Question 1 of 15

1.0 Points

When preparing the operating activities section of the statement of cash flows using the indirect method, decreases in current liabilities are deducted from net income.

A.TrueB.False

Question 2 of 15

1.0 Points

Which of these would be deducted from net income as part of the operating activities sec-tion, when using the indirect method of preparing the statement of cash flows? Stalwart Inc. accounting records show the following changes during the companys most recent fiscal year. (1.) Gain on sale of (2.) Loss on sale of long-term investments (3.) Decrease in prepaid expenses (4.) Increase in accounts receivable (5.) Decrease in merchandise inventory (6.) Decrease in wages payable (7.) Increase in accounts payable (8.) Payment of cash dividends (9.) Purchase of machinery (10.) Payments of principal on bonds payable (11.) Proceeds from sale of long-term investments

A.2, 3, 5, 7, 8, & 10B.1, 4, & 6C.2, 3, 5, & 7D.3, 4, 5, 6, & 7E.None of the answer choices is correct.

Question 3 of 15

1.0 Points

Free cash flow provides information regarding how much cash generated from daily opera-tions is remaining after investing in fixed assets.

A.TrueB.False

Question 4 of 15

1.0 Points

Which of these would be added as part of the cash flows from investing activities when preparing the statement of cash flows? Stalwart Inc. accounting records show the following changes during the companys most recent fiscal year. (1.) Gain on sale of (2.) Loss on sale of long-term investments (3.) Decrease in prepaid expenses (4.) Increase in accounts receivable (5.) Decrease in merchandise inventory (6.) Decrease in wages payable (7.) Increase in accounts payable (8.) Payment of cash dividends (9.) Purchase of machinery (10.) Payments of principal on bonds payable (11.) Proceeds from sale of long-term investments

A.11,B.1, 9 & 11C.9 & 11D.1, 2, 9 & 11E.None of the answer choices is correct.

Question 5 of 15

1.0 Points

Firms with significant net income always have significant cash generated from operating activities.

A.TrueB.False

Question 6 of 15

1.0 Points

If a company purchases land with its common stock, and no cash changes hands, where would this activity be presented on the statement of cash flows?

A.The financing section of the statement of cash flows.B.The investing section of the statement of cash flows.C.The operating section of the statement of cash flows.D.A note below the statement of cash flows.E.None of the answer choices is correct.

Question 7 of 15

1.0 Points

Where would cash payments for insurance appear in the statement of cash flows?

A.Operating activities section.B.Financing activities section.C.Investing activities section.D.Capital activities section.E.None of the answer choices is correct.

Question 8 of 15

1.0 Points

Which of these items would appear in the financing activities section of the statement of cash flows? Carr Company has the following cash flows to account for: (1) Cash receipts for the sale of common stock. (2) Cash payments for the purchases of merchandise. (3) Cash receipts from the collection of accounts receivable. (4) Cash receipts from the collection of principal on loans made to others. (5) Cash payments to shareholders for dividends. (6) Cash payments for the purchase of machinery.

A.1 & 6B.2 & 3C.1 & 5D.4 & 6E.None of the answer choices is correct.

Question 9 of 15

1.0 Points

Significant noncash financing and investing activities are reported in:

A.a note below the statement of cash flows.B.the investing activities section of the statement of cash flows.C.the financing activities section of the statement of cash flows.D.the operating activities section of the statement of cash flows.E.None of the answer choices is correct.

Question 10 of 15

1.0 Points

Which of these items would appear in the investing activities section of the statement of cash flows? Ellie Inc. has the following cash flows to account for: (1) Cash receipts from the sale of long-term bonds. (2) Cash receipts from the sale of equipment. (3) Cash payments for income taxes. (4) Cash receipts from the sale of stock. (5) Cash payments for the purchase of a factory building.

A.1 & 4B.2 & 5C.3D.2, 4, & 5E.None of the answer choices is correct.

Question 11 of 15

1.0 Points

The capital expenditure ratio is calculated as:

A.Cash provided by operating activities divided by capital expenditures.B.Cash provided by operating activities plus capital expenditures.C.Cash provided by operating activities divided by current liabilities.D.Capital expenditures divided by cash provided by operating activities.E.None of the answer choices is correct.

Question 12 of 15

1.0 Points

The operating cash flow ratio measures:

A.the company's ability to generate enough cash from daily operations to cover capital expenditures.B.the company's ability to generate enough cash from daily operations to cover long-term liabilities.C.the company's ability to generate enough cash from daily operations to cover current liabili-ties.D.the company's ability to generate enough cash from financing operations to cover current liabilities.E.None of the answer choices is correct.

Question 13 of 15

1.0 Points

A capital expenditure ratio greater than 1.0 indicates the company was able to generate enough operating cash to cover investments in property, plant and equipment.

A.TrueB.False

Question 14 of 15

1.0 Points

The issuance of common stock would be included in the financing activities section when preparing a statement of cash flows.

A.TrueB.False

Question 15 of 15

1.0 Points

When using the indirect method for the statement of cash flows, depreciation expense is added to net income to obtain cash provided by operating activities.

A.TrueB.False