1. A company’s transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:
A. Operating activities.
B. Investing activities.
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C. Financing activities.
D. Direct activities.
E. Indirect activities.
2. In preparing a company’s statement of cash flows for the most recent year using the indirect method, the following information is available:
Net income for the year was
Accounts payable decreased by
Accounts receivable increased by
Inventories increased by
Depreciation expense was
30,000Net cash provided by operating activities was:
3. A company’s income statement showed the following: net income, $124,000 and depreciation expense, $30,000. An examination of the company’s current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; and accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.
4. Marshland Company is preparing the company’s statement of cash flows for the fiscal year just ended. The following information is available:
Cash dividends declared for the year
Cash dividends payable at the beginning of the year
Cash dividends payable at the end of the year
The amount of cash paid for dividends was:
5. Which of the following items is reported on the statement of cash flows under financing activities?
A. Declaration of a cash dividend.
B. Payment of a cash dividend.
C. Declaration of a stock dividend.
D. Payment of a stock dividend.
E. Stock split.
6. When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except:
A. An increase in accounts receivable.
B. A decrease in accounts payable.
C. Proceeds from the disposal of a long-term asset with no gain or loss.
D. An increase in prepaid expenses.
E. A decrease in accrued expenses payable.
7. The indirect method for the preparation of the operating activities section of the statement of cash flows:
A. Separately lists each major item of operating cash receipts.
B. Separately lists each major item of operating cash payments.
C. Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
D. Is required if the company is a merchandiser.
E. Must not be used in all circumstances.
8. Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $28,000; net cash used in investing activities was $10,000 and net cash used in financing activities was $12,000. If the beginning cash balance is $5,000, what is the ending cash balance?
9. Typical cash flows from investing activities include each of the following except:
A. Payments to purchase property, plant and equipment or other productive assets (excluding inventory).
B. Proceeds from collecting the principal amount of accounts receivable arising from customer sales.
C. Payments to buy intangible assets.
D. Payments to acquire held-to maturity securities of other entities, except cash equivalents.
E. Proceeds from the sale of equipment.
10. All of the following statements related to preparation of the statement of cash flows under U.S. GAAP and IFRS are true except:
A. Both U.S. GAAP and IFRS permit the reporting of cash flows from operating activities using either the direct or indirect method.
B. IFRS permits classification of cash outflows for interest expense under operating or financing based on which one results in better cash flows from operating activities.
C. U.S. GAAP requires cash outflows for income tax be classified as operating activities.
D. IFRS permits the splitting of income tax cash flows among operating, investing, and financing depending on the sources of that tax.
E. IFRS permits classification of interest expense under operating or financing activities provided it is consistently applied across periods