Question 1

A statement NOT required by FASB to comply with GAAP is ________.
A)a balance sheet
B)an income statement
C)a statement of cash flows
D)a cash budget

Accepted Answer

A cash budget is not required by FASB to comply with GAAP, while a balance sheet, income statement, and statement of cash flows are all required financial statements under GAAP.

Question 2

Cash budgets are required by ________.
A)U)S.GAAP
B)IFRS
C)both U.S.GAAP and IFRS
D)neither U.S.GAAP nor IFRS

Accepted Answer

Neither U.S. GAAP (Generally Accepted Accounting Principles) nor IFRS (International Financial Reporting Standards) specifically require companies to prepare cash budgets. Cash budgets are internal management tools used for planning and controlling cash flows, rather than external reporting requirements.

Question 3

The statement of cash flows ________.
A)reports all of the cash a company has received and all of the cash a company has disbursed during an accounting period
B)reports all of the income,expenses,and profit or losses a company has earned or incurred during an accounting period
C)reports the amount of assets,liabilities,and shareholders' equity of a business
D)reports all of the income,dividends,and retained earnings of a business

Accepted Answer

The statement of cash flows reports all of the cash a company has received and all of the cash a company has disbursed during an accounting period. It provides information on the cash inflows and outflows from operating, investing, and financing activities of the business.

Question 4

The statement of cash flows reports the ________.
A)sources and uses of cash
B)financial position of a company
C)changes in shareholders' equity
D)profitability of a company

Accepted Answer

The statement of cash flows reports on the sources and uses of cash, showing how much cash a company generated or used during a specific period of time. It does not report the financial position of a company or changes in shareholders' equity, nor does it show profitability (which is reported in the income statement).

Question 5

The cash budget ________.
A)is one of the financial statements required by the SEC and FASB
B)is used by management to anticipate any cash flow shortages
C)has three sections: operating,investing,and financing
D)all of these

Accepted Answer

The cash budget is primarily used by management to anticipate any cash flow shortages. While it may have three sections (operating, investing, and financing), it is not required by the SEC and FASB nor is it considered one of the financial statements.

Question 6

Cash paid to vendors is characterized as an ________ activity.
A)inflow from investing
B)outflow for investing
C)inflow from operating
D)outflow for operating

Accepted Answer

Cash paid to vendors is an outflow of cash for operating activities, as it is a part of the day-to-day operations of the business.

Question 7

Repayment of a loan is a(n)________ activity on the statement of cash flows.
A)operating
B)investing
C)financing
D)indirect

Accepted Answer

Repayment of a loan involves the use of funds obtained from external sources such as creditors or lenders. This is considered a financing activity since it involves the repayment of borrowed funds. Operating activities involve transactions related to the daily operations of the business, while investing activities involve the acquisition and disposition of long-term assets such as property and equipment. Indirect activities are those that are not directly related to the business's cash flows, such as non-cash transactions or changes in accounting methods.

Question 8

Cash from operating activities includes ________.
A)all cash receipts and all cash disbursements for long-term business assets
B)all cash receipts and all cash disbursements for loans,contributions from owners,and distributions to owners
C)all cash receipts and cash disbursements for routine sales and payments made in the course of doing business
D)detailed estimates of the sources of cash and uses of cash

Accepted Answer

Cash from operating activities refers to the cash generated or used in the normal course of business operations. Therefore, it includes all cash receipts and disbursements related to routine sales and payments made in the course of doing business such as salaries, rent, purchases of inventory, etc. Options A and B relate to non-operating activities such as purchases of long-term assets or contributions from owners, and option D refers to cash forecasting which is not a part of actual cash flows generated from operations.

Question 9

A cash budget ________.
A)reports cash inflows and outflows from operating,investing,and financing activities
B)is a detailed plan of a company's estimated cash receipts and disbursements
C)is prepared using the indirect method
D)is prepared using the direct method

Accepted Answer

A cash budget is a detailed plan of a company's estimated cash receipts and disbursements. It helps the company in managing its cash flow by providing information on expected cash inflows and outflows. Option A is not entirely correct as it refers to a cash flow statement which reports cash inflows and outflows from operating, investing, and financing activities. Options C and D are incorrect as they do not relate to the cash budget.

Question 10

The preparation of cash budgets includes ________.
A)estimating in detail the amount and the timing of cash receipts and disbursements
B)categorizing cash inflows and outflows by operating,financing,and investing activities
C)securing a line of credit from a bank
D)all of these

Accepted Answer

Cash budgets primarily involve estimating the detailed amount and timing of cash receipts and disbursements to manage liquidity effectively.

