Question 1

Activities that involve obtaining resources as a borrower or issuer of securities and repaying creditors and owners are included in which section of the statement of cash flows?

Accepted Answer

Activities that involve obtaining resources as a borrower or issuer of securities and repaying creditors and owners are included in the financing section of the statement of cash flows. This includes issuing stocks, bonds, or other forms of debt or equity, as well as repaying loans, dividends to shareholders, or buying back stock. The other sections are operating, which includes cash flows from day-to-day operations, and investing, which includes cash flows related to investments in property, plant, equipment, and other long-term assets. Managing and net income are not sections of the statement of cash flows.

Question 2

The statement of cash flows reports on where cash came from and how it was used.

Accepted Answer

The statement of cash flows is a financial statement that reports on the cash inflows and outflows of a company over a specific period of time. It provides information on where the cash came from (operating activities, investing activities, and financing activities) and how it was used (such as to pay off debt, purchase assets, or distribute dividends).

Question 3

A statement of cash flows reports cash inflows and cash outflows on a particular day.

Accepted Answer

A statement of cash flows reports cash inflows and outflows over a period of time, such as a month, quarter, or year, not just on a particular day.

Question 4

Which of the following would be classified as an operating activity on a statement of cash flows?

Accepted Answer

Collections from customers are part of the operating activities section on a statement of cash flows. Operating activities refer to the cash flows that arise from a company's main business activities, such as sales and purchases of inventory, receipt from customers, and payments to suppliers, among others.

Question 5

All of the following activities would be included in a company's operating activities on a statement of cash flows except

Accepted Answer

Payment to the bank to reduce loan balance is a financing activity, not an operating activity. Operating activities involve transactions related to the day-to-day operations of the business, such as payments to employees, payments to suppliers, and payments for rent. Payments for taxes may also be considered operating activities depending on the nature of the taxes.

Question 6

Like the income statement,the statement of cash flows covers a period of time.

Accepted Answer

The statement of cash flows, like the income statement, covers a period of time such as a month, quarter, or year. It provides information on cash inflows and outflows during the specified period.

Question 7

One of the purposes of a statement of cash flows is to determine a company's ability to pay its debts when they become due.

Accepted Answer

One of the main objectives of a statement of cash flows is to provide information about a company's cash inflows and outflows during a specific period. By analyzing this information, investors, creditors, and other stakeholders can determine a company's ability to generate enough cash to meet its current and future obligations, including the payment of debts when they come due.

Question 8

Which of the following would be classified as an operating activity on a statement of cash flows?

Accepted Answer

Purchase of inventory for cash would be classified as an operating activity, as it relates to the day-to-day operations of the company. The other options would be classified as investing activities (purchase of a building, sale of another company's stock) or financing activities (borrowing money through a promissory note, payment of dividends).

Question 9

The issuance of a long-term debt for cash would appear on the statement of cash flows as a(n)

Accepted Answer

Issuing long-term debt for cash represents a financing activity as it involves obtaining funds from external sources (creditors) to finance the company's operations rather than generating funds from operations or investing activities. The statement of cash flows separates cash inflows and outflows into three categories: operating, investing, and financing activities.

Question 10

A firm may have a significant amount of net income,as computed by accountants on the accrual basis,and yet have a severe decline in cash.

Accepted Answer

This can happen if a large amount of the firm's net income is tied up in accounts receivable or inventory and has not yet been converted into cash. It can also happen if the firm has made significant investments or incurred large capital expenditures, which can temporarily decrease its cash balance.

Question 11

Cash and cash equivalents include all of the following except

Accepted Answer

An investment with a maturity of March, 2014 is not a cash or cash equivalent because it is not readily available for use in the near future. Cash and cash equivalents are defined as highly liquid assets that can be easily converted into cash within 90 days. The other options listed are all considered cash and cash equivalents.

Question 12

All of the following would be included in a company's investing activities except

Accepted Answer

Taking out a loan from the bank is a financing activity, not an investing activity. Investing activities involve the purchase or sale of long-term assets or investments, such as equipment, stocks, bonds, or loans made to other companies.

