Chapter 17

Question 1

Operating activities involve ____ items

Answer 1

Income Statement

Question 2

Investing activities involve cash flows from changes in ___ and ___

Answer 2

Investments and Long-Term Assets

Question 3

Financing activities involve cash flows from changes in ___ and ___ items.

Answer 3

Long-term liability and Stockholder Equity

Question 4

Issuing debt is a(n) ___ activity

Answer 4

Financing

Question 5

Buying and selling PPE assets is a(n) ___ activity

Answer 5

Investing

Question 6

Losses on disposal of PPE should be ___ to convert net income to net cash

Answer 6

Added

Question 7

Gains on disposal of PPE should be ___ to convert to net cash

Answer 7

Deducted

Question 8

Increases in current assets (like accounts receivable or inventory) should be ___ from net income

Answer 8

Deducted

Question 9

Decreases in current assets should be ___ from net income

Answer 9

Added

Question 10

Purchase of PPE should be __

Answer 10

Deducted (cash went out)

Question 11

Sale of PPE should be

Answer 11

Added (cash came in)

Question 12

Issuance of stock is a(n) __ activity

Answer 12

Financing Activity

Question 13

Issuance of stock should be __ for net cash flows

Answer 13

Added (cash came in)

Question 14

Payment of cash dividends should be ___ for net cash flows

Answer 14

Deducted (cash went out)

Question 15

Payment of cash dividends is a(n) __ activity

Answer 15

Financing

Question 16

Decrease in income taxes payable should be ___

Answer 16

Deducted (cash went out)

Question 17

Redemption of bonds should be ___

Answer 17

Deducted (cash went out)

Question 18

Calculate free cash flow

Answer 18

Cash from Operating Activities minus Cap Expenditures minus Cash Dividends