 |
| 1 | |
Which of the following activities is an operating activity? |
| | A) | Issuing stock for a building |
| | B) | Redemption of bonds at maturity |
| | C) | Collecting the interest on an investment |
| | D) | Purchasing the common stock of another corporation as an investment |
| | E) | Issuing bonds for an amount greater than the bond par value |
|
|
|
| 2 | |
Which of the following activities would not be reported as an investing activity on a statement of cash flows? |
| | A) | Collection of the principal amount owed on a long-term note receivable |
| | B) | Purchase of a patent from an inventor |
| | C) | Sale of a plant asset at a price equal to its book value |
| | D) | Cash dividends received from an investment made in another company |
| | E) | Purchase of used production equipment |
|
|
|
| 3 | |
Interest earned on a long-term note receivable would be included in which section of the statement of cash flows? |
| | A) | Operating |
| | B) | Financing |
| | C) | Investing |
| | D) | Noncash Investing and Financing Disclosure |
| | E) | Both Operating and Financing Sections |
|
|
|
| 4 | |
Which of the following activities would not be considered a financing activity? |
| | A) | Retirement of preferred stock |
| | B) | Issuing bonds payable |
| | C) | Paying cash dividends |
| | D) | Borrowing money by issuing a short-term note |
| | E) | Purchasing land for cash |
|
|
|
| 5 | |
Which of the following would be considered a noncash investing or financing transaction? |
| | A) | Purchase of a long-term asset using a long-term note payable |
| | B) | Exchange of a building for stock |
| | C) | Retirement of debt by issuing stock |
| | D) | All of the above |
| | E) | None of the above |
|
|
|
| 6 | |
A company issued common stock for land valued at $450,000. How would this transaction be reported? |
| | A) | On a statement of cash flows as both an investing and financing activity |
| | B) | On a statement of cash flows as an investing activity |
| | C) | On a separate schedule of non-cash activities on the statement of cash flows or in a note to the statement |
| | D) | On a statement of retained earnings |
| | E) | None of the above |
|
|
|
| 7 | |
The cash provided from operations was $33,000. The net increase in cash was $22,000. If the net cash inflow from financing activities was $15,000, then what was the net cash flow from investing activities? |
| | A) | A net inflow of $26,000 |
| | B) | A net outflow of $26,000 |
| | C) | A net outflow of $24,000 |
| | D) | A net inflow of $11,000 |
| | E) | None of the above |
|
|
|
| 8 | |
The company's statement of cash flows reported the following for the current year: cash flows provided by operating activities of $60,000, cash used by investing activities of $20,000, cash provided by financing activities of $10,000, and a net increase in cash and cash equivalents of $50,000. Assets totaled $900,000 at the beginning of the year and $1,100,000 at the end of the year. What is the cash flow on total assets ratio? |
| | A) | 1% |
| | B) | 2% |
| | C) | 5% |
| | D) | 6% |
| | E) | None of the above |
|
|
|
| 9 | |
Which section is affected by the decision to use either the direct method or the indirect method to prepare the statement of cash flows? |
| | A) | Operating |
| | B) | Financing |
| | C) | Investing |
| | D) | Both B and |
| | E) | All of the above |
|
|
|
| 10 | |
Which of the following statements is not correct regarding the indirect method of preparing a statement of cash flows? |
| | A) | An increase in accounts receivable is added to net income |
| | B) | An increase in merchandise inventory is subtracted from net income |
| | C) | Depreciation expense is added to net income |
| | D) | A decrease in taxes payable is subtracted from net income |
| | E) | A loss on sale of an investment added to net income |
|
|
|
| 11 | |
Which of the following statements is correct regarding the indirect method of preparing a statement of cash flows? |
| | A) | Amortization expense is added |
| | B) | A loss on the sale of plant assets is added |
| | C) | A gain on the sale of plant assets is subtracted |
| | D) | All of the above |
| | E) | None of the above |
|
|
|
| 12 | |
The following took place during the year: Decrease in accounts receivable $4,000; Deprecation expense $50,000; Gain on sale of investments $1,000; Increase in accounts payable $2,000; Net income $100,000; Payment of principal on long-term note payable $10,000; and Proceeds from sale of equipment $7,000. Using this information, what is the cash provided (used) by operating activities using the indirect method? |
| | A) | $145,000 |
| | B) | $152,000 |
| | C) | $155,000 |
| | D) | $156,000 |
| | E) | None of the above |
|
|
|
| 13 | |
The following events occurred during the accounting period. Cash of $56,000 was received from the issue of common stock. Cash dividends of $11,000 were paid to stockholders. Cash of $19,000 was received as the proceeds from the sale of a long-term investment. Cash of $14,000 was paid for interest payments to bondholders. Cash of $10,000 was used to retire preferred stock. What was the net cash provided or used by financing activities? |
| | A) | $54,000 provided |
| | B) | $39,000 provided |
| | C) | $35,000 provided |
| | D) | $45,000 used |
| | E) | None of the above |
|
|
|
| 14 | |
The following events occurred during the accounting period. Cash of $43,000 was used to purchase a second-hand forklift. Cash of $12,000 was received from the sale of an investment at a loss. Cash of $15,000 was used to retire bonds. Plant assets were depreciated for $7,000 on the declining-balance method. What was the cash provided or used by investing activities? |
| | A) | $31,000 used |
| | B) | $16,000 used |
| | C) | $1,000 used |
| | D) | $31,000 provided |
| | E) | None of the above |
|
|
|
| 15 | |
Which of the following statements is not correct? |
| | A) | IFRS permits interest revenue to be classified under operating or investing provided the classification is consistently applied across periods. |
| | B) | Both U.S. GAAP and IFRS require cash flows for income tax to be classified as operating. |
| | C) | U.S. GAAP requires cash flows for interest expense to be classified as operating. |
| | D) | IFRS permits cash flows for interest expense to be operating or financing provided it is applied consistently applied across periods. |
| | E) | Both B and D are not correct. |
|
|
.