Which of the following statements is TRUE regarding a statementof cash flows?
A statement of cash flows measures the profitability of acompany using the cash basis of accounting.
Two different methods may be used to compute the net cash flowsfrom operating, investing, and financing activities.
Noncash investing and financing activities need to be disclosedunder “other activities.”
The statement of cash flows reports the changes in cash and cashequivalents.
Which of the following is a cash equivalent?
Accounts receivable
Certificates of deposit that mature in less than threemonths
Certificates of deposit that mature in one year or less
Prepaid expenses
Which of the following activities is an operating activity?
Payment on the principal portion of a bank loan
Collection of cash from issuing stock
Payment of interest on a bank loan
Payment of cash dividends
Which of the following activities would NOT be considered aninvesting activity?
Issuance of common stock
Purchase of used equipment
Sale of land
Sale of a long-term investment
Which of the following activities is a financing activity?
Purchase of land by issuing stock
Payment of cash dividends
Purchase of land for cash
Purchase of inventory for cash
On a statement of cash flows, the net increase in cash was$24,000. Cash provided from operations was $30,000. If the net cashoutflow from investing activities was $7,000, then what was the netcash flow from financing activities?
A net inflow of $1,000
A net outflow of $1,000
A net inflow of $13,000
A net outflow of $13,000
Using the following information for Stewart Auto, Inc.,calculate the net cash flow from operating activities using theindirect method.
Netincome $150,000
Depreciationexpense 10,000
Increase in accountsreceivable 4,000
Decrease ininventory 5,000
Increase in accountspayable 8,000
Loss on sale ofequipment 7,000
The net cash provided by operating activities is:
$142,000.
$144,000.
$160,000.
$176,000.
Which of the following statements is TRUE regarding the indirectmethod of preparing a statement of cash flows?
A decrease in inventory is subtracted from net income.
A loss on the sale of an investment is added to net income.
Depreciation expense is subtracted from net income.
An increase in wages payable is subtracted from net income.
Which of the following statements is TRUE regarding the directmethod of preparing a statement of cash flows?
Depreciation expense is added as a reconciling item.
It is easier and less costly to prepare than the indirectmethod.
A supplementary schedule reconciling net income to the cashbasis must also be provided.
All of the statements above are correct.
Which of the following is an example of noncash investing andfinancing activity that is disclosed in a supplementary scheduleaccompanying the statement of cash flows or in a footnote to thefinancial statements?
Selling goods on credit
Paying the amount due a creditor
Purchasing equipment in exchange for a long-term note
Gain on the sale of land
Asked Jan. 10, 2017
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