1.Which of the following is a cash flow from an investing activity?
a.payment for advertising
b.cash receipt from a customer for a previous credit sale
c.cash received from sale of equipment
d.payment of dividends
Paid for inventory$ 20,000
Paid wages to employees40,000
Received from cash sales100,000
Paid for equipment60,000
Received a loan70,000
What was the cash flow from financing activities?
3.The direct and indirect formats are methods of preparing the
a.operating activities section of a statement of cash flows
b.investing activities section of a statement of cash flows
4.A company's net income and operating cash flow are _______ equal.
5.In the long run, a firm must depend on its _______ activities to meet most of its cash flow needs.
6.The primary difference between the cash flows statement and all other primary external financial statements is that the cash flows statement is
a.not an accrual based statement and all others are
b.not prepared unless the firm is a manufacturer
c.an optional statement in the external reporting package
d.prepared before the end of the year and not after
7.Which of the following best describes the purpose of the statement of cash flows?
a.identify the revenues and expenses of the accounting period
b.report the inflows and outflows of cash
c.balance current period revenues with those of the previous period
d.report assets, liabilities and owners' equity as of a specific date
8.Which of the following is a fundamental purpose of the statement of cash flows?
To report the To report the
inflows of cash outflows of cash
9.Differences between the direct format and indirect format of the statement of cash flows are found in which section(s) of the statement?
d.all three sections (operating, financing, investing)
10.The statement of cash flows is designed to report
a.how the previous period's income statement relates to the current period's income statement
b.only the sources and uses of cash during the current period
c.the cash from operating, financing and investing activities of the firm during the current period
d.the effects of the current period's income statement on the current period's balance sheet