Statments of Cash Flow


PART ONE: TRUE OR FALSE
  • Question 1. The statement of cash flows classifies cash receipts and payments into four activity categories.
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  • Question 2. Noncash activities are a part of the statement of cash flows.
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  • Question 3. Under the indirect method, noncash expenses are added to net earnings.
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  • Question 4.  Conversion of bonds to common shares is an example of a noncash activity.
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  • Question 5.  Cash receipts from customers, under the direct method, are equal to sales plus the increase in accounts receivable.
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PART TWO: MULTIPLE CHOICE

  • Question 6. Which of the following would be classified as an operating activity?
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  • Question 7.  Which of the following is not an operating activity?
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  • Question 8. During which phase of a product life cycle are cash from operating activities and net earnings approximately equal?
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  • Question 9. Which of the following is not a reason that companies favour the indirect method of preparing the statement of cash flows?
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  • Question 10. The indirect method of preparing the statement of cash flows begins with:
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  • Question 11. Under the indirect method of preparing the statement of cash flows, an increase in accounts receivable is:
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  • Question 12.  Under the indirect method of preparing the statement of cash flows, which of the following is added to net earnings in the operating activities section?
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  • Question 13. Under the indirect method of preparing the statement of cash flows, which of the following is deducted from net earnings in the operating activities section?
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  • Question 14. Assume a company sold a piece of equipment for $3,000. The original cost was $15,000 and the accumulated amortization prior to the sale was $10,000. What amount, if any, would appear in the operating activities section of the statement of cash flows using the indirect method?
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  • Question 15. If Sales are $130,000, beginning Accounts Receivable $12,000, and ending Accounts Receivable $15,000, what is the amount of the cash receipts from customers?
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  • Question 16. If the cost of goods sold is $255,000, the change in Accounts Payable is an increase of $12,000, and the change in Inventory is a decrease of $25,000, what is the amount of the payment to suppliers?
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  • Question 17. If operating expenses are $95,000, the change in Prepaid Insurance is a decrease if $3,000, and the change in Accrued Wages Payable is a decrease of $2,000, what is the amount of cash payments to suppliers?
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  • Question 18.  Which of the following would not appear on the statement of cash flows prepared under the direct method?
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  • Question 19. Land purchased through the issuance of common shares should be disclosed on the statement of cash flows under the:
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  • Question 20. The calculation of free cash flow includes all the following except:
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