1.5 Statement Of Cash Flows Flashcards
All of the following should be classified under the operating section in a statement of cash flows except a
A. Decrease in inventory
B. Depreciation expense
C. Decrease in prepaid insurance
D. Purchase of land and building in exchange for a long-term note
D. Purchase of land and building in exchange for a long-term note.
A company entered into the following transactions during the year
- purchased stock for $200,000
- purchased electronic equipment for use on the manufacturing floor for $300,000
- paid dividends to shareholders of the company in the amount of $800,000
The amount to be reported in the investing activities section of the company’s statement of cash flows would be
A. $200,000
B. $500,000
C. $800,000
D. $1,300,000
B. $500,000
In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for
A. Operating activities
B. Borrowing activities
C. Lending activities
D. Financing activities
A. Operating activities
A company acquired land by assuming a mortgage for the full acquisition cost. This transaction should be disclosed on its statement of cash flows as a(n)
A. Financing activity
B. Investing activity
C. Operating activity
D. Non-cash financing and investing activity
D. Non-cash financing and investing activity
The exchange of debt for a long-lived asset does not involve a cash flows. It is therefore classified as a noncash financing and investing activity.
To calculate cash flows using the indirect method, which one of the following items must be added back to net income?
A. Interest income
B. Depreciation expense
C. Marketing expense
D. Revenue
B. Depreciation expense
All of the following should be classified as investing activities in the statement of cash flows except
A. Cash inflows from the sale of a manufacturing plant
B. Cash inflows from the sale of bonds of other entities
C. Cash outflows to purchase manufacturing equipment
D. Cash outflows to lenders for interest
D. Cash outflows to lenders for interest