Multiple CHOICE Choose the one alternative that best completes the statement or answers the question.

1) One of the purposes of the statement of cash flows is to

A) Determine the worth of the accounts receivable of the business

B) To calculate the turnover of inventory

C) Predict the ability of a company to pay debts and dividends

D) Evaluate the level of debt and leverage of a company

2) Which of the following statements accurately describes the statement of cash flows?

A) It shows the link between book income and earnings per share.

B) It shows the link between accrual based income and the cash reported on the balance sheet.

C) It shows the relative proportion of debt and MAVIS.

D) It indicates when long-term debt will mature.

3) The_________section of the statement of cash flows includes increase and decrease in long-term assets.

A) Non-cash operating activities

B) Investing activities

C) Financing activities

D) Operating activities

4) Which of the following statements is true of the direct and indirect methods of preparing the statement of cash (lows?

A) The operating activities section of both the direct and the indirect methods arc the same.

B) The indirect method shows three types of cash flows but the direct method does not

C) The investing activities section is the only section that differs between the direct and indirect methods.

D) The indirect method and the direct method will produce the same amount of net cash flow from operating activities.

5) Which of the following sections of the statement of cash flows is presented differently between the direct method and indirect method?

A) Investing activity

B) Non-cash activity

C) Operating activity

D) Financing activity