QUESTION 1

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports

	1.	the increase or decrease in cash
	2.	net cash flow from financing activities
	3.	cash at the end of the year
	4.	net cash flow from investing activities

QUESTION 2

The current period statement of cash flows includes the flowing:

Cash balance at the beginning of the period	$310,000
Cash provided by operating activities	185,000
Cash used in investing activities	43,000
Cash used in financing activities	97,000

The cash balance at the end of the period is

	1.	$45,000
	2.	$635,000
	3.	$125,000
	4.	$355,000

QUESTION 3

Free cash flow is

	1.	cash from financing, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends
	2.	cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends
	3.	all cash in the bank
	4.	cash from operations

QUESTION 4

Which one of the following below would not be classified as an operating activity?

	1.	selling expenses
	2.	interest expense
	3.	payment of dividends
	4.	income taxes

QUESTION 5

Discount Sales sells some used store fixtures. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $4,500. The value of this transaction in the Investing section of the statement of cash flows is:

	1.	$2,750
	2.	$1,750
	3.	$12,500
	4.	$4,500

QUESTION 6

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

	End	Beginning
Cash	$ 50,000	$ 60,000
Accounts receivable	112,000	108,000
Inventories	105,000	93,000
Prepaid expenses	4,500	6,500
Accounts payable (merchandise creditors)	75,000	89,000

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

	1.	$352,000
	2.	$296,000
	3.	$198,000
	4.	$324,000

QUESTION 7

Which of the following would not be found in a Schedule of Noncash Investing and Financing Activities, reported at the end of a Statement of Cash Flows?

	1.	bonds payable exchanged for capital stock
	2.	capital stock issued to acquire fixed assets
	3.	stock dividends declared
	4.	purchase of treasury stock

QUESTION 8

Which of the following below increases cash?

	1.	the declaration of a cash dividend
	2.	acquisition of treasury stock
	3.	borrowing money by issuing a six-month note
	4.	depreciation expense

QUESTION 9

All of the following are typically included in the Managements Discussion and Analysis in annual reports except:

	1.	journal entries.
	2.	explanations of any significant changes between the current and prior years financial statements.
	3.	off-balance-sheet arrangements
	4.	managements assessment of liquidity.

Question 10

Which of the following is required by the Sarbanes-Oxley Act of 2002?

	1.	A common-sized statement.
	2.	A price-earnings ratio.
	3.	A vertical analysis.
	4.	A report on internal control.

QUESTION 11

The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.

	1.	False
	2.	True