1) The first step in preparing a Statement of Cash flows is to:

A. Prepare a comparative income statement.

B. Prepare a balance sheet.

C. Complete the adjusting entries.

D. Preparing comparative balance sheet.

a) The major sections of a Statement of Cash Flows are:

A. Assets, Liabilities, and Owners Equity

B. Financial activities, investing activities, and owner activities.

C. Operating activities, investing activities, and financing activities

D. None of the above.

b) When using the indirect method of preparing a Statement of Cash Flows depreciation is

A. Subtracted from cash flows in Investment Activities.

B. Added to cash flows from Operating Activities.

C. Is ignored because it is not a cash flow.

D. Is added to cash flows from Financing Activities.

c) There are two methods of preparing a Statement of Cash Flows They are:

A. The effective interest rate and the straight-line methods.

B. The Equity and the Cost methods.

C. The Horizontal and Vertical methods.

D. The Direct and Indirect methods

d) In a Statement of Cash Flows, the payment of dividends would be a:

A. Decrease in cash flows from Operating Activities.

B. Increase in cash flows from Investing Activities.

C. Decrease in cash flows from Financing Activities.

D. Increase in cash flows from Financig Activities

e)There are three major methods used to analyze financial statements. They include:

A. Ratio analysis, Stress analysis, and Market analysis.

B. Ratio analysis, Balance Sheet Analysis, and Income Statement Analysis.

C. Horizontal analysis, Vertical analysis, and Ratio analysis.

D. Market analysis, Ratio analysis, and Market analysis.

f) The most looked at ratio to predict the future stock price of a Corporation is:

A. The Price Earnings Ratio.

B. The Asset Turnover Ratio.

C. Earnings per Share.

D. The Inventory Turnover Ratio

g) The Current Ratio is used primarily:

A. By potential stockholders.

B. By Bondholders.

C. By Stockholders.

D. By short-term creditors