PA 13 - Statament of Cash Flows Quiz

What is the primary purpose of the statement of cash flows?

• To verify that income exceeds expenses when there's profit

• To highlight cash receipts and cash payments during a specific period

• To assist in forming banking relationships

• To detail investing and financing transactions within the period

The cash flow statement summarizes:

• Revenue and expenses of an entity

• Operating, investing, and financing activities

• Financial relationships with lenders

• A daily record of cash transactions

The cash impact of transactions creating revenues and expenses is classified as:

• Operating activities

• Investing activities

• Financing activities

• Non-cash transactions

The order of activities in a cash flow statement is:

• Operating, investing, and financing

• Investing, operating, and financing

• Financing, operating, and investing

• Financing, investing, and operating

Which of the following activities is considered investing?

• Lending money and collecting repayments

• Issuing equity to raise funds

• Collecting revenue from goods and services

• Purchasing inventory for sale

Financing activities include:

• Lending money to other entities

• Issuing equity or debt

• Purchasing long-term assets

• Writing off uncollectible receivables

If accounts payable increase during a period, it means:

• Cash-based expenses are lower than accrual-based expenses

• Accrual-based expenses equal cash-based expenses

• Revenues exceed expenses on a cash basis

• Accrual revenues are less than cash revenues

Which of the following impacts cash during a period?

• Declaring dividends

• Recording depreciation expense

• Paying accounts payable

• Writing off bad debts

When using the indirect method, how is a gain on the sale of equipment handled?

• Added to net income

• Deducted from net income

• Ignored because it doesn't affect cash

• Excluded from the cash flow statement

A loss from selling equipment appears in the cash flow statement as a(n):

• Addition to investing cash flows

• Addition to net income

• Subtraction from operating cash flows

• Subtraction from investing cash flows