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PRACTICE MULTIPLE-CHOICE QUESTIONS Which of the following is incorrect about the state rovides information about cash receipts and It reconciles the ending Cash account balance to ment of cash flows? a) It is a fourth basic financial statement. 6. Cash dividends paid to stoc kholders are classified on (LO 1) the statement of cash flows as: (a) an operating activity (b) an investing activity (b) It p cash payments of an entity during a period. the balance per the bank statement. c) a combination of (a) and (b) (d) a financing activity d) It provides information about the operating investing, and financing activities of the business , which of the following is not reported in the state 7. Which is an example of a cash flow from a financing (LO 1) activity (a) Receipt of cash from sale of land (b) Issuance of debt for cash (c) Purchase of equipment for cash (d) None of the above ment of cash flows? a) The net change in stockholders' equity during the (c) Cash receipts from sales of plant assets during the (d) How acquisitions of plant assets during the year 3. The statement of cash flows classifies cash receipts (b) Cash payments for plant assets during the year 8. Which of the following is incorrect about the state- (LO 1) ment of cash flows? (a) The direct method may be used to report net cash year provided by operating activities (b) The statement shows the net cash provided (used) were inanced for three categories of activity. (c) The operating section is the last section of the and cash payments by these activities (a) operating and nonoperating. (b) investing, financing, and operating. (c) financing, operating, and nonoperating (d) investing, financing, and nonoperating statement. (d) The indirect method may be used to report net cash provided by operating activities. Use the indirect method to solve Questions 9 through 11. ) 4. Which is an example of a cash flow from an operating 9. Net income is $132,000, accounts payable increased (LO 2) activity? (a) Payment of cash to lenders for interest. b) Receipt of cash from the sale of common stock. (c) Payment of cash dividends to the company's $10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased $12.000 during the year. Under the indirect method hat is net cash provided by operating activities (a) $102,000. (b) $112,000 w stockholders (d) None of the above (c) $124,000 (d) $136,000 10. Items that are added back to net i ncome in determin- (LO 2) 5. Which is an example of a cash flow from an investing ing net cash provided by operating activities under activity? (a) Receipt of cash from the issuance of bonds payable. (b) Payment of cash to repurchase outstanding common the indirect method do not include (a) depreciation expense. stoc (c) Receipt of cash from the sale of equipment. d) Payment of cash to suppliers for inventory (b) an increase in inventory (c) amortization expense (d) loss on disposal of equipment
