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A company uses the indirect method to prepare the statement of cash flows.It sold a piece of equipment at a loss of $3,600.The equipment was purchased several years ago for $70,500 and had accumulated depreciation of $52,900.What is reported under the operating activities section on the statement of cash flows?


A) Cash proceeds of $14,000 are subtracted from net income.
B) Cash proceeds of $14,000 are added to net income.
C) The loss of $3,600 is added to net income.
D) The loss of $3,600 is subtracted from net income.

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Which of the following financial statements reports an entity's cash receipts and cash payments during the period?


A) The statement of cash flows
B) The statement of retained earnings
C) The balance sheet
D) The income statement

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Buying and selling property,plant and equipment would be considered in:


A) the operating portion of the statement of cash flows.
B) the investing portion of the statement of cash flows.
C) the financing portion of the statement of cash flows.
D) none of the above portions of the statement of cash flows.

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A cash flow statement shows $13,000 from operations,($9,000) from investing,and $21,000 from financing.The cash balance must have increased or decreased by:


A) $12,000.
B) $25,000.
C) $43,000.
D) $34,000.

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The statement of cash flows reflects cash flows on a particular date.

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Of the following,which is the primary source of cash over the life of a business?


A) Operating activities
B) Financing activities
C) Investing activities
D) None of the above

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Cash received from selling merchandise would be considered a:


A) cash inflow from investing activities.
B) cash inflow from operating activities.
C) cash inflow from financing activities.
D) cash outflow from operating activities.

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The balance sheet for Maleenah Corporation follows: The balance sheet for Maleenah Corporation follows: Operating income for the period was $13,800,while cash dividends paid were $4,300. -The overall total of the uses of cash for Maleenah Corporation for the year was: A) $ 2,000. B) $32,300. C) $34,500. D) $55,100. Operating income for the period was $13,800,while cash dividends paid were $4,300. -The overall total of the uses of cash for Maleenah Corporation for the year was:


A) $ 2,000.
B) $32,300.
C) $34,500.
D) $55,100.

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A company's income statement reports depreciation expenses of $25,000.How will the depreciation expense be reported on the statement of cash flows if the company uses the direct method to prepare the statement?


A) Depreciation would not be reported on the statement of cash flows.
B) Depreciation expense would be an addition under financing activities.
C) Depreciation expense would be a deduction under operating activities.
D) Depreciation expense would be an addition under investing activities.

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Operating activities include activities that affect long-term liabilities and owners' equity.

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A company uses the indirect method to prepare the statement of cash flows.How will a loss from the sale of equipment be presented on the statement?


A) A loss from the sale of equipment will be an addition in the financing activities section.
B) A loss from the sale of equipment will be added to net income in the operating activities section.
C) A loss from the sale of equipment will be deducted from net income in the operating activities section.
D) A loss from the sale of equipment will be an addition in the investing activities section.

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Paying cash dividends would be:


A) a cash outflow from financing.
B) a cash outflow from operations.
C) a cash outflow from investing.
D) none of the above.

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A company uses the indirect method to prepare the statement of cash flows.How will the adjustment to reflect the amount of cash payments to employees be presented on the statement?


A) The adjustment will be for the increase or decrease in accrued expenses for the period and will adjust net income in the operating activities section.
B) The adjustment will be for the increase or decrease in accounts receivable for the period and will adjust net income in the operating activities section.
C) The adjustment will be for the increase or decrease in inventory for the period and will adjust net income in the operating activities section.
D) The adjustment will be for the increase or decrease in accounts payable for the period and will adjust net income in the operating activities section.

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A company uses the direct method to prepare the statement of cash flows.How will the amount of cash payments to employees be computed?


A) The amount of cash payments to employees is computed as salary expense plus the decrease in salaries payable.
B) The amount of cash payments to employees is computed as salary expense plus the ending balance salaries payable.
C) The amount of cash payments to employees is computed as salary expense plus the increase in salaries payable.
D) The amount of cash payments to employees is computed as salary expense plus the beginning balance in salaries payable.

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A company acquires its own stock to hold as treasury stock.Where would this transaction appear if the company prepares the statement of cash flows using the indirect method or the direct method?


A) The acquisition of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.
B) The acquisition of treasury stock would be presented in the financing activities section as a cash payment under both methods.
C) The acquisition of treasury stock would be presented in the non-cash investing and financing activities section under both methods.
D) The acquisition of treasury stock would be presented in the investing activities section as a cash payment under both methods.

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A company sells treasury stock for an amount less than its acquisition cost.Where would this transaction appear if the company prepares the statement of cash flows using the indirect method or the direct method?


A) The sale of treasury stock would be presented in the investing activities section as a cash receipt under the both methods.
B) The sale of treasury stock would be presented in the financing activities section as a cash receipt under the both methods.
C) The sale of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.
D) The sale of treasury stock would be presented in the non-cash investing and financing activities section under both methods.

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A company purchases land using its common stock.Where would this transaction appear if the company prepares the statement of cash flows using the indirect method or the direct method?


A) The purchase of land would be presented in the financing activities section as a cash payment under both methods.
B) The purchase of land would be presented in the investing activities section as a cash payment under both methods.
C) The purchase of land would be presented in the non-cash investing and financing activities section under both methods.
D) The purchase of land would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.

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List three ways that owners and investors use the statement of cash flows.

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A.The statement of cash flows is used to...

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Of the following,which is NOT a cash inflow from a financing activity?


A) Additional owner investment
B) Issuance of stock
C) Interest revenue on loans
D) Mortgage proceeds

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Which of the following are the three major categories included on the statement of cash flows?


A) Investing,operating and financing activities
B) Investing,capital and financing activities
C) Investing,operating and capital activities
D) Financial,operating and capital activities

Correct Answer

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