41 which of the following is a false statement a noncash expenses are added to net i 4352181

41.Which of the following is a FALSE statement?

a.noncash expenses are added to net income to arrive at cash from operations

b.payment of a current note payable is a financing activity but payment of interest on that note is an operating activity

c.the indirect format reconciles net income to cash flow from operating activities

d.issuance of stock is a financing activity but payment of dividends on that stock is an operating activity

42.Use the following information to calculate the cash from operating activities:

Net income$3,308

Depreciation expense712

Increase in accounts receivable500

Decrease in merchandise640

Increase in supplies86

Increase in accounts payable132

Decrease in wages payable75

Increase in interest payable56

Decrease in income tax payable140

a.$4,047

b.$3,991

c.$3,335

d.$2,569

43.In the long run, a company should attempt to meet most of its cash flow needs through its

a.income activities

b.financing activities

c.operating activities

d.investing activities

44.Which of the following situations would best indicate strong company performance?

operating cash flow       investing cash flow

a.positive                      negative

b.positive                      positive

c.negative                     negative

d.negative                     positive

45.Cash outflow from financing activities may indicate that

a.the company has a lot of good investing opportunities

b.the company is performing well but does not have a lot of good investing opportunities

c.the company has no excess cash

d.the company cannot create enough cash from its operations to meet ongoing needs

46.Which pattern of cash flows would indicate that the company is experiencing serious financial problems?

operating     investing     financing

a.+                 –                  +

b.-                 +                  +

c.+                 –                  –

d.+                +                  –

47.Which of the following is a false statement?

a.a company can have a net income for the period but have a net decrease in cash from operations

b.a company that consistently reports net cash inflow from investing activities has many growth opportunities

c.a company that reports a net loss for the period may not necessarily report a net cash outflow from operating activities

d.depreciation expense is added back to net income to arrive at cash from operations

48.Net income for FJ Company was $1,000,000.  Accounts payable at the beginning of the year was $200,000.  Accounts payable balance at the end of the year was $225,000.  When preparing the cash flow from operating activities under the indirect format, the required adjustment is

a.add $25,000 to net income

b.subtract $25,000 from net income

c.add $200,000 to net income

d.none

 

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