Chapter 12 Adaptive Practice

Dividends paid is equal to: A cash provided by operations less capital expenditures. B cash provided by investing activities less capital expenditures. C Free cash flow less cash provided by operations and capital expenditures. D Free cash flow less cash provided by investing activities and capital expenditures.

C Free cash flow less cash provided by operations and capital expenditures.

Which is true of the growth phase? A Positive cash from investing, and negative cash from financing. B Negative cash from operations, negative cash from investing, and positive cash from financing. C Small amounts of cash from operations, negative cash from investing, and positive cash from financing. D Net cash from operations and net income roughly the same, and negative cash from financing.

C Small amounts of cash from operations, negative cash from investing, and positive cash from financing.

Which component of net income does not affect cash flow? A purchase of inventory B payment of cash dividends C depreciation on plant assets D issuance of notes payable

C depreciation on plant assets

Where is a conversion of bonds into common stock reported on a statement of cash flows? A in the financing section B in the stockholders' equity section C in the significant noncash activities D in the extraordinary section

C in the significant noncash activities

________ is added to net income when computing cash from operating activities. A A decrease in accounts payable B Write-off of an uncollectible account receivable C Depreciation expense D Declaration of a cash dividend

A A decrease in accounts payable

In general, which of the following is considered the MOST important category on the statement of cash flows? A cash flows from operating activities B cash flows from financing activities C cash flows from significant noncash activities D cash flows from investing activities

A cash flows from operating activities

If a company uses the indirect method to report cash flows, where, if at all, would a decrease in accounts receivable be classified on the statement of cash flows? A operating activities section B financing activities section C investing activities section D noncash activities

A operating activities section

Blackstone Company has the following information available: Net income, $20,000; Cash provided by operating activities, $30,000; Cash sales, $75,000; Capital expenditures, $12,000; and Cash dividends, $6,000. What is Blackstone's free cash flow? A $27,000 B $12,000 C $48,000 D $2,000

B $12,000

Which of the following statements about free cash flow is true? A Significant free cash flow indicates less potential to finance new investments. B Free cash flow is not reported on the statement of cash flows. C Significant free cash flow indicates less potential to pay additional dividends. D Free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends.

B Free cash flow is not reported on the statement of cash flows.

________ causes a change in cash during a period. A Declaration of a cash dividend B Payment of an accounts payable C Recording depreciation expense D Accrual of an expense

B Payment of an accounts payable

What is the result of an increase in accounts receivable during a period? A Expenses on an accrual basis are less than expenses on a cash basis. B Revenues on an accrual basis are greater than revenues on a cash basis. C Revenues on an accrual basis are the same as revenues on a cash basis. D Revenues on an accrual basis are less than revenues on a cash basis.

B Revenues on an accrual basis are greater than revenues on a cash basis.

On the statement of cash flows, how are cash receipts from interest and dividends classified? A as investing activities B as operating activities C as significant noncash activities D as financing activities

B as operating activities

Identify the type of activity that includes lending money and collecting on the loans. A noncash investing and financing activities B investing activities C operating activities D financing activities

B investing activities

Which of the following is associated with financing activities? A acquiring investments B issuing debt C lending money D acquiring long-lived assets

B issuing debt

What is the result of an increase in accounts payable during a period? A Expenses on an accrual basis are the same as expenses on a cash basis. B Expenses on an accrual basis are less than expenses on a cash basis. C Expenses on an accrual basis are greater than expenses on a cash basis. D Revenues on an accrual basis are less than revenues on a cash basis.

C Expenses on an accrual basis are greater than expenses on a cash basis.

An example of a noncash transaction that is not reported in the body of a statement of cash flows is: A delivering payment for equipment. B repaying money previously borrowed. C obtaining capital from owners. D acquiring land by issuing common stock.

D acquiring land by issuing common stock.

Which of the following describes free cash flow? A cash provided by operations less cash dividends B cash provided by investing activities less capital expenditures and cash dividends C cash provided by investing activities less capital expenditures D cash provided by operations less capital expenditures and cash dividends

D cash provided by operations less capital expenditures and cash dividends

Which of the following terms is computed as cash provided by operations less capital expenditures and cash dividends? A adjusted cash flow B direct cash flow C indirect cash flow D free cash flow

D free cash flow

The ________ method adjusts net income to find net cash provided by operating activities. A working capital B direct C cost-benefit D indirect

D indirect

What can be determined by converting net income from an accrual basis to a cash basis under either the direct or the indirect method? A net cash provided by goods sold B operating expenses C gross sales revenue D net cash provided by operating activities

D net cash provided by operating activities