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WorksheetsStatement of Cash Flows Quiz
Total questions: 78
Worksheet time: 39mins
A statement of cash flows accomplishes all of the following EXCEPT:
determines the ability of the company to pay dividends and interest.
provides information about the cash receipts and cash payments during a period.
lists revenues and expenses.
predicts future cash flows.
Highly liquid short-term investments that can be immediately converted into cash are called:
trading securities.
cash equivalents.
current assets.
accounts receivable.
Creditors analyze the statement of cash flows to determine:
total interest earned during the period.
the quality of the company's earnings.
whether or not the company can pay principal and interest on its debt.
if management was overpaid.
The statement of cash flows does NOT report:
cash payments in the current year.
cash receipts in the current year.
noncash investing and financing activities.
revenues and expenses for the current year.
The statement of cash flows is designed to fulfill all the following purposes EXCEPT to:
show the relationship of net income to changes in the company's cash.
provide information about cash receipts and cash payments.
assess the company's ability to generate future cash flows.
evaluate the company's liquidity and financial flexibility.
Which financial statements cover a period of time?
Income Statement only
Income Statement and Statement of Stockholders' Equity
Income Statement, Statement of Stockholders' Equity and Statement of Cash Flows
Income Statement, Statement of Stockholders' Equity, Statement of Cash Flows and Balance Sheet
Which financial statement(s) show(s) one point in time?
Balance Sheet only
Income Statement and Statement of Stockholders' Equity
Income Statement, Statement of Stockholders' Equity and Statement of Cash Flows
Income Statement, Statement of Stockholders' Equity, Statement of Cash Flows and Balance Sheet
A good predictor of future cash flows includes:
net income in past year.
net income in current year.
past cash receipts and past cash payments.
cash receipts and cash payments in the current year.
The statement of cash flows provides information about:
a company's ability to pay interest and dividends.
a company's future cash flows.
The three types of activities reported on the statement of cash flows are:
operating, investments, and financing.
operating, investing, and free flow.
operating, investing, and financing.
operating, indirect, and direct.
The three types of activities reported on the statement of cash flows are presented in the following order:
operating, investing, and financing.
financing, operating, and investing.
investing, operating, and financing.
financing, investing, and operating.
The financial statement that reports cash receipts and cash payments classified according to the company's operating, investing, and financing activities is the:
income statement.
balance sheet.
statement of cash flows.
statement of stockholders' equity.
Which of the three types of activities reported on the statement of cash flows is the MOST critical for a company's long-term survival?
investing activities
operating activities
financing activities
marketing activities
On the statement of cash flows, financing activities involve:
purchasing investments.
acquiring long-term assets.
lending money.
borrowing by signing a long-term note.
On the statement of cash flows, investing activities include:
obtaining cash from creditors.
collecting cash on long-term loans.
selling stock to stockholders.
repaying borrowed money.
Usually, the most important category on the statement of cash flows is cash flows from:
operating activities.
investing activities.
financing activities.
noncash activities.
Increases and decreases in the long-term assets are reported on the statement of cash flows as:
operating activities.
investing activities.
financing activities.
Increases and decreases in the long-term liability accounts are reported on the statement of cash flows as:
operating activities.
investing activities.
financing activities.
noncash activities.
Cash received from the issuance of bonds would be reported on a statement of cash flows under:
investing activities.
financing activities.
operating activities.
noncash activities.
Purchases of treasury stock would be reported on a statement of cash flows as:
operating activities.
investing activities.
financing activities.
noncash investing and financing activities.
Which of the following would be reported on a statement of cash flows as an investing activity?
depreciation expense
purchase of treasury stock
sale of equipment for cash
payment of cash dividends
On the statement of cash flows, in which section would the purchase of land with cash appear?
operating activities
investing activities
financing activities
noncash investing and financing activities
Which of the following would be reported on a statement of cash flows as a financing activity?
sale of equipment
amortization expense
collection of notes receivable
purchase of treasury stock
Under the indirect method of preparing the operating section of the statement of cash flows, net cash provided by operating activities is $247,000. If the direct method of preparing the operating section of the statement of cash flows was used:
net cash provided by operating activities would be the same, $247,000.
net cash provided by operating activities would be more than $247,000.
net cash provided by operating activities would be less than $247,000.
net cash provided by financing and investing activities would equal $247,000.