Question 13

Which of the following statements show the results of a company over a period of time? 1.Balance sheet
2)Income statement
3)Statement of cash flows
4)Statement of stockholders' equity

Accepted Answer

An income statement shows a company's financial performance over a period of time, usually one year. The statement of cash flows indicates a company's inflows and outflows of cash over a specific period. The statement of stockholders' equity outlines changes in stockholder equity during a certain period. A balance sheet reflects a company's financial position at a specific point in time, not over a period of time. Therefore, the best choice(s) are 2, 3, and 4.

Question 14

All of the following would be included in a company's operating activities except

Accepted Answer

Dividend payments are a financing activity, not an operating activity. Operating activities involve the primary business activities of a company, such as sales, purchases, and expenses related to producing and selling goods and services.

Question 15

Cash payments to suppliers would appear on a statement of cash flows using the direct method as a(n)

Accepted Answer

Cash payments to suppliers relate to the operating activities of a company as they are directly linked to the purchase of goods or services required for generating revenues. Thus, they appear under the operating activities section in the statement of cash flows when prepared using the direct method.

Question 16

Activities that involve (1)providing and collecting cash as a lender and (2)acquiring and disposing of fixed assets are included in which section of the statement of cash flows?

Accepted Answer

Activities involving acquiring and disposing of fixed assets are investing activities, while providing and collecting cash as a lender is also an investing activity if the company is a financial institution. If the company is not a financial institution, it would fall under financing activities. However, since both activities are related to investments, the best choice is investing activities.

Question 17

Which of the following statements is false?

Accepted Answer

The statement of cash flows and the income statement serve different purposes. The income statement calculates the net income for a company by subtracting expenses from revenues, while the statement of cash flows reports the actual cash inflows and outflows over a period of time.

Question 18

Activities or transactions that affect the income statement are primarily included in which section of the statement of cash flows?

Accepted Answer

Activities or transactions that affect the income statement, such as revenue and expenses, are primarily included in the operating section of the statement of cash flows. The operating section shows the inflows and outflows of cash related to the company's core operations.

Question 19

The issuance of stock for cash would be classified as a(n)

Accepted Answer

The issuance of stock for cash involves raising equity capital through the sale of stock. It is classified as a financing activity on the statement of cash flows, as it reflects the inflow of cash from investors.

Question 20

The statement of cash flows has classifications of

Accepted Answer

The statement of cash flows has three classifications: operating activities, investing activities, and financing activities. Operating activities include cash flows related to daily business activities, such as sales and purchases of inventory. Investing activities include cash flows related to the acquisition or disposal of long-term assets, such as property or equipment. Financing activities include cash flows related to the borrowing or repayment of debt, as well as the issuance or repurchase of stock. Therefore, choice E is the best answer as it correctly identifies the three classifications of the statement of cash flows.

Quiz 5: Statement of Cash Flows

Activities that involve obtaining resources as a borrower or issuer of securities and repaying creditors and owners are included in which section of the statement of cash flows?

The statement of cash flows reports on where cash came from and how it was used.

A statement of cash flows reports cash inflows and cash outflows on a particular day.

Which of the following would be classified as an operating activity on a statement of cash flows?

All of the following activities would be included in a company's operating activities on a statement of cash flows except

Like the income statement,the statement of cash flows covers a period of time.

One of the purposes of a statement of cash flows is to determine a company's ability to pay its debts when they become due.

Which of the following would be classified as an operating activity on a statement of cash flows?

The issuance of a long-term debt for cash would appear on the statement of cash flows as a(n)

A firm may have a significant amount of net income,as computed by accountants on the accrual basis,and yet have a severe decline in cash.

Cash and cash equivalents include all of the following except

All of the following would be included in a company's investing activities except

Which of the following statements show the results of a company over a period of time? 1.Balance sheet 2) Income statement 3) Statement of cash flows 4) Statement of stockholders' equity

All of the following would be included in a company's operating activities except

Cash payments to suppliers would appear on a statement of cash flows using the direct method as a(n)

Activities that involve (1) providing and collecting cash as a lender and (2) acquiring and disposing of fixed assets are included in which section of the statement of cash flows?

Which of the following statements is false?

Activities or transactions that affect the income statement are primarily included in which section of the statement of cash flows?

The issuance of stock for cash would be classified as a(n)

The statement of cash flows has classifications of