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WorksheetsACC 2 Chapter 14 Test Review
Total questions: 51
Worksheet time: 28mins
Name
Class
Date
1.
Cash Flow Statement is based upon
a)
Cash basis of accounting
b)
Accrual basis of accounting
c)
Credit basis of accounting
d)
None of the above
2.
Which of the following statements are false?
A) Cash Flow Statement is helpful in the formation of policies.
B) Cash Flow Statement is useful for external analysis
C) Cash Flow Statement is helpful in estimating future cash flow
A) Cash Flow Statement is helpful in the formation of policies.
B) Cash Flow Statement is useful for external analysis
C) Cash Flow Statement is helpful in estimating future cash flow
a)
Both A and B
b)
Both A and C
c)
Both B and C
d)
None of the above
3.
Cash from operating activities consist of ____
a)
Operational Net Profit
b)
Decrease in CA
c)
Increase in CL
d)
All
4.
Purchase of goodwill will appear in ____ activity?
a)
Operating
b)
Investing
c)
Both
d)
None
5.
Cash deposited into bank will result in ____ of cash
a)
Inflow
b)
Outflow
c)
No flow
d)
All
6.
Payment of rent relates to _____ activity
a)
Operating
b)
Financing
c)
Investing
d)
All
7.
Rent received by a financing company is classified under _____ activity.
a)
Financing
b)
Investing
c)
Operating
d)
None
8.
Dividend received by the financing company is classified under ______ activity.
a)
Operating
b)
Financing
c)
Investing
d)
None
9.
Which of the following is an example of a cash out-flow for a business?
a)
payments to creditors
b)
sale of goods
c)
payment from debtors
d)
receiving a loan from the bank
10.
If a cashflow forecast suggests that a firm will run out of cash, which would help the problem?
a)
purchase more fixed assets
b)
repay a bank loan
c)
pay suppliers immediately
d)
delay paying suppliers
11.
Issue of share capital is _____ activity
a)
Operating activity
b)
Financing activity
c)
Investing activity
d)
Cash Equivaleants
12.
The following items would be classified as operating activities on the statement of cash flows
a)
(a) Payment for inventory, payments for salaries, cash received from sale of goods
b)
(a) Payments on loan, payments for taxes, payments for rent
c)
(a) Acquisitions of equipment, payment of dividends , revenue
d)
(a) Proceeds from borrowing ,payments of dividends, purchases of supplies
13.
The following items would be classified as investing activities on the statement of cash flows
a)
(a) Sale of goods , receipt of dividends, repurchase of firms own stock
b)
(a) Proceeds from borrowing, payment of dividends, receipt of dividends
c)
(a) Sale of property, purchase of equity securities, loan to others
d)
(a) Proceeds from borrowing, payment of dividends, receipt of dividends
14.
The following items would be classified as financing activities on the statement of cash flows
a)
(a) Payments for inventory, payments to lenders, payments for taxes
b)
(a) Sale of goods, repayment of debt, loans to others
c)
(a) Proceeds from borrowing, payment of dividends , repayment of debt
d)
(a) Loans to others, returns from loans to others, acquisition of land
15.
Which item may be of concern when analyzing cash flow from operating activities?
a)
Repayment of debt
b)
payment of dividends
c)
increasing inventories
d)
(a) decreasing accounts receivable
16.
A cash flow statement shows an overview of money flowing in and out of a company
a)
True
b)
False
17.
There are no links between the cash flow statement and the other financial statement
a)
True
b)
False
18.
In a cash flow statement depreciation is deducted from profit because it is a non cash expense
a)
False
b)
True
19.
In a cash flow statement an increase in inventories has a negative effect on cash flow
a)
True
b)
False
20.
The financing activities section of a cash flow statement includes dividends paid
a)
False
b)
True
21.
Proceeds from the sale of non current assets are shown as a cash inflow in the investing activities section of a cash flow statement
a)
True
b)
False
22.
In a cash flow statement, the amount of a gain on the sale of non current assets is added to the profit from operations
a)
True
b)
False
23.
when a non current asset is revalued upwards, the amount of the revaluation is shown as a cash inflow in the investing activities section if a cash flow statememt
a)
False
b)
True
24.
The cash flow statement uses the money measurement concept, which means that only items which can be recorded in money terms are included in the cash flow statement
a)
True
b)
False
25.
For users of financial statements, because it shows of cash, a cash flow statement is considered to be the most objective of the three main financial statement
a)
False
b)
True
26.
Cash flow statement shows the flow of cash and cash equivalents during the period under report
a)
True
b)
False
27.
Cash equivalents are short term highly liquid investments that are readily convertible into known amount of cash and which are subject to insignificant risk of change in value
a)
False
b)
True
28.
Operating activities are the principal revenue producing activities of the enterprise and other activities that are not investing and financing
a)
True
b)
False
29.
For a trading company purchase and sale of goods is its revenue producing activities
a)
True
b)
False
30.
Acquisition and disposal of long term assets and other investments included in Cash equivalents.
a)
False
b)
True
31.
Issue of share capital is _____ activity
a)
Operating activity
b)
Financing activity
c)
Investing activity
d)
Cash Equivaleants
32.
Sale of plant is related to _____ activity
a)
Cash equivalents
b)
Operating activity
c)
Investing activity
d)
Financing activity
33.
Which item may be of concern when analyzing cash flow from operating activities?
a)
Repayment of debt
b)
payment of dividends
c)
increasing inventories
d)
(a) decreasing accounts receivable
34.
Identify one example of operation activity for a non-finance enterprise?
a)
Interest received from investment
b)
Payment of interest on debentures
c)
Payment of interest on debentures
d)
a) Cash received from the sale of goods
35.
Identify the transaction that would be shown under cash flow from financing activities.
a)
1. Identify the transaction that would be shown under cash flow from financing activities. Issue of shares
b)
Goodwill written off
c)
Sale of investment
d)
Receipt of dividend
36.
Identify one example of cash and cash equivalents?
a)
Payment of dividend
b)
Marketable securities
c)
Bank overdraft
d)
Purchase of furniture
37.
Made payments on accounts payable to merchandise suppliers.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
38.
Paid the principal amount of a note payable to First Bank.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
39.
Paid interest charges relating to a note payable to First Bank.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
40.
Issued bonds payable for cash; management plans to use this cash in the near future to expand manufacturing and warehouse capabilities.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
41.
Paid salaries to employees in the finance department.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
42.
Collected an account receivable from a customer.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
43.
Transferred cash from the general bank account into a money market fund.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
44.
Used the cash from the bond issue to purchase land and a building suitable for a manufacturing facility.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
45.
Made a year-end adjusting entry to recognize depreciation expense.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
46.
At year-end, purchased for cash an insurance policy covering the next 12 months.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
47.
Paid the quarterly dividend on preferred stock.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
48.
Paid the semiannual interest on bonds payable.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
49.
Received a quarterly dividend from an investment in the preferred stock of another corporation.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
50.
Sold for cash an investment in the preferred stock of another corporation.
a)
Operating
b)
Investing
c)
Financing
d)
Not Included
51.
Using the indirect method of preparing the statement of cash flows, the first item listed under Cash Flows from Operating Activities is
a)
Cash
b)
Accounts Receivable
c)
Net Income
d)
Cash Flows from Investing Activities
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