Under the direct method of preparing the operating section of the statement of cash flows, net cash provided by financing activities is $488,000. If the indirect method of preparing the statement of cash flows was used:
net cash provided by financing activities would be less than $488,000.
net cash provided by financing activities would be more than $488,000.
A successful business must generate most of its cash from:
investing activities.
financing activities.
operating activities.
noncash investing and financing activities.
The last section on the statement of cash flows is:
operating activities.
investing activities.
financing activities.
noncash investing and financing activities.
Google Inc. paid $10.6 billion to acquire other companies. Google also paid $33 billion to purchase long-term securities. How are these cash outflows classified on the statement of cash flows?
financing activities
operating activities
investing activities
noncash investing and financing activities
Net cash provided by operating activities under the indirect method must be net cash provided by operating activities under the direct method.
equal to
larger than
smaller than
unrelated to
Positive signs of a successful company as seen on the statement of cash flows do NOT include:
investments in property, plant and equipment.
operating activities are the largest source of cash.
banks are willing to lend money to the company.
the sale of a majority of a company's plant assets.
In 2023, Gary Kraen Company purchases $100,000 of equipment with cash. This purchase would be reported on Gary Kraen Company's 2023 statement of cash flows as:
a financing activity.
an operating activity.
an investing activity.
none of the above.
Financing activities on a statement of cash flows relate to:
current liabilities and long-term liabilities.
current assets and long-term assets.
long-term assets.
long-term liabilities and stockholders' equity.
Examples of financing activities on a statement of cash flows do NOT include:
issuing stock.
borrowing money.
buying treasury stock.
purchasing equipment.
Using the indirect method to prepare the statement of cash flows, a gain or loss on the sale of a long-term asset would be part of:
investing activities.
financing activities.
operating activities.
noncash investing and financing activities.
Using the indirect method to prepare the statement of cash flows, net income would be part of:
investing activities.
financing activities.
operating activities.
noncash investing and financing activities.
Cash received for revenues or cash paid for expenses would be part of the:
investing activities.
financing activities.
operating activities.
noncash investing and financing activities.
Under the indirect method of preparing the statement of cash flows, the starting point to determine Net cash provided by operating activities is:
the beginning cash balance.
the ending cash balance.
net income.
sales.
Which of the following transactions does NOT affect cash during a period?
sale of treasury stock
write-off of an uncollectible account
purchase of property with cash
payment of an accounts payable
The purchase of treasury stock would be reported on a statement of cash flows as a:
cash outflow under the financing activities.
cash inflow under the investing activities.
cash inflow under the operating activities.
cash outflow under the investing activities.
Under the indirect method of preparing the statement of cash flows, a gain on the sale of equipment is:
subtracted from net income in the operating activities section.
added to net income in the operating activities section.
subtracted from the book value of the equipment in the financing activities section.
ignored since this transaction does not affect cash.
When preparing the statement of cash flows using the indirect method, which statement is INCORRECT?
Gains on the sale of long-term assets are subtracted from net income.
Losses on the sale of long-term assets are subtracted from net income.
Depreciation expense is added to net income.
Increases in current liabilities are added to net income.
The method of preparing the statement of cash flows that starts with net income and adjusts it for items that affect net income, but do NOT affect cash is called the:
net income method.
direct method.
indirect method.
non-cash method.
All of the following may appear as an adjustment of net income when preparing the statement of cash flows using the indirect method EXCEPT:
payment of cash dividends.
depreciation expense.
loss on sale of long-term assets.
an increase in accounts payable.
Using the indirect method to calculate net cash provided by operating activities, a decrease in prepaid expenses is:
subtracted from net income.
added to net income.
ignored since it does not affect expenses.
ignored since it does not affect net income.
Under the indirect method of preparing a statement of cash flows, amortization expense for the current period is:
added in the investing activities section.
subtracted in the investing activities section.
added in the financing activities section.
added in the operating activities section.
