1. Which of the following regarding the statement of cash flows is incorrect?
a. It is one of the four basic financial statements.
b. Information about a company's cash payments and receipts is provided.
c. It is a reconciliation of the cash in the company's bank accounts to the balance sheet.
d. It is divided into three main sections.
2. Which of the following is an example of a cash flow resulting from an operating activity?
a. Cash received from the sale of inventory.
b. Cash received from the sale of common stock.
c. A cash dividend payment.
d. Cash paid for equipment
3. The statement of cash flows presents a company's cash flows for a period of time divided into what three sections?
a. Operating, Investing, and Non-Operating.
b. Operating, Financing, and Non-Operating.
c. Operating, Investing, and Financing.
d. Investing, Financing, and Non-Operating.
4. Which of the following cash flows is an example of a financing activity?
a. Cash payments for inventory.
b. Cash paid to acquire new manufacturing equipment.
c. Cash received from the issuance of common stock.
d. A stock dividend issued to the stockholders of a company.
5. Which of the following is an example of an investing cash flow?
a. Cash received from sale of long-term investment.
b. Cash paid for equipment.
c. Cash received from sale of building.
d. All of the above.
6. Which of the following is an additional disclosure often included on the statement of cash flows?
a. Significant non-cash investing and financing activities.
b. Cash paid for interest and taxes.
c. Neither a nor b.
d. Both a and b.
7. A company recently purchased new land by issuing bonds payable. Under which section of the statement of cash flows would this transaction appear?
a. Operating activities
b. Investing activities
c. Financing activities
d. Additional disclosure of non-cash transactions
8. Which of the following is correct about the statement of cash flows?
a. Operating cash flows can be calculated with either the direct method or the income method.
b. Financing cash flows are normally shown as the last section on the statement.
c. The statement shows the cash subtotals associated with four types of activities.
d. Investing cash flows only relate to stocks and bonds.