CHAPTER 11 PRACTICE

Question 1

paying interest on notes payable is a/an … activity

Answer 1

operating (could be Financing)

Question 2

paying principal on credit loan is a/an … activity

Answer 2

financing

Question 3

Recorded an adjusted entry to record an accrued salary expense’s effect on cash flow

Answer 3

None

Question 4

paid dividends to shareholders is a/an— activity

Answer 4

Financing (could be O)

Question 5

Capital expenditures ratio

Answer 5

Operating cash/Capital Expenditures(or investing)

Question 6

free cash flow =

Answer 6

cash flow from operating activities - dividends (less) - capital expeditures (less - additions to fixed assets and investment properties)

Question 7

to know if the company expandes

Answer 7

check investing activities cash flow

Question 8

Was the cash collected from customers during fiscal year 2020 higher or lower than Big Rock’s sales revenue for that year?

Answer 8

Big Rock expanded during both years 2019 and 2020. The statement of cash flows shows that it spent $952 and $1,250 in 2019 and 2020, respectively. The company paid for the expansion in 2019 from the cash resources available at the beginning of the year. The purchase of long-lived assets in 2020 was paid for from the cash generated through operating activities.