In computing net cash provided by operating activities using the indirect method, each of the following is added to net income EXCEPT:
an increase in accrued expenses payable.
a gain on sale of equipment.
depreciation expense.
a decrease in inventory.
Using the indirect method to prepare the statement of cash flows, dividends paid during the year are:
subtracted from net income in the operating activities section.
added to net income in the operating activities section.
shown as a cash outflow in the financing activities section.
shown as a cash outflow in the investing activities section.
Using the indirect method of preparing the statement of cash flows, which of the following would be added to net income?
depletion expense
an increase in accounts receivable
a decrease in accounts payable
gain on the sale of property
On a statement of cash flows prepared using the indirect method, an increase in accounts payable during the period is:
added to net income to determine net cash provided by operating activities.
deducted from net income to determine net cash provided by operating activities.
shown as a cash inflow in the investing activities section.
shown as a cash inflow in the financing activities section.
When converting net income to net cash provided by operating activities on the statement of cash flows, indirect method, which of the following is NOT added to net income?
gain on sale of land
decrease in inventory
decrease in accounts receivable
depreciation expense
Salem, Inc. uses the indirect method to prepare its statement of cash flows. Salem's Accumulated Depreciation—Trucks account increased during the period. Salem did not purchase or sell trucks during the period. The increase in Accumulated Depreciation—Trucks is:
subtracted from net income to determine net cash provided by operating activities.
added to net income to determine net cash provided by operating activities.
shown as a cash outflow on the investing activities section.
shown as a cash outflow on the financing activities section.
In 2023, Chen Corporation purchased treasury stock with a cost of $53,000. During the year, the company declared and paid dividends of $11,000 and issued bonds payable for $1,100,000. Net cash provided by financing activities for 2023 is:
$1,036,000.
$1,047,000.
$1,089,000.
$1,100,000.
In 2023, Forever Young, Inc. sold land for $120,000 cash, purchased equipment for $21,000 cash and issued bonds for $90,000 cash. The Net cash provided by investing activities is:
$99,000.
$141,000.
$189,000.
$210,000.
Independent Support, Inc. issued common stock for $520,000 cash. The company declared and paid cash dividends of $55,000 and purchased treasury stock at a cost of $18,000. The financing section of the statement of cash flows will report Net cash provided by financing activities of:
$447,000.
$465,000.
$520,000.
$538,000.
If $410,000 of bonds are issued during the year and $80,000 of bonds are retired during the year, the statement of cash flows (indirect method) will show a(n):
net gain on retirement of bonds of $330,000 in the financing activities section.
increase in cash of $410,000 in the financing activities section and a decrease in cash of $80,000 in the financing activities section.
net increase in cash of $330,000 in the operating activities section.
net decrease in cash of $330,000 in the operating activities section.
On a statement of cash flows, activities that affect long-term assets are classified as:
Operating activities.
Financing activities.
Investing activities.
Non-cash activities.
On a statement of cash flows prepared under the indirect method, Net cash provided by investing activities is:
$476,000.
$546,000.
$522,000.
$570,000.
On the statement of cash flows prepared under the indirect method, activities that affect stockholders' equity and long-term debt are classified as:
operating activities.
investing activities.
financing activities.
free cash flows.
Land was purchased by issuing common stock. This transaction would be reported on the statement of cash flows as a(n):
operating activity.
investing activity.
financing activity.
noncash investing and financing activity.
On the statement of cash flows, cash used for financing activities include:
issuing stock for property.
sale of treasury stock.
payment of notes payable.
purchase of plant assets
During the year, Lady Liberty Corporation's Treasury Stock account increased $54,000 due to a cash purchase, cash dividends of $40,000 were paid and the company reported net income of $220,000. On the statement of cash flows (indirect method), Net cash used by financing activities is:
($94,000).
($126,000).
($166,000).
($180,000).
Which statement about the statement of cash flows is FALSE?
The statement of cash flows is based on information from several financial statements.
The statement of cash flows is based on information from a company's income statement only.
The change in the Cash account on the comparative balance sheets is the check figure for the statement of cash flows.
