Question 1

Which of the following includes cash flows that relate to the production and delivery of goods and services?
A)financing activities section
B)operating activities section
C)funding activities section
D)investing activities section

Accepted Answer

The answer of Which of the following includes cash flows...

Question 2

A decrease in a liability,all other things being equal,serves to increase cash flows.

Accepted Answer

When a liability decreases, it means that less money needs to be paid out in the future, which increases cash flows in the present.

Question 3

An increase in a accounts receivable,all other things being equal,serves to increase cash flows.

Accepted Answer

An increase in accounts receivable represents money that is owed to a company but has not yet been collected. Therefore, it ties up cash and decreases cash flows in the short term. It only improves cash flows in the long term when the money is eventually collected.

Question 4

Which of the following equations represent the relationship between the change in cash and cash equivalents (Cash)and the changes in other current assets (OCA),current liabilities (CL),Noncurrent Assets (NCA),noncurrent liabilities (NCL),capital stock (CS)and retained earnings (RE)?
A)ΔCash = ΔCL + ΔNCL − .ΔOCA −.ΔNCA + ΔCS + ΔRE
B)ΔCash = ΔOCA + ΔNCA −.ΔCL −.ΔNCL + ΔCS + ΔRE
C)ΔCash = ΔCL + ΔNCL − .ΔOCA −.ΔNCA - ΔCS - ΔRE
D)ΔCash = ΔOCA + ΔNCA −.ΔCL −.ΔNCL - ΔCS - ΔRE

Accepted Answer

The correct equation is A) ΔCash = ΔCL + ΔNCL − .ΔOCA −.ΔNCA + ΔCS + ΔRE. This equation represents the relationship between the change in cash and cash equivalents (Cash) and the changes in other current assets (OCA), current liabilities (CL), noncurrent assets (NCA), noncurrent liabilities (NCL), capital stock (CS), and retained earnings (RE).

Question 5

Changes in current assets relate to operating activities.

Accepted Answer

Changes in current assets, such as accounts receivable or inventory, are typically related to the day-to-day operations of a business and therefore considered operating activities.

Question 6

Changes in which of the following are included in financing activities?
A)accounts payable
B)bonds payable
C)accounts receivable
D)property,plant,and equipment

Accepted Answer

Changes in bonds payable are included in financing activities, whereas changes in accounts payable, accounts receivable, and property, plant, and equipment are included in operating or investing activities.

Question 7

Which of the following is not included in the operating activities section of the cash flow statement?
A)payments of income taxes
B)payments of dividends
C)payments of interest
D)payments of executive salaries

Accepted Answer

The answer of Which of the following is not included...

Question 8

Changes in which of the following are included in operating activities?
A)accounts payable
B)bonds payable
C)treasury stock
D)property,plant,and equipment

Accepted Answer

The answer of Changes in which of the following are...

Question 9

List and briefly describe the various sections of the statement of cash flows.

Accepted Answer

The answer of List and briefly describe the various sections...

Question 10

The conceptual model for the statement of cash flows is based on the accounting income statement equation.

Accepted Answer

The statement of cash flows is based on the accounting equation, which states that assets = liabilities + equity. The statement of cash flows shows how changes in assets, liabilities, and equity affect the cash balance of a company.

Question 11

When preparing the operating activities section of the statement of cash flows,both FASB and IASB prefer the direct method over the indirect method.

Accepted Answer

Both FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) prefer the direct method over the indirect method for preparing the operating activities section of the statement of cash flows. The direct method presents actual cash inflows and outflows from operating activities, while the indirect method adjusts net income for non-cash items and changes in current assets and liabilities to arrive at cash flows from operating activities.

Question 12

The conceptual model for the statement of cash flows is based on the accounting equation.

Accepted Answer

The conceptual model for the statement of cash flows is based on the movement of cash and cash equivalents and not on the accounting equation. The accounting equation describes the relationship between assets, liabilities, and shareholders' equity.

Question 13

Changes in retained earnings always relate to operating activities.

Accepted Answer

Changes in retained earnings can result from multiple activities including operating, investing, and financing activities.

Question 14

Under U.S.GAAP,which of the following may be included in the financing activities section of the cash flow statement?
A)receipt of dividends
B)payment of dividends
C)receipt of interest
D)payment of interest

Accepted Answer

The answer of Under U.S.GAAP,which of the following may be...

Question 15

Cash flows from investing activities should include ________.
A)the factoring of accounts receivable
B)the receipt of stock dividends
C)the issuance of common stock in exchange for land
D)the major repair of a fixed asset

Accepted Answer

Cash flows from investing activities typically include transactions involving the purchase and sale of long-term assets and investments, not the factoring of accounts receivable, which is an operating activity.

Question 16

All of the following would appear as significant non-cash transactions in the notes to the financial statements except ________.
A)issuing preferred stock
B)converting bonds into capital stock
C)exchanging land for a building
D)signing a capital lease

Accepted Answer

The answer of All of the following would appear as...

Question 17

Changes in non-current liabilities relate to financing activities.

Accepted Answer

Non-current liabilities typically include long-term loans, bonds, and other financing arrangements. Therefore, changes in non-current liabilities generally reflect financing activities such as borrowing or issuing debt.

Question 18

Changes in current liabilities relate to financing activities.

Accepted Answer

Changes in current liabilities relate to operating activities, such as accounts payable, accrued expenses, and taxes owed. Financing activities typically involve changes in long-term liabilities or equity, such as issuing or repaying debt, issuing or buying back stock, and paying dividends.

Question 19

Explain the conceptual model for the statement of cash flows.

Accepted Answer

The answer of Explain the conceptual model for the statement...

Question 20

The conceptual model for the statement of cash flows is based on which of the following equations?
A)Total Cash Flows = Cash from Operating Activities + Cash from Financing Activities + Cash from Investing Activities
B)Net Income = Revenues - Expenses + Gains - Losses
C)Assets = Liabilities + Equity
D)Change in Retained Earnings = Net Income - Dividends

Accepted Answer

The answer of The conceptual model for the statement of...

Quiz 22: Accounting Corrections and Error Analysis

Which of the following includes cash flows that relate to the production and delivery of goods and services?

A decrease in a liability,all other things being equal,serves to increase cash flows.

An increase in a accounts receivable,all other things being equal,serves to increase cash flows.

Changes in current assets relate to operating activities.

Changes in which of the following are included in financing activities? A)accounts payable B)bonds payable C)accounts receivable D)property,plant,and equipment

Which of the following is not included in the operating activities section of the cash flow statement? A)payments of income taxes B)payments of dividends C)payments of interest D)payments of executive salaries

Changes in which of the following are included in operating activities? A)accounts payable B)bonds payable C)treasury stock D)property,plant,and equipment