1. Which of the following properly represents the preparation of the statement of cash flows prepared using IFRS rules?

A) Firms using the direct method are not required to provide a reconciliation of net income to cash flows from operations.

B) The presentation of the statement of cash flows differs to those following U.S. GAAP as a result of prescribed classification differences under IFRS.

C) The presentation of the statement of cash flows is the same for all companies preparing statements under IFRS.

D) The flexibility provided under IFRS guidance for the preparation of the statement of cash flows increases the comparability of results between companies.

2. Which of the following does not reflect the accounting and impact on the statement of cash flows for the sale or transfer of accounts receivable?

A) Receivable transfers that are secured borrowings have no effect on operating cash flows.

B) Receivable sales are not reported in the statement of cash flows as they do not represent collections from the end customers and therefore are not part of operating cash flows.

C) Receivable sales create an operating cash inflow on the cash flow statement.

D) Receivable sales transfer future operating cash flows into the current period.

3. Which of the following does not represent the impact of the use of stock options when comparing operating cash flows?

A) Firms not using stock options will generally have lower compensation expense and higher net income.

B) Stock based compensation is a simultaneous operating and financing transaction and must appear in both sections of the statement of cash flows.

C) Stock based compensation is not presented in the statement of cash flows.

D) Stock based compensation impacts income taxes and that impact is reflected in the statement of cash flows.

4. Regulatory accounting principles are important to those outside the regulatory agencies because:

A) GAAP may allow reporting for assets and liabilities consistent with the way in which regulators establish rates.

B) GAAP does not allow reporting for assets and liabilities consistent with the way in which regulators establish rates.

C) regulatory accounting principles are not compatible with GAAP.

D) the SEC requires them.

5. Which of the following does not properly represent the relation of tax and GAAP accounting?

A) Companies using FIFO for financial statements prefer FIFO for tax purposes because FIFO results in a lower taxable income.

B) GAAP and tax depreciation expense will rarely be equal.

C) If LIFO is used for inventory valuation for taxes, LIFO must also be used for GAAP financial reporting.

D) The accounting methods used for tax are permitted to differ from GAAP rules.

6. Edsel Inc. has the following unadjusted year end trial balance information available for 2018:

Credit sales	$	600,000
Ending accounts receivable balance	$	180,000
Ending allowance for uncollectibles	$	1,500
Estimated uncollectibles		2	%

If Edsel uses the sales revenue approach for estimating the bad debt provision, the income statement should show an expense of:

A) $10,000

B) $12,000

C) $14,000

D) $20,000