The indirect method of preparing the statement of cash flows is used by the vast majority of companies in the United States.
On a statement of cash flows prepared with the indirect method, adjustments to reconcile net income to net cash provided by operating activities do NOT include:
gain on sale of equipment.
patent amortization expense.
On a statement of cash flows prepared with the indirect method, financing activities do NOT include:
payment of principal amounts of long-term debt.
payment of interest on long-term debt.
payment of dividends.
sale of treasury stock.
On a statement of cash flows prepared with the indirect method, investing activities do NOT include:
sale of investments that are not cash equivalents.
receipt of interest on investments.
collection of note receivable.
lending money to an employee.
A company is adjusting net income to determine Net cash provided by operating activities for the statement of cash flows. The indirect method is used. Which statement is INCORRECT?
An increase in a noncash current asset is subtracted from net income.
A decrease in a noncash current asset is added to net income.
A decrease in a current liability is added to net income.
An increase in a current liability is added to net income.
Depreciation expense is added to net income when reconciling net income to net cash provided by operating activities because it:
represents a cash inflow.
is a tax deduction that reduces the payment of taxes.
conserves cash outflows for taxes.
On January 1, 2023, plant assets, net are $190,000. On December 31, 2023, plant assets, net are $300,000. Depreciation expense for the year is $18,000. During the year, plant assets were acquired for $147,000 with cash. There is a Gain on sale of plant asset of $12,000. What is the book value of the plant asset sold during the year?
$0
$7,000
$19,000
$37,000
On January 1, 2023, plant assets, net are $190,000. On December 31, 2023, plant assets, net are $280,000. Depreciation expense for the year is $22,000. During the year, plant assets were acquired for $155,000 with cash. There is a Gain on sale of plant asset of $8,000. What are the cash proceeds from the sale of the plant asset?
$0
$35,000
$43,000
$51,000
On January 1, 2023, plant assets, net are $180,000 and on December 31, 2023, plant assets, net are $270,000. Depreciation expense for the year is $70,000. No plant assets were sold or exchanged during the year. What is the cost of the plant assets acquired during the year?
$0
$110,000
$90,000
$160,000
On January 1, 2023, the Notes Receivable account has a balance of $10,000. On December 31, 2023, the Notes Receivable account has a balance of $100,000. No collections on notes receivable occurred in 2023. What is the amount of long-term notes that were made in 2023?
$0
$90,000
$100,000
$160,000
On January 1, 2023, the Bonds Payable account has a balance of $710,000. On December 31, 2023, the Bonds Payable account has a balance of $790,000. During 2023, one bond of $10,000 was retired. No discounts or premiums were amortized in 2023. What amount of new bonds were issued in 2023?
$0
$70,000
$80,000
$90,000
What is reported on the statement of cash flows prepared with the indirect method for the year ended December 31, 2024? Assume there were no retirements of common stock or additional purchases of Treasury Stock during 2024. No dividends were declared in 2024.
Financing Activity of $141,000
Financing Activity of $154,000
Operating Activity $12,000
B and C
During 2023, dividends of $17,000 were declared and paid. What is net income for 2023?
$10,000
$7,000
$17,000
$24,000
During 2022, net income of $33,000 was reported. No treasury stock was sold during 2022. No common stock was retired during 2022. No land was sold during 2022. What financing activities are reported on the statement of cash flows prepared with the indirect method for the year ending December 31, 2022?
sale of treasury stock $5,000 and Payment of dividends $21,000
purchase of treasury stock $5,000, Payment of dividends $21,000 and Sale of common stock $146,000
sale of treasury stock $5,000, purchase of land $10,000.
payment of dividends $12,000, Sale of common stock $153,000, and Purchase of treasury stock $5,000
There were no retirements of common stock in 2023. On the statement of cash flows (indirect method), what is the net cash provided by financing activities for the year ending December 31, 2023?
$34,000
$42,000
$48,000
$40,000
Using the indirect method, what is the net cash provided by operating activities for the year ending December 31, 2023?
$58,000
$98,000
$135,000
$203,000
Using the indirect method, what is the net cash provided by operating activities for the year ending December 31, 2023?
(a)
