Cashflows

Question 1

The acquistion of land by isssuing share capital is:
a. A non-cash transaction that is not reported in a statement of cashflows
b. a cash transaction that is reported in the statement of cashflows.
c. a non- cash transaction the is rpeorted in the statement of cashflows
d. Only reported if the statement of cashflows is prepared using the direct method

Answer 1

a. A non-cash transaction the is not reported in the statment of cashflows

Question 2

The acquistion of land for cash appears in the:
a. operating activities
b. financing activites
c. Investing activities
d. does not appear on the cashflow statement

Answer 2

c. Investing activities

Question 3

The acquisition of land for $100,000 (of which $20,000 is on account) appears in the cashflows statement for and amount of:
a. $100,000
b. $20,000
c. $80,000
d. does not appear of the cashflow statement

Answer 3

c. $80,000

Question 4

White flag, A woman’s Clothing manufacture, reported salaries expense of $18 million. The beginning balance of salaries pahyable was $3 million, and the ending balance of salaries payable was $1 million. How uch did they pay in salaries?

a. $18 million
b. $19 million
c. $20 million
d. $21 million

Answer 4

$20 million

Question 5

Accounts receivable arising form sales to customers amounted to $35,000 and $30,000 at the beginning and end of year, respectively. Revenue reported on the income statement for the year was $130,000. Exclusive of the effects if the other adjustments, the cash flows from operating activities to be reported on the statements of cash flows is:
a. 100,000
b. 115,000
c. 165,000
d. 135,000

Answer 5

d. $135,000

130,000 + 35,000 - 30,000

Question 6

Tuncurry Ltd reported a loss of $15,000 for the year ended December 31, During the year Accounts receivable decreased by $6,000, merchandise inventory increased by $4,000, accounts payable increased by $5,000, and depreciation expense of $3,000 was recorded. Durig the year, operating activities:
a. Used net cash of $3,000
b. used net cash of $5,000
c. Provided net cash of $5,000
d. Provided net cash of $3,000

Answer 6

b. Used net cash of $5,000
(15,000)
6000
(4000)
5000
3000
=
(5000)

(15,000)

Question 7

Starting with profit and adjusting it for items that affected reported profit but whihc did not affect cash is called the:
a. Direct method
b. Indirect method
c. Working captial method
d. Cost-benefit method

Answer 7

b. Indirect method

Question 8

In calculating net cash provided by operting activities using the indirect method, an increase in prepaid expenses during a period is:
a. Deducted from the profit
b. aded to the profit
c. ignored because it does not affect the profit
d. ignored becasue it does not affect expenses

Answer 8

a. Deducted from the profit

Question 9

Using the indirect method, Amortisation expense for the period:
a. deducted from the profit
b. causes cash to increase
c. causes cash to decrease
d. is added to the profit

Amortisation is like depreciation

Answer 9

d. Is added to the profit

Question 10

A company reported a profit of $175,000. Depreciation expense is $17,000. During the year accounts receivable incrase and inventory decreased $12,000 and $30,000, respectively. Prepaid expenses and accounts payable decreased $1,500 and $5,000, respectively. There was also a loss on the sale of equipment of $6,000. The amount of cash provided by operatig activities was:
a. $188,500
b. $212,500
c. $206,500
d. $200,500

Answer 10

b. $ 212,500

175,000
17,000
(12,000)
30,000
1,500
(5,000)
6,000
=
212,500

Question 11

Cash collected from customers

Answer 11

opn accounts receivable
plus sales
less clos accounts receivable

Question 12

Cash payments to suppliers

Answer 12

Cogs
plus or minus increase or decrease in inventory
plus or minus increase or decrease in accounts payable

Adding on the inventory classfies the payments for new inventory youhave made
minusing an increase in accounts payable because it classfies the money you haven not paid to supliers yet

Question 13

Cash Payment for operatng expense

Answer 13

SGA (Operating expenses)
plus an increase in prepaid expense or less a decrease in prepaid expense
plus a decrease in accrued expense
less an increase in accrued expense

Liabilites are the oposite e.g instead of plus and inecrease you plus a decrease.

Question 14

Income tax expense

Answer 14

Tax expense
plus the decreae or minus the increase in tax payable

Question 15

Interest expense

Answer 15

Interst expense
plus a decrease in interest payable
less a increase in interest payable

Question 16

Which of the following is most likely to appear in the operating section of a cash flow statement
under the indirect method?
A. Net income.
B. Cash paid to suppliers.
C. Cash received from customers.
D. Cash paid for interest expense.

Answer 16

A. Net income.

Question 17

2. The order of presentation of activities on the statement of cash flows is:

Answer 17

*A. Operating, investing, financing

Question 18

An inflow of cash would result from which of the following?
A. The increase in an asset account other than cash;
B. The decrease in an asset account other than cash;
C. The decrease in an equity account;
D. the decrease in a liability account;

Answer 18

B. The decrease in an asset account other than cash;

Question 19

Investing activities include:
A. Collecting cash from loans made.
B. Obtaining cash from creditors.
C. Obtaining capital from owners.
D. Repaying borrowed money.

Answer 19

A. Collecting cash from loans made.

Question 20

On the Cash Flow Statement, declared and issued a share dividend appears in:
A. Operating activities section.
B. Investing activities section.
C. Financing activities section.
D. Does not represent a cash flow.

Answer 20

*D. Does not represent a cash flow.

Question 21

6. The change in retained earnings is affected by which of the following:
   A. Net income and common stock;
   B. Net income and receipt of dividend;
   C. Net income and payment of dividends;
   D. Payment of dividends and common stock

Answer 21

C. Net income and payment of dividends;

Question 22

Issued shares to acquire equipment appears as part of:
A. Operating activities section.
B. Investing activities section.
C. Financing activities section.
D. Does not represent a cash flow

Answer 22

D. Does not represent a cash flow

Question 23

. Issued share capital for cash appears as part of:
A. Operating activities section.
B. Investing activities section.
C. Financing activities section.
D. Does not represent a cash flow.

Answer 23

C. Financing activities section.

Question 24

Purchased land for cash appears as part of:
A. Operating activities section.
B. Investing activities section.
C. Financing activities section.
D. Does not represent a cash flow

Answer 24

B. Investing activities section.

Question 25

G Corp. reported cost of goods sold for the year of $90 million. Total assets increased by $55
million, including an decrease of $5 million in inventory. Total liabilities increased by $45 million,
including an increase of $2 million in accounts payable. The cash paid by the company to its suppliers
is most likely closest to:
A. $87 million.
B. $93 million.
C. $83 million.
D. $97 million

Answer 25

C. $83 million.

Question 26

R Company, a consulting company, reported total revenues of $120 million, total expenses of $80
million, and net income of $40 million in the most recent year. If accounts receivable increased by
$20 million, how much cash did the company receive from customers?
A. $90 million.
B. $100 million.
C. $20 million.
D. $60 million.

Answer 26

B. $100 million.

Question 27

S Ltd reported profit of $30,000 for the year. During the year, accounts receivable decreased by
$6,000, accounts payable increased by $4,000 and depreciation expense of $7,000 was recorded. Net
cash provided by operating activities for the year is:
A. $33,000.
B. $47,000.
C. $55,000.
D. $59,000

Answer 27

B. $47,000.