Question 1

Net income must be adjusted for changes in current assets and liabilities, such as accounts receivable and accounts payable, when determining the net cash provided by---------- .

Accepted Answer

The answer of Net income must be adjusted for changes...

Question 2

Noncash investing and financing activities, such as the issuance of bonds to acquire business property, do not require disclosure as the cash account is not affected.

Accepted Answer

While noncash investing and financing activities do not affect the cash account directly, they still need to be disclosed in the financial statements as they can have significant impacts on the company's operations and financial position.

Question 3

The purpose of the--------- is to report the cash balance at the beginning and end of the fiscal period and to show the sources and uses of cash during the period.

Accepted Answer

The answer of The purpose of the--------- is to report...

Question 4

A gain on the sale of equipment is reported in the -------------section of the statement of cash flows.

Accepted Answer

The answer of A gain on the sale of equipment...

Question 5

On the statement of cash flows, cash and----------consist of currency, bank accounts, and short-term, highly liquid investments.

Accepted Answer

The answer of On the statement of cash flows, cash...

Question 6

The FASB requires companies to report the Statement of Cash Flows using the direct method.

Accepted Answer

The FASB allows companies to report the Statement of Cash Flows using either the direct method or the indirect method. However, using the direct method requires more detailed information about cash inflows and outflows, which can be difficult and time-consuming for companies to gather. As a result, most companies choose to use the indirect method.

Question 7

The statement of cash flows assumes that the----------- basis of accounting is used when recording transactions and preparing the balance sheet and income statement.

Accepted Answer

The answer of The statement of cash flows assumes that...

Question 8

On the statement of cash flows, the------------ is reconciled with the net cash provided by operating activities.

Accepted Answer

The answer of On the statement of cash flows, the------------...

Question 9

Cash flows from---------- activities are the result of routine business transactions such as buying and selling merchandise.

Accepted Answer

The answer of Cash flows from---------- activities are the result...

Question 10

When using the Direct Method of preparing the Statement of Cash Flows, interest expense is treated as an outflow of cash in the----------section.

Accepted Answer

The answer of When using the Direct Method of preparing...

Question 11

The cash flows from investing activities and cash flows from financing activities are the same in both the direct and indirect methods.

Accepted Answer

The direct and indirect methods of cash flow statement preparation differ only in the presentation of cash flows from operating activities; cash flows from investing and financing activities are presented in the same way in both methods.

Question 12

The payment of bonds at maturity would be treated as a cash--------- in the----------- section of the statement of cash flows.

Accepted Answer

The answer of The payment of bonds at maturity would...

Question 13

The schedule of----------- supplements the income statement, showing selling and administrative expenses in greater detail.

Accepted Answer

The answer of The schedule of----------- supplements the income statement,...

Question 14

The purchase of treasury stock is treated as a cash outflow in the------------ section of the statement of cash flows.

Accepted Answer

The answer of The purchase of treasury stock is treated...

Question 15

A complete set of published financial statements for a corporation must include a statement of cash flows.

Accepted Answer

According to generally accepted accounting principles (GAAP), a complete set of published financial statements for a corporation must include a statement of cash flows. The other required financial statements are the balance sheet, income statement, and statement of retained earnings.

Question 16

Issuing stock for cash and paying dividends in cash would be classified as------------ on the statement of cash flows.

Accepted Answer

The answer of Issuing stock for cash and paying dividends...

Question 17

If the indirect method of preparing the statement of cash flows is used, a note disclosing the amount of interest and income taxes paid during the period must accompany the statement.

Accepted Answer

The indirect method of preparing the statement of cash flows requires a note disclosing the amount of interest and income taxes paid during the period, in order to reconcile net income to net cash provided by operating activities.

Question 18

If a corporation issued stock for $85,000 in cash, received $35,000 in cash from the issuance of a long-term loan, and paid cash dividends totaling $24,000, the net cash provided by financing activities would be-------- .

Accepted Answer

The answer of If a corporation issued stock for $85,000...

Question 19

Purchases and sales of land, buildings, and equipment for cash are shown as------------- on the statement of cash flows.

Accepted Answer

The answer of Purchases and sales of land, buildings, and...

Question 20

When the----------- method of preparing the statement of cash flows is used, the interest and income taxes paid during the period are disclosed in notes accompanying the statement.

Accepted Answer

The answer of When the----------- method of preparing the statement...

Quiz 24: The Statement of Cash Flows