chapter 17 true/false

Question 1

the statement of cash flows is an optional financial statement

Answer 1

false

Question 2

the primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of an entity during a period

Answer 2

true

Question 3

the statement of cash flows classifies cash receipts and cash payments into two categories: operating activities and non operating activities

Answer 3

false

Question 4

investing activities pertain only to cash flows from acquiring and disposing of investments and productive long lived assets

Answer 4

false

Question 5

financing activities include the obtaining of cash from issuing debt and repaying the amounts borrowed

Answer 5

true

Question 6

a cash inflow from the sale of equity securities of another entity is an investing activity

Answer 6

true

Question 7

cash outflows to pay employees for services rendered are a operating activity

Answer 7

true

Question 8

a significant non cash transaction occurs when plant assets are acquired by issuing bonds

Answer 8

true

Question 9

significant non cash transactions are reported in the statement of cash flows in a separate section entitled significant non cash transactions

Answer 9

false

Question 10

in the statement of cash flows, the operating activities section is presented last

Answer 10

false

Question 11

the statement of cash flows helps investors assess the company ‘s ability to pay cash diviends

Answer 11

true

Question 12

the adjusted trial balance is the only item needed to prepare the statement of cash flows

Answer 12

false

Question 13

the indirect method is used more often in practice than the direct method

Answer 13

true

Question 14

in determining net cash provided by operating activities, accrual basis net income is converted to cash basis net income

Answer 14

true

Question 15

under the indirect method, retained earnings is adjusted for items that affected reported net income but did not affect cash

Answer 15

false