Question 1

The cash flow on total assets ratio is calculated by:

Accepted Answer

A)   Dividing cash flows from operations by average total assets.
B)   Dividing total cash flows by average total assets.
C)   Dividing average total assets by cash flows from investing activities.
D)   Dividing average total assets by total cash flows.
E)   Total cash flows divided by average total assets times 365.F) A) and C)
G) None of the above

Question 2

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used.

Accepted Answer

A) True 
 B)False

Question 3

The statement of cash flows is:

Accepted Answer

A)   Another name for the statement of financial position.
B)   A financial statement that presents information about changes in equity during a period.
C)   A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities.
D)   A financial statement that lists the types and amounts of assets, liabilities, and equity of a business on a specific date.
E)   A financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period.F) A) and B)
G) C) and D)

Question 4

Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

Accepted Answer

A) True 
 B)False

Question 5

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method:

Accepted Answer

A)   $332,200.
B)   $236,800.
C)   $261,400.
D)   $186,800.
E)   $189,400.F) B) and E)
G) A) and D)

Question 6

Explain the value of separating cash flows into operating activities, investing activities and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

Accepted Answer

By separating cash flows into three categories, the statement of cash flows allows users to focus their analysis on specific areas of importance. The operating section of the statement reveals the net effect of cash inflows and cash outflows from the core activities of a business which directly affect its operating income. Operating cash flows indicate the health of a business. A business with a declining or negative amount of cash from operating activities may be in financial difficulty. Analysis of the financing section reveals to financial statement users how a business raises funds from the outside. Analysis of the investing activity section reveals whether or not a firm is acquiring new assets and disposing of existing assets and thus investing in the future of the company.

Question 7

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Accepted Answer

A) True 
 B)False

Question 8

Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

Accepted Answer

A) True 
 B)False

Question 9

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 10

Use the following information to calculate cash received from dividends:

Accepted Answer

A)   $26,400.
B)   $29,000.
C)   $29,800.
D)   $30,600.
E)   $32,400.F) All of the above
G) A) and D)

Question 11

A company had average total assets of $1,760,000, total cash flows of $1,320,000, cash flows from operations of $205,000, and cash flows from financing of $850,000. The cash flow on total assets ratio equals:

Accepted Answer

A)   1.33%.
B)   8.58%.
C)   11.65%.
D)   15.5%.
E)   75%.F) None of the above
G) B) and C)

Question 12

Cash flows from selling trading securities are usually reported in the statement of cash flows as part of:

Accepted Answer

A)   Operating activities.
B)   Financing activities.
C)   Investing activities.
D)   Noncash activities.
E)   None of these. This is not reported in the statement of cash flows.F) All of the above
G) A) and C) A

Question 13

The statement of cash flows reports and proves the net change in cash for a reporting period.

Accepted Answer

A) True 
 B)False

Question 14

A company's Inventory balance at 12/31/11 was $188,000 and $200,000 at 12/31/10. Its Accounts Payable balance at 12/31/11 was $84,000 and $80,000 at 12/31/10, and its cost of goods sold for 2011 was $720,000. The company's total amount of cash payments for merchandise in 2011 equals:

Accepted Answer

A)   $704,000.
B)   $712,000.
C)   $720,000.
D)   $728,000.
E)   $736,000.F) A) and E)
G) C) and D)

Question 15

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Accepted Answer

Noncash investing and financing activiti...

Question 16

Use the following information to calculate cash paid for wages and salaries:

Accepted Answer

A)   $157,400.
B)   $163,800.
C)   $168,000.
D)   $172,200.
E)   $174,400.F) C) and D)
G) A) and C)

Question 17

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from financing activities generally affect

Accepted Answer

A)   Net income, current assets, and current liabilities.
B)   Noncurrent assets.
C)   Noncurrent liability and the equity accounts.
D)   Both noncurrent assets and noncurrent liabilities.
E)   Equity accounts only.F) A) and B)
G) A) and C)

Question 18

Information to prepare the statement of cash flows usually comes from three sources: (1) ________________________, (2) _____________________, and (3) __________________.

Accepted Answer

C omparative balance...

Question 19

A cash coverage ratio of less than 1 indicates cash inadequacy to meet asset growth.

