1. Receipts of dividends from investments in equity securities would be reported in the financing activities section of the cash flow statement.

a. True b. False

2. Generating positive cash flows from operations is one of the most important cash flow activities of a company.

a. True b. False

3. GAAP allows the use of either the direct or indirect method but prefers the direct method. Companies who use the indirect method must also include a separate schedule reconciling net income to net cash flow provided by operating activities.

a. True b. False

4. Under IFRS, a company is allowed to report dividends and interest received as either an operating or a financing cash inflow.

a. True b. False

5. The visual inspection method is used when a company has simple financial statements and when the relationships between the changes in account balances can be easily analyzed.

a. True b. False

6. The Roberts Company reported net income of $190,000 in 2016. Additional information follows: Depreciation expense $28,000 Loss on sale of equipment 20,000 Gain on sale of land 27,000 Given just this information, what was the Roberts Company's net cash provided by operating activities in 2016?

a. $115,000 b. $169,000 c. $211,000 d. $162,000

7. The following information relates to the Joshua, Inc: Depreciation expense $ 500 Increase in salaries payable 50 Purchased operating equipment 700 Net income 3,000 Paid long term note payable 600 Paid dividends 900 Increase in accounts receivable 400 What is the net cash provided by operating activities?

a. $2,100 b. $2,650 c. $3,200 d. $3,150

8. The following information relates to the Stork Company: Paid note payable $ 150 Bought equipment 1260 Depreciation expense 1,500 Net income 5,000 Paid dividends 500 Issued bonds payable 1,100 Issued common stock 900 Sold land 3,400 What is the net cash provided by financing activities?

a. $1,350 b. $1,850 c. $2,350 d. $5,850

9.Which of the following statements is true regarding GAAP and reporting operating activities on the statement of cash flows?

a. The direct method is required of large companies. b. GAAP expresses a preference for the indirect method. c. GAAP expresses a preference for the direct method. d. GAAP did not express a preference for either the direct or indirect method.

10.Which of the following would be added to net income in computing cash flows from operating activities?

a. an increase in accounts receivable b. an increase in inventories c. a decrease in deferred taxes payable d. a decrease in prepaid expenses