Chapter 12

Question 1

What are the three sections of the statement of cash flows?

Answer 1

• Operating activities
• Investing activities
• Financing activities

Question 2

The operating activities section includes cash ______ and cash ______ that result from operations of the business.

Answer 2

inflows

outflows

Question 3

T or F: Companies want most of their cash to come from operating activities.

Answer 3

True

Question 4

Interest can be both an ________ and _________ operating activity.

Answer 4

inflow

outflow

Question 5

T or F: Interest can be any kind of activity.

Answer 5

False, it is ALWAYS an operating activity.

Question 6

List examples of cash inflows from operating activities.

Answer 6

• receipts from sales
• commissions and fees
• interest and dividends received

Question 7

List some examples of cash outflows from OA.

Answer 7

• payments for inventory
• salaries and wages
• operating expenses
• interest on liabilities
• taxes

Question 8

List examples of cash inflows from IA.

Answer 8

• selling property, plant and equipment
• selling investments
• collecting loans

Question 9

List examples of cash outflows from IA.

Answer 9

• purchasing property, plant, and equipment
• purchasing investments
• lending to others

Question 10

Borrowing money and issuing common stock are examples of cash inflows from _________ ________.

Answer 10

financing activities

Question 11

Cash outflows from FA can be _________ ______, purchasing __________ ________, and paying __________.

Answer 11

repaying debt

treasury stock

dividends