Accepted Answer

A) True 
 B)False

Question 20

All of the following statements related to reporting cash flows from operating activities under U.S. GAAP and IFRS are True except:

Accepted Answer

A)   The definition of cash and cash equivalents is similar for U.S. GAAP and IFRS.
B)   U.S. GAAP requires cash flows from interest revenue and dividend revenue be classified as operating activities.
C)   IFRS permits classification of interest revenue and dividend revenue under operating or investing activities.
D)   U. S. GAAP requires cash outflows for interest expense to be classified as financing activities.
E)   IFRS permits classification of interest expense under operating or financing activities.F) None of the above
G) A) and D) D

Exam 16: Reporting the Statement of Cash Flows

The cash flow on total assets ratio is calculated by:

Correct Answer
verified

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used.

Correct Answer
verified

The statement of cash flows is:

Correct Answer
verified

Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

Correct Answer
verified

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method:

Correct Answer
verified

Explain the value of separating cash flows into operating activities, investing activities and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Correct Answer
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Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

Correct Answer
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A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Correct Answer
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Use the following information to calculate cash received from dividends:

Correct Answer
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A company had average total assets of $1,760,000, total cash flows of $1,320,000, cash flows from operations of $205,000, and cash flows from financing of $850,000. The cash flow on total assets ratio equals:

Correct Answer
verified

Cash flows from selling trading securities are usually reported in the statement of cash flows as part of:

Correct Answer
verified
A

The statement of cash flows reports and proves the net change in cash for a reporting period.

Correct Answer
verified

A company's Inventory balance at 12/31/11 was $188,000 and $200,000 at 12/31/10. Its Accounts Payable balance at 12/31/11 was $84,000 and $80,000 at 12/31/10, and its cost of goods sold for 2011 was $720,000. The company's total amount of cash payments for merchandise in 2011 equals:

Correct Answer
verified

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Correct Answer
verified
Noncash investing and financing activiti...
View Answer

Use the following information to calculate cash paid for wages and salaries:

Correct Answer
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When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from financing activities generally affect

Correct Answer
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Information to prepare the statement of cash flows usually comes from three sources: (1) ______________, (2) _, and (3) ________.

Correct Answer
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C omparative balance...
View Answer

A cash coverage ratio of less than 1 indicates cash inadequacy to meet asset growth.

Correct Answer
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All of the following statements related to reporting cash flows from operating activities under U.S. GAAP and IFRS are True except:

Correct Answer
verified
D

Exam 16: Reporting the Statement of Cash Flows

The cash flow on total assets ratio is calculated by:

Correct AnswerverifiedShow Answer

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used.

Correct AnswerverifiedShow Answer

The statement of cash flows is:

Correct AnswerverifiedShow Answer

Depreciation expense is not reported on a statement of cash flows prepared under the direct method.

Correct AnswerverifiedShow Answer

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method:

Correct AnswerverifiedShow Answer

Explain the value of separating cash flows into operating activities, investing activities and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Correct AnswerverifiedShow Answer

Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

Correct AnswerverifiedShow Answer

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Correct AnswerverifiedShow Answer

Use the following information to calculate cash received from dividends:

Correct AnswerverifiedShow Answer

A company had average total assets of $1,760,000, total cash flows of $1,320,000, cash flows from operations of $205,000, and cash flows from financing of $850,000. The cash flow on total assets ratio equals:

Correct AnswerverifiedShow Answer

Cash flows from selling trading securities are usually reported in the statement of cash flows as part of:

Correct AnswerverifiedA

The statement of cash flows reports and proves the net change in cash for a reporting period.

Correct AnswerverifiedShow Answer

A company's Inventory balance at 12/31/11 was $188,000 and $200,000 at 12/31/10. Its Accounts Payable balance at 12/31/11 was $84,000 and $80,000 at 12/31/10, and its cost of goods sold for 2011 was $720,000. The company's total amount of cash payments for merchandise in 2011 equals:

Correct AnswerverifiedShow Answer

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Correct AnswerverifiedNoncash investing and financing activiti...View AnswerShow Answer

Use the following information to calculate cash paid for wages and salaries:

Correct AnswerverifiedShow Answer

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from financing activities generally affect

Correct AnswerverifiedShow Answer

Information to prepare the statement of cash flows usually comes from three sources: (1) ________________________, (2) _____________________, and (3) __________________.

Correct AnswerverifiedC omparative balance...View AnswerShow Answer

A cash coverage ratio of less than 1 indicates cash inadequacy to meet asset growth.

Correct AnswerverifiedShow Answer

All of the following statements related to reporting cash flows from operating activities under U.S. GAAP and IFRS are True except:

Correct AnswerverifiedD

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A

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Noncash investing and financing activiti...
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Information to prepare the statement of cash flows usually comes from three sources: (1) ______________, (2) _, and (3) ________.

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C omparative balance...
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D