Deck 16: The Cash Flow Statement

Question 1

Cash inflows and outflows from investing and financing activities should be reported separately on the cash flow statement.

Answer 1

True

Question 2

Information for the cash flow statement is taken from the adjusted trial balance.

Answer 2

False

Question 3

Purchases of non-current assets are considered cash outflows used by operating activities.

Answer 3

False

Question 4

An increase in dividends payable increases net cash provided by operating activities.

Question 5

When accounts receivable increases during the year, revenues on a cash basis are higher than revenues on an accrual basis.

Question 6

Cash outflows to purchase long-term investments would be reported in the investing section of the cash flow statement.

Question 7

A cash flow statement starts with profit and adds (or deducts) items on the income statement that did not affect cash to arrive at cash provided by operating activities if the indirect method is used.

Question 8

The issue of bonds to acquire land would be shown in the financing section.

Question 9

If equipment was sold for $15,000 and a loss of $10,000 was recognized, investing activities would show a cash inflow of $15,000.

Question 10

Net cash provided (used) by operating activities is determined by converting profit from an accrual basis to a cash basis.

Question 11

A company has credit sales of $150,000 and cash sales of $90,000 during the same year that the Accounts Receivable account decreased by $20,000. What was the total cash received from customers?

A) $220,000
B) $260,000
C) $170,000
D) $130,000

Question 12

Cash inflows from investing activities include:

A) sale of common shares.
B) purchase of equipment.
C) sale of land.
D) issue of long-term debt.

Question 13

Noncash investing and financing activities:

A) may represent significant investing and financing activities.
B) do not involve cash receipts or cash payments.
C) are disclosed in a separate note to the statements.
D) All of the above

Question 14

Assuming the indirect method is used for operating activities, complete the following table by indicating the section of the cash flow statement where each item would appear. Use I if the item would be an inflow and O if the item would be an outflow. If the item would not appear, place an X in the last column.

Question 15

Assuming the direct method is used for operating activities, complete the following table by indicating the section of the cash flow statement where each item would appear. Use I if the item would be an inflow and O if the item would be an outflow. If the item would not appear, place an X in the last column.

Question 16

Given the following information, calculate the cash provided (used) by operating activities. You may use either the direct or the indirect method.

Question 17

What are the three sections on a cash flow statement?

Question 18

Cash paid to purchase equipment would be classified in what section of the cash flow statement?