Accounting 210 Quiz 12

Which of the following represent cash outflows from financing activities? a. Distributing a stock dividend. b. Paying a bond's face value at maturity. c. Issuing long-term bonds at a discount. d. Paying interest on promissory notes.

b. Paying a bond's face value at maturity.

If the calculation of net cash flows from operating activities starts with net income, the company: a. Is using the net income method. b. Will remove the effects of all noncash items included in the calculation of net income. c. Is using the direct method. d. Will add all noncash items not included in the calculation of net income.

b. Will remove the effects of all noncash items included in the calculation of net income.

Which of the following statements is NOT true? a. The statement of cash flows does not replace the income statement. b. The statement of cash flows provides details as to how cash changed during a period. c. The statement of cash flows provides information about cash receipts and cash payments over a period of time. d. The statement of cash flows measures profitability.

d. The statement of cash flows measures profitability.

Which of the following statements regarding cash flows from investing activities is true? a. The proceeds from sales of investments are reported as cash inflows from investing activities. b. Cash flows from investing activities are calculated by making adjustments to net income. c. Cash paid to acquire long-lived assets is reported as a cash inflow from investing activities. d. Cash received from issuing a long-term payable is reported as a cash inflow from investing activities.

a. The proceeds from sales of investments are reported as cash inflows from investing activities.

Assume a company uses the direct method to prepare its statement of cash flows. If the company's accounts receivable increase during the accounting period, the change in accounts receivable is: a. Added to the change in the cash account to calculate cash collected from customers. b. Subtracted from sales revenue to calculate the cash collected from customers. c. Added to sales revenue to calculate the cash collected from customers. d. Subtracted from the change in the cash account to calculate cash collected from customers.

b. Subtracted from sales revenue to calculate the cash collected from customers.

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a cash inflow from investing activities is: a. $50,000 b. $5,000 c. $45,000 d. $0. This is a financing activity.

a. $50,000

A company loaned $1,000,000 with interest at 7% to another company. The interest revenue from this loan would be reported on the statement of cash flows as a. Cash inflows from operating activities b. Cash inflows from investing activities c. Cash inflows from financing activities d. Noncash transaction in a supplemental disclosure

a. Cash inflows from operating activities

Which of the following statements regarding financing activities is NOT true? a. Cash dividends paid to a company's stockholders are reported as cash outflows from financing activities. b. When a company issues stock for cash, it reports a cash inflow from financing activities. c. When a company repurchases stock with cash, it reports a cash outflow from financing activities. d. When a company repays a loan, it reports a cash outflow from investing activities.

d. When a company repays a loan, it reports a cash outflow from investing activities.