Question 11

The statement of cash flows reports ________.
A)all of the cash a company has received and all of the cash a company has disbursed during an accounting period
B)all of the income,expenses,profit or losses a company has earned or incurred during an accounting period
C)the change in total assets during an accounting period
D)all of the sources and uses of shareholders' equity

Accepted Answer

The statement of cash flows reports all of the cash a company has received and all of the cash a company has disbursed during an accounting period, including operating, investing, and financing activities. It does not report income, expenses, profit, losses, or changes in assets or shareholders' equity.

Question 12

Preparation of the cash budget starts ________.
A)with net income and makes adjustments for all the items that are not cash
B)by converting every number on the income statement to its cash amount
C)by estimating the sources of cash and the uses of cash
D)with cash collected from customers

Accepted Answer

The preparation of the cash budget involves estimating the sources and uses of cash, including cash collected from customers, cash paid to suppliers, operating expenses, capital expenditures, and debt service payments. It is important to consider the timing of these cash flows and any cash reserves that may be necessary to cover unexpected expenses or shortfalls. While net income and the income statement provide important information, they are not sufficient for preparing the cash budget without adjustments and additional information.

Question 13

Cash dividends paid to shareholders is a(n)________ activity on the statement of cash flows.
A)operating
B)investing
C)financing
D)indirect

Accepted Answer

Cash dividends paid to shareholders is a financing activity as it involves the distribution of profits to the company's owners or shareholders.

Question 14

The statement of cash flows is required by ________.
A)U)S.GAAP only
B)IFRS only
C)both U.S.GAAP and IFRS
D)neither U.S.GAAP nor IFRS

Accepted Answer

The statement of cash flows is required by both U.S. GAAP and IFRS.

Question 15

The statement of cash flows shows all of ________ the period.
A)the cash a company has collected and paid during
B)the revenues earned and expenses incurred during
C)assets,liabilities and shareholders' equity at the end of
D)the changes in shareholders' equity during

Accepted Answer

The statement of cash flows shows all of the cash that a company has collected and paid during the period. It provides information on the cash inflows and outflows from operating, investing, and financing activities. The other options (B, C, and D) are not accurate descriptions of the statement of cash flows.

Question 16

Cash budgets allow companies to plan for any cash shortage by ________.
A)securing a line of credit from a local bank
B)borrowing money
C)altering the timing of receipts or disbursements
D)all of these

Accepted Answer

Cash budgets allow companies to plan for any cash shortage by securing a line of credit from a local bank, borrowing money, or altering the timing of receipts or disbursements. Therefore, option D is the correct answer as it includes all the other options.

Question 17

Cash proceeds from a new stock issue is a(n)________ activity on the statement of cash flows.
A)operating
B)investing
C)financing
D)indirect

Accepted Answer

Cash proceeds from a new stock issue is a financing activity as it involves raising funds by issuing new shares to investors, which is a source of external financing for the company. It is reported in the financing section of the statement of cash flows.

Question 18

The statement of cash flows does NOT report cash flows from ________.
A)operating activities
B)investing activities
C)financing activities
D)budgeting activities

Accepted Answer

The statement of cash flows only reports cash flows from operating, investing, and financing activities. It does not report cash flows from budgeting activities, as budgeting is a planning process and not a source or use of cash.

Question 19

Cash proceeds from the sale of land is a(n)________ activity on the statement of cash flows.
A)operating
B)investing
C)financing
D)indirect

Accepted Answer

Proceeds from the sale of land would be classified as an investing activity on the statement of cash flows, as it represents a cash inflow from the sale of a long-term asset.

Question 20

Cash collections from customers is a(n)________ activity on the statement of cash flows.
A)operating
B)investing
C)financing
D)indirect

Accepted Answer

Cash collections from customers is a part of the operating activities section of the statement of cash flows, which includes all cash inflows and outflows related to a company's primary business operations.

Quiz 9: Preparing and Analyzing the Statement of Cash Flows

A statement NOT required by FASB to comply with GAAP is ________.

Cash budgets are required by ________.

The statement of cash flows ________.

The statement of cash flows reports the ________.

The cash budget ________.

Cash paid to vendors is characterized as an ________ activity.

Repayment of a loan is a(n) ________ activity on the statement of cash flows.

Cash from operating activities includes ________.

A cash budget ________.

The preparation of cash budgets includes ________.

The statement of cash flows reports ________.

Preparation of the cash budget starts ________.

Cash dividends paid to shareholders is a(n) ________ activity on the statement of cash flows.

The statement of cash flows is required by ________.

The statement of cash flows shows all of ________ the period.

Cash budgets allow companies to plan for any cash shortage by ________.

Cash proceeds from a new stock issue is a(n) ________ activity on the statement of cash flows.

The statement of cash flows does NOT report cash flows from ________.

Cash proceeds from the sale of land is a(n) ________ activity on the statement of cash flows.

Cash collections from customers is a(n) ________ activity on the statement of cash flows.