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1) The operating activities section of the cash flow statement must be converted from an accrual basis to a cash basis under: the direct method

1)

The operating activities section of the cash flow statement must be converted from an accrual basis to a cash basis under:

the direct method only.

the indirect method only.

both the direct and indirect methods.

neither the direct nor indirect method.

2)

If the balance in a companys equipment account increased $25,000 during the year and additional information shows that the company purchased $30,000 worth of equipment and disposed of equipment costing $5,000 for proceeds of $3,000, which of the following amounts should be reported in the investing section of the cash flow statement?

Outflow of cash of $27,000

Outflow of cash of $30,000 and an inflow of $5,000

Outflow of cash of $30,000 and an inflow of $3,000

Outflow of cash of $25,000

3)

If a companys retained earnings increased $120,000 and its profit was $140,000, the financing activities section of the cash flow statement would show:

a cash inflow of $140,000 and a cash outflow of $20,000.

a cash inflow of $20,000 and an outflow of $140,000.

a cash inflow of $120,000.

a cash outflow of $20,000.

4)

Free cash flow is calculated as:

cash provided (used) by operating activities less cash used (provided) by investing activities.

cash provided (used) by operating activities plus operating activities and dividends declared.

net change in cash for the period less cash used (provided) by investing activities.

net cash provided (used) by investing activities less operating activities and dividends paid.

5)

Free cash flow is calculated as:

cash provided (used) by operating activities less cash used (provided) by investing activities.

cash provided (used) by operating activities plus operating activities and dividends declared.

net change in cash for the period less cash used (provided) by investing activities.

net cash provided (used) by investing activities less operating activities and dividends paid.

6)

If there is a net decrease in cash we say that cash was

used by that activity.

absorbed by that activity.

provided by that activity.

generated by that activity.

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