1. Which may lead to financial distress?

1. positive cash flow from operating activities
2. negative cash flow from operating activities
3. cash outflow from purchase of inventory
4. cash outflow from purchase of investments

2. Which is NOT a means of cash inflow?

1. investments
2. operating activities
3. financing activities
4. dividends for shareholders

2. TMM.13-05

Click to watch the Tell Me More Learning Objective 5 video and then answer the questions below.

1. What would be the correct order in which the following would be listed on a statement of cash flows?

1. Cash paid for purchase of land, decrease in inventories, cash paid for dividends
2. Cash paid for dividends, cash paid for purchase of land, decrease in inventories
3. Decrease in inventories, cash paid for purchase of land, cash paid for dividends
4. Decrease in inventories, cash paid for dividends, cash paid for purchase of land

2. Fox Corporation reported the following on its year-end statement of cash flows:

Net cash flow from operating activities	$120,700
Net cash flow used for investing activities	(2,850)
Net cash flow used for financing activities	(19,000)
Cash at the beginning of the year	52,500

What is the amount of cash at the end of the year?

1. $45,650
2. $98,150
3. $151,350
4. None of these choices are correct.

3. TMM.13-04

Click to watch the Tell Me More Learning Objective 4 video and then answer the questions below.

1. Which of the following accounts would be analyzed to determine a companys cash flows from financing activities?

1. Bonds Payable
2. Dividends Payable
3. Paid-In Capital in Excess of ParCommon Stock
4. All of these choices are correct.

2. Taylor Corporation had the following activities:

• Recorded depreciation of $5,000
• Received cash from the sale of common stock, $20,000
• Purchased $10,000 of equipment with cash
• Paid $4,000 income tax
• Received $8,000 cash for the sale of an asset
• Paid cash dividends, $10,000

What is the amount of net cash flows from (used for) financing activities?

1. $25,000
2. $10,000
3. $(14,000)
4. None of these choices are correct.

4. TMM.13-03

Click to watch the Tell Me More Learning Objective 3 video and then answer the questions below.

1. Which of the following transactions would be reported in the Investing Activities section?

1. Purchase of land for cash for $15,000
2. Issue of 4,000 shares of common stock for $10 per share
3. Payment of cash dividends of $28,000
4. All of these choices are correct.

2. Russell Corporation had the following activities:

• Recorded depreciation of $5,000
• Purchased $10,000 of equipment with cash
• Paid $4,000 in interest payments
• Received $8,000 cash for the sale of an asset

What is the amount of net cash flows from (used for) investing activities?

1. $2,000
2. $(2,000)
3. $(11,000)
4. None of these choices are correct.

5. TMM.13-02

Click to watch the Tell Me More Learning Objective 2 video and then answer the questions below.

1. Under the indirect method

1. net income is the first amount reported on the statement of cash flows.
2. the balance sheet accounts should be analyzed in their order of liquidity.
3. the first account normally analyzed is Cash.
4. a change in any balance sheet account (excluding cash) can be analyzed in terms of changes in other balance sheet accounts.

2. Under the indirect method, which of the following are deducted from net income?

1. Decreases in accounts receivable
2. Increases in inventory
3. Increases in accounts payable
4. Decreases in prepaid expenses

3. Under the indirect method, a loss on the sale of land is

1. deducted from net income.
2. added to net income.
3. ignored.
4. not reported as part of net income.

6. TMM.13-01

Click to watch the Tell Me More Learning Objective 1 video and then answer the questions below.

1. Cash flows from __________ activities are the cash flows from transactions that affect the net income of a company.

1. operating
2. investing
3. financing
4. purchasing

2. Cash flows from __________ activities are the cash flows from transactions that affect the debt and equity of the company.

1. investing
2. operating
3. financing
4. purchasing

3. Which of the following would appear in the computation of net cash flow from operating activities if using the direct method?

1. Cash received from customers
2. Net income
3. Increase in accounts payable
4. Increase in supplies

4. Cash inflows from investing activities normally arise from all of the following EXCEPT

1. selling fixed assets.
2. issuing stock.
3. selling investments.
4. selling intangible assets

7. TMM.13-ADM

Click to watch the Tell Me More Learning Objective ADM video and then answer the questions below.

1. Free cash flow is calculated as

1. cash flows from investing activities plus cash used to purchase property, plant, and equipment.
2. cash flows from operating activities less cash used to purchase property, plant, and equipment.
3. cash flows from operating activities less cash flow from investing activities less cash flow from financing activities.
4. cash used to purchase property, plant, and equipment less cash flows from operating activities.

2. Estill Corporation had the following financial data at year-end:

Cash flows from operating activities	$52,500
Cash flows from investing activities	7,000
Cash flows from financing activities	12,000
Cash used to purchase property, plant, and equipment	14,280
Sales	550,275

What is Estill Corporations ratio of free cash flow to sales?

1. 1.0%
2. 6.0%
3. 6.9%
4. 9.2%