FIN 445 UFS Ch 4 Quiz
Using the indirect method, what is net cash flow from investing activities? a) $14,000 b) ($14,000) c) $21,000 d) ($16,000)
($14,000)
Using the indirect method, what is the change in cash? a) ($3,000) b) $2,000 c) $3,000 d) ($2,000)
($2,000)
Using the indirect method, what is net cash flow from operating activities? a) $5,000 b) ($1,000) c) ($3,000) d) $13,000
($3,000)
T/F: Proceeds from borrowing are a financing cash outflow.
False
What type of accounts are notes payable and current maturities of long-term debt? a) Cash accounts b) Operating accounts c) Investing accounts d) Financing accounts
Financing accounts
Why has cash flow from operations become increasingly important as an analytical tool? a) Inflation has distorted the meaningfulness of net income b) Firms may have uncollected accounts receivable and unsalable inventory on the books c) High interest rates can put the cost of borrowing to cover short-term cash needs out of reach for many firms d) All of the above
All of the above
Which of the following statements is false? a) An increase in accounts payable represents accounts not yet collected in cash b) To obtain cash flow from operations, the reported net income must be adjusted c) A negative cash flow can occur in a year in which net income is positive d) An increase in accounts receivable represents accounts not yet collected in cash
An increase in accounts payable represents accounts not yet collected in cash
How would the repayment of debt principal be classified? a) Operating outflow b) Investing inflow c) Operating inflow d) Financing outflow
Financing outflow
What is the preferred method to generate cash in a firm? a) Financing activities b) Operating activities c) Investing and financing activities d) Investing activities
Operating activities
How would payments for taxes be classified? a) Operating inflow b) Financing inflow c) Operating outflow d) Investing inflow
Operating inflow
How would revenue from sales of goods and services be classified? a) Operating outflow b) Operating inflow c) Investing inflow d) Financing outflow
Operating inflow
The statement of cash flows segregates cash inflows and outflows by: a) Financing and investing activities b) Operating and financing activities c) Operating and investing activities d) Operating financing, and investing activities
Operating, financing, and investing activities
An outflow of cash would result from which of the following? a) The decrease in an asset account other than cash b) The increase in an equity account c) The decrease in a liability account d) The increase in a liability account
The decrease in a liability account
An inflow of cash would result from which of the following? a) The increase in an asset account other than cash b) The decrease in a liability account c) The decrease in an equity account d) The decrease in an asset account other than cash
The decrease in an asset account other than cash
How is it possible for a firm to be profitable and still go bankrupt?
The firm has a positive net income but has failed to generate cash from operations
Which method of calculating cash flow from operations requires the adjustment of net income for deferrals, accruals, non-cash, and non-operating expenses? a) The indirect method b) The direct method c) The inflow method d) The outflow method
The indirect method
Which statement is true for gains and losses from capital asset sales? a) They are included in cash flows from financing activities b) They are included in cash flows from investing activities c) They are included in cash flows from operating activities d) They do not affect cash and are excluded from the statement of cash flows
They are included in cash flows from investing activities
Using the indirect method, what is net cash flow from financing activities? a) $15,000 b) $17,000 c) ($14,000) d) ($15,000)
$15,000
Use the indirect method to answer the question using the following information for Felix Company: What is the change in cash for Felix Company? a) $205 b) $310 c) $330 d) $230
$230
Use the indirect method to answer the question using the following information for Felix Company: What is cash from investing activities for Felix Company? a) $40 b) $5 c) $10 d) $75
$40
Depreciation and amortization should be _____ to convert net income to cash flow from operating activities. a) Added b) Subtracted
Added
Which of the following current assets is included in the adjustment of net income to obtain cash flow from operating activities? a) Inventory b) Prepaid expenses c) Accounts receivable d) All of the above
All of the above
Which of the following items is included in the adjustment of net income to obtain cash flow from operating activities? a) The amount by which equity income recognized exceeds cash received b) Depreciation expense for the period c) The change in deferred taxes d) All of the above
All of the above
What type of accounts are accounts receivable and inventory? a) Cash accounts b) Operating accounts c) Financing accounts d) Investing accounts
Operating accounts
What are internal sources of cash? a) Cash inflows from investing activities b) Cash inflows from operating activities c) Cash inflows from financing activities d) All of the above
Cash inflows from operating activities
How would the sale of a building be classified? a) Operating inflow b) Operating outflow c) Financing inflow d) Investing inflow
Investing inflow
The change in retained earnings is affected by which of the following? a) Net income and payment of dividends b) Payment of dividends and common stock c) Net income and common stock d) Net income and paid-in capital
Net income and payment of dividends
What type of accounts are accounts receivable and inventory? a) Cash accounts b) Investing accounts c) Financing accounts d) Operating accounts
Operating accounts
What could lead to cash flow problems?
Slow-moving inventory, accounts receivable of inferior quality, tightening of credit by suppliers
A decrease in accrued liabilities should be _