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Exam 16: The Cash Flow Statement

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Question 1

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Which of the following sections from the cash flow statement includes activities that increase and decrease non-current liabilities and owners' equity?

A) The financing section
B) The investing section
C) The non-cash investing and financing section
D) The operating section

E) B) and D)
F) A) and D)

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Question 2

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Which of the following would be considered an operating activity on the cash flow statement?

A) Payment to purchase equipment
B) The sale of inventory
C) The receipt of cash from sale of equipment
D) Dividends paid to shareholders

E) B) and D)
F) A) and B)

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Question 3

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Most public companies use the direct method to prepare their cash flow statement because the calculations are simpler.

Of the following,which is NOT a cash outflow from an investing activity?

Which of the following sections from the cash flow statement includes purchases and sales of non-current assets?

Which of the following transactions would be shown in the non-cash investing and financing activities section of the cash flow statement?

Companies sometimes make investments that do NOT require cash.Such transactions are called non-cash investing activities and appear in a separate section of the cash flow statement.

Which of the following sections from the cash flow statement includes activities that affect current assets and current liabilities on the balance sheet?

Which of the following items would be included as an operating activity on the cash flow statement?

The three activities of the cash flow statement in order of importance,from most important to least important,are:

In creating a cash flow statement using the indirect method,a gain on the sale of non-current assets must be shown as an addition to Profit in the operating activities section.

Which one of the following is a principal function of the cash flow statement?

Arturo Sales purchased some equipment for $12 000 by issuing a six-month bill payable.Because this was a non-cash transaction,it would not be shown in the main body of the cash flow statement but in a separate section for non-cash investing and financing activities.

Qtopia Company uses the direct method to prepare its cash flow statement.It has reported Cost of sales of $70 000 on its income statement for the year 2016.If the balance in the inventory account has gone up by $2 000 during the year,then $2 000 will have to be added to $70 000 as part of the process to calculate payments to suppliers for inventory purchases.

Which of the following would NOT be classified as an operating activity?

Avatar Company uses the indirect method to prepare the cash flow statement.Please refer to the following section of the comparative balance sheet: $\begin{array} { | l | r | r | r | } \hline & { \mathbf { 2 0 1 7 } } & { \mathbf { 2 0 1 6 } } & { \text { Increase/decrease } } \\\hline \text { Accounts payable } & \$ 4000 & \$ 6000 & \$ ( 2000 ) \\\hline \text { Accrued liabilities } & 2000 & 1000 & 1000 \\\hline \text { Long-term bills payable } & 84000 & 90000 & ( 6000 ) \\\hline \text { Total liabilities } & \$ 90000 & \$ 97000 & \$ ( 7000 ) \\\hline\end{array}$ The change in accounts payable will be shown as a positive cash flow in the adjustments to Profit.

Which of the following is the CORRECT order of the sections on a cash flow statement?

Interest expense incurred on a bill payable would be included in the financing section of the cash flow statement.

Qtopia Company uses the direct method to prepare its cash flow statement.It has reported Cost of sales of $70 000 on its income statement for the year 2016.If the balance in accounts payable (for inventory suppliers only)has gone down by $5 000 during the year,then $5 000 will have to be added to $70 000 as part of the process to calculate payments to suppliers for inventory purchases.

Which of the following sections from the cash flow statement would include the acquisition of a building by issuing ordinary shares?