cash flows?

A) long-term borrowings
B) share capital
C) patents
D) depreciation

Question 29

Which of the following situations affects the statement of cash flows?

A) decreases in long-term borrowings are an outflow of cash
B) decreases in long-term borrowings increase cash
C) increases in long-term borrowings are an investing activity
D) changes in long-term borrowings are an operating activity

Question 30

Which of the following is a non-cash working capital account?

A) fixed assets
B) long-term borrowings
C) trade and other payables
D) retained earnings

Question 31

Which of the following is an operating activity?

A) net profit for the year
B) a computer purchase
C) long-term borrowings
D) short-term borrowings

Question 32

Which of the following scenarios represents a cash inflow?

A) Short-term deposits remain unchanged during the year.
B) An RRSP account increases during the year.
C) The furniture account increases during the year.
D) The savings bonds account increases during the year.

Question 33

Which of the following is a cash inflow?

A) a decrease in a liability account
B) a decrease in a non-cash asset account
C) an increase in an expense account
D) an increase in the dividends paid account

Question 34

Which of the following scenarios represents a cash outflow?

A) The bank loan account increases by $ 10,000.
B) The mortgage payable account decreases by $ 30,000.
C) The house account decreases by $ 15,000.
D) The furniture account decreases by $4,000.

Question 35

How is the purchase of a new machine treated?

A) as an investing activity
B) as an adjustment in non-cash working capital accounts
C) as an operating activity
D) as a financing activity

Question 36

Which of the following is one step in calculating cash provided from operations?

A) adding dividends to share capital
B) adding depreciation to net profit for the year
C) adding operating income to cash
D) adding dividends to profit before taxes

Question 37

If depreciation expense is $38,000, how will it be shown on the statement of cash flows?

A) Depreciation will not be shown in the statement of cash flows
B) Depreciation will be shown in investing activities as an increase in cash of $ 38,000.
C) Depreciation will be shown in financing activities as a decrease in cash of $ 38,000.
D) Depreciation will be shown in operating activities as an increase in cash of $ 38,000.

Question 38

Which of the following is considered a cash outflow?

A) a decrease in prepaid expenses
B) an increase in long-term debt
C) an increase in accounts payable
D) an increase in inventory

Question 39

Which of the following is shown on the statement of cash flows?

A) total assets
B) earnings per share
C) investing activities
D) common shares outstanding

Question 40

Which of the following is included in non-cash working capital accounts?

A) retained earnings
B) non-current assets
C) inventories
D) non-current liabilities

Question 41

Which of the following is included in the adjustments in non-cash working capital accounts?

A) cash
B) trade receivables
C) revenue
D) long-term borrowings

Question 42

A company has the following information. What is the impact on cash as shown in the statement of cash flows?
Cash at beginning of year $10,000
Cash at end of year $50,000
Operating activities increased cash by $56,000
Financing activities decreased cash by $10,000

A) Cash decreased by $40,000
B) Cash increased by $10,000.
C) Cash increased by $40,000.
D) Cash increased by $46,000.

Question 43

Which of the following is considered a cash outflow?

A) an increase in prepaid expenses between two consecutive accounting periods
B) an increase in an equity account between two consecutive accounting periods
C) an increase in a liability account between two consecutive accounting periods
D) an increase in trade and other payables between two consecutive accounting periods

Question 44

Which of the following is considered a cash inflow?

A) the sale of inventory
B) an increase in trade receivables
C) the purchase of investment securities
D) a decrease in long-term debt

Question 45

Which of the following is considered a cash inflow?

A) a decrease in an asset account between two consecutive periods
B) the sale of investment securities
C) the purchase of non-current assets
D) an increase in net working capital accounts

Question 46

One business has purchased another business. What type of activity has occurred?

A) an operating activity
B) a financing activity
C) a cash inflow activity
D) an investing activity

Question 47

- According to the above information, which of the following is a cash inflow?

A) long-term debt
B) trade receivables
C) prepaid expenses
D) short-term loan

Question 48

-According to the above information, which of the following is a cash outflow?

A) trade receivables
B) long-term debt
C) prepaid expenses
D) short-term loan

Question 49

Which of the following headings do not-for-profit organizations' statements of cash flows sometimes contain?

A) operating and financing activities
B) operating and investment activities
C) cash inflow and cash outflow activities
D) operating and financing and investment activities

Question 50

What is the objective of financial management?

A) deciding the overall financial strategy of the corporation
B) making sure that the corporation has sufficient cash resources available
C) reviewing cash inflow and cash outflow activities
D) obtaining and allocating cash

Question 51

Why is managing cash flow important?

A) It affects the profitability of the entity.
B) It allows us to plan for the future.
C) Cash inflows and cash outflows must be equal.
D) Financial analysts, lenders, investors and managers are all interested in the flow of cash.

Question 52

The statement of cash flows is also called the statement of changes in financial position.

Question 53

The only financial statement that is required to do the statement of cash flows is the statement of financial position.

Question 54

Based on the statement of cash flows format, paying salaries is considered a cash outflow.

Question 55

Reducing a mortgage account from one period to the next is considered a cash outflow.

Question 56

A reduction in an asset account from one period to the next is considered a cash inflow.

Question 57

Cash flow has to do with the determining whether a business is efficient.

Question 58

A reduction in a term deposit from one period to the next is considered a cash outflow.

Question 59

An increase in a credit card account from one period to the next is considered a cash inflow.

Question 60

If a house account goes from $200,000 to $230,000, it is considered a cash outflow.

Question 61

Both profit for the year and the sale of investment securities are considered a cash inflow.

Question 62

A decrease in share capital and long-term borrowing accounts are considered cash inflows.

Question 63

The cash budget is a treasury function that shows the cash flow position of a business at the micro level and determines the level is liquidity.

Question 64

In order to produce the statement of cash flows, you need two consecutive statements of income.

Question 65

A cash inflow takes place when there is a decrease in an asset account or an increase in an equity account.

Question 66

A cash outflow takes place when there is an increase in an asset account or a decrease in an equity account.

Question 67

The statement of cash flows is the financial statement that can reveal the level of solvency of a business.

Question 68

The portion of the statement of cash flows that shows the cash outflow from internal sources is referred to as financing activities.

Question 69

The adjustments in non-cash working capital accounts show the cash outflow or inflow for accounts such as trade receivables and inventories.

Question 70

Profit for the year is presented in the statement of cash flows as an "operating activity".

Question 71

Both depreciation and adjustments in non-cash working capital accounts are presented in the statement of cash flows under the section "operating activities".

Question 72

Payment of dividends is presented in the statement of cash flows under the section "financing activities".

Question 73

The section called "operating activities" in the statement of cash flows normally shows a cash outflow.

Question 74

Cash flows from external activities are presented in the statement of cash flows under the heading "financing activities".

Question 75

The statement of cash flows presents three key sections: "operating activities", "financing activities" and "adjustments in working capital accounts activities".

Question 76

The cash balance account is presented on the statement of cash flows under the heading "operating activities".

Question 77

An increase in a company's trade and other payables is considered a cash outflow and presented in the statement of cash flows under the heading "financing activities".

Question 78

Both, the purchase of buildings and equipment are presented in the statement of cash flows under the heading "investing activities".

Question 79

When shareholders invest money in a business, it is presented in the statement of cash flows under the heading "investing activities".

Question 80

The section dealing with investing activities in the statement of cash flows usually shows a cash outflow.