A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio: True or False
1. The payment of cash dividends never changes the balance of retained 2. 3. 4. 5. 6. 7. earnings. (true or false) A company's Inventory balance at 12/31/XXX2 was $200,000 and was $188,000 at 12/31/XXX1. Its Accounts Payable balance at 12/31/XXX2 was $80,000 and was $84,000 at 12/31/XXX1, and its cost of goods sold for XXX2 was $720,000. The company's total amount of cash payments for merchandise in XXX2 equals: a. 704000 b. 712000 c. 720000 d. 728000 e. 736000 A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio. (True or False) Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows. (True or false) An example of a transaction that must be disclosed as a noncash investing and financing activity includes a. The retirement of debt by issuance of equity b. The purchase of long-term assets financed by a cash down payment and a note payable to the seller for the balance. c. The leasing of assets in a transaction that qualifies as a capital lease. d. The purchase of noncash assets in exchange for equity or debt securities. e. All of these Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities. (True or False) The indirect method reports individual operating cash outflows and cash inflows by activity. (true or false) 8. Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. a. b. c. d. e. 218000 223200 220000 228800 234000 9. The statement of cash flows helps address questions such as a. How is the increase in investments financed? b. What is the source of cash for new plant assets? c. How much cash is generated from or used in operations? d. Why is cash flow from operations different from income? e. All of these. 10. Which of the following items is reported on the statement of cash flows under financing activities? a. Declaration of a cash dividend b. Payment of a cash dividend c. Declaration of a stock dividend d. Payment of a stock dividend e. Stock split 11. Most managers stress the importance of understanding and predicting cash flows for business decisions. (true or false) 12. When preparing the operating section of the statement of cash flows using the indirect method, noncash operating expenses are added back to net income. (true or false) 13. A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes. (true or false) 14. Use the following information and the indirect method to calculate the net cash provided or used by operating activities: 12700 13900 20900 28400 35900 15. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: a. Operating activities b. Financing activities c. Investing activities d. Schedule of noncash investing or financing activity. e. None of these. This is not reported on the statement of cash flows. 16. Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information. (true or false) 17. When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires: a. The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method. b. A reconciliation of net income to net cash provided or used by operating activities. c. Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities. d. The income statement to be prepared under the cash basis of accounting. e. Noncash investing and financing activities be included in the statement of cash flows. 18. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: a. Financing Activities b. Investing Activities c. Operating Activities d. Direct activities e. Indirect activities 19. The direct method for the preparation of the operating activities section of the statement of cash flows: a. b. c. d. e. a. Separately lists each major item of operating cash receipts and cash payments. b. Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement. c. Reports a different amount of cash flows from operations than if the indirect method is used. d. Is required if the company is a merchandiser. e. Is required by the FASB 20. A noncash investing transaction should be disclosed as either a footnote or small schedule attached to the statement of cash flows. 1. The payment of cash dividends never changes the balance of retained 2. 3. 4. 5. 6. 7. earnings. (true or false) A company's Inventory balance at 12/31/XXX2 was $200,000 and was $188,000 at 12/31/XXX1. Its Accounts Payable balance at 12/31/XXX2 was $80,000 and was $84,000 at 12/31/XXX1, and its cost of goods sold for XXX2 was $720,000. The company's total amount of cash payments for merchandise in XXX2 equals: a. 704000 b. 712000 c. 720000 d. 728000 e. 736000 A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio. (True or False) Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows. (True or false) An example of a transaction that must be disclosed as a noncash investing and financing activity includes a. The retirement of debt by issuance of equity b. The purchase of long-term assets financed by a cash down payment and a note payable to the seller for the balance. c. The leasing of assets in a transaction that qualifies as a capital lease. d. The purchase of noncash assets in exchange for equity or debt securities. e. All of these Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities. (True or False) The indirect method reports individual operating cash outflows and cash inflows by activity. (true or false) 8. Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. a. b. c. d. e. 218000 223200 220000 228800 234000 9. The statement of cash flows helps address questions such as a. How is the increase in investments financed? b. What is the source of cash for new plant assets? c. How much cash is generated from or used in operations? d. Why is cash flow from operations different from income? e. All of these. 10. Which of the following items is reported on the statement of cash flows under financing activities? a. Declaration of a cash dividend b. Payment of a cash dividend c. Declaration of a stock dividend d. Payment of a stock dividend e. Stock split 11. Most managers stress the importance of understanding and predicting cash flows for business decisions. (true or false) 12. When preparing the operating section of the statement of cash flows using the indirect method, noncash operating expenses are added back to net income. (true or false) 13. A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes. (true or false) 14. Use the following information and the indirect method to calculate the net cash provided or used by operating activities: 12700 13900 20900 28400 35900 15. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: a. Operating activities b. Financing activities c. Investing activities d. Schedule of noncash investing or financing activity. e. None of these. This is not reported on the statement of cash flows. 16. Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information. (true or false) 17. When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires: a. The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method. b. A reconciliation of net income to net cash provided or used by operating activities. c. Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities. d. The income statement to be prepared under the cash basis of accounting. e. Noncash investing and financing activities be included in the statement of cash flows. 18. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: a. Financing Activities b. Investing Activities c. Operating Activities d. Direct activities e. Indirect activities 19. The direct method for the preparation of the operating activities section of the statement of cash flows: a. b. c. d. e. a. Separately lists each major item of operating cash receipts and cash payments. b. Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement. c. Reports a different amount of cash flows from operations than if the indirect method is used. d. Is required if the company is a merchandiser. e. Is required by the FASB 20. A noncash investing transaction should be disclosed as either a footnote or small schedule attached to the statement of cash flows. 1. The payment of cash dividends never changes the balance of retained 2. 3. 4. 5. 6. 7. earnings. (true or false) A company's Inventory balance at 12/31/XXX2 was $200,000 and was $188,000 at 12/31/XXX1. Its Accounts Payable balance at 12/31/XXX2 was $80,000 and was $84,000 at 12/31/XXX1, and its cost of goods sold for XXX2 was $720,000. The company's total amount of cash payments for merchandise in XXX2 equals: a. 704000 b. 712000 c. 720000 d. 728000 e. 736000 A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio. (True or False) Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows. (True or false) An example of a transaction that must be disclosed as a noncash investing and financing activity includes a. The retirement of debt by issuance of equity b. The purchase of long-term assets financed by a cash down payment and a note payable to the seller for the balance. c. The leasing of assets in a transaction that qualifies as a capital lease. d. The purchase of noncash assets in exchange for equity or debt securities. e. All of these Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities. (True or False) The indirect method reports individual operating cash outflows and cash inflows by activity. (true or false) 8. Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. a. b. c. d. e. 218000 223200 220000 228800 234000 9. The statement of cash flows helps address questions such as a. How is the increase in investments financed? b. What is the source of cash for new plant assets? c. How much cash is generated from or used in operations? d. Why is cash flow from operations different from income? e. All of these. 10. Which of the following items is reported on the statement of cash flows under financing activities? a. Declaration of a cash dividend b. Payment of a cash dividend c. Declaration of a stock dividend d. Payment of a stock dividend e. Stock split 11. Most managers stress the importance of understanding and predicting cash flows for business decisions. (true or false) 12. When preparing the operating section of the statement of cash flows using the indirect method, noncash operating expenses are added back to net income. (true or false) 13. A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes. (true or false) 14. Use the following information and the indirect method to calculate the net cash provided or used by operating activities: 12700 13900 20900 28400 35900 15. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is: a. Operating activities b. Financing activities c. Investing activities d. Schedule of noncash investing or financing activity. e. None of these. This is not reported on the statement of cash flows. 16. Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information. (true or false) 17. When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires: a. The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method. b. A reconciliation of net income to net cash provided or used by operating activities. c. Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities. d. The income statement to be prepared under the cash basis of accounting. e. Noncash investing and financing activities be included in the statement of cash flows. 18. Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as: a. Financing Activities b. Investing Activities c. Operating Activities d. Direct activities e. Indirect activities 19. The direct method for the preparation of the operating activities section of the statement of cash flows: a. b. c. d. e. a. Separately lists each major item of operating cash receipts and cash payments. b. Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement. c. Reports a different amount of cash flows from operations than if the indirect method is used. d. Is required if the company is a merchandiser. e. Is required by the FASB 20. A noncash investing transaction should be disclosed as either a footnote or small schedule attached to the statement of cash flows
