QuizMe

1: Non Cash investing and financing transactions:

Appear as a separate schedule on the statement of cash flows

Appear in either the investing or financing activities section, but not both

Are excluded from the statement of the cash flows

Appear in both the investing and financing activities section

2: Cash equivalents do not include:

U.S. Treasury bills

Money market accounts

Marketable securities

Commercial paper

3: Investors and creditors would find the statement of cash flows least useful in assessing:

Financial position at a point in time

Need for additional financing

ability to pay dividends and liabilities

Ability to generate positive future cash flows

4: Collected accounts receivables:

Does not represent a cash flow

Operating activities section

Financing activities section

Investing activities section

5: If net cash flows from operating activities were $187,000, net income were $50,000, and net sales were $600,000, the cash flow yield would equal (Round to on decimal place)

$137,000

$237,000

3.7 times

$413,000

6: If the indirect method is used to prepare a statement of cash flows, which of the following would be deducted from the net income to arrive at net cash flows from operating activities:

Increase in accrued liabilities

Increase in income taxes payable

Increase in accounts receivable

Decrease in prepaid expenses

7: indirect method is used to compute net cash flows from operating activities. From the financial statements –“Increase in Accounts Receivable” indicate the effect on net income in arriving at net cash flow flows from operating activities

Add to net income to arrive at net cash flows from operating activities

Subtract from net income to arrive at net cash flows from operating activities

Not used to adjust net income to calculate net cash flows from operating activities

8: Assume the indirect method is used to compute net cash flows from operating activities. From the financial statements –“Decrease in Prepaid Expenses” indicate the effect on net income in arriving at net cash flow flows from operating activities

Add to net income to arrive at net cash flows from operating activities

b. Subtract from net income to arrive at net cash flows from operating activities

c. Not used to adjust net income to calculate net cash flows from operating activities.

9: If the indirect method is used, each of the following is a proper adjustment to net income to arrive at net cash flows from operating activities, except:

Deducting a decrease in Prepaid Expenses

Adding an increase in Salaries Payable

Deducting an increase in Accounts Receivable

Adding a decrease in inventory

10: In preparing a statement of cash flows using the indirect method, an increase in unearned revenue account should:

Be shown as a financing activity

Be shown as a deduction from net income in computing net cash flows from operating activities

Not be shown on the statement of cash flows

Be shown as an addition to net income in computing net cash flows from operating activities

11: On the statement of cash flows prepared using the indirect method, the amount representing cash paid for interest would:

Be included in the net cash flows from financing activities section

Not be shown

Be included in the net cash flows from investing activities section

Be included in the net cash flows from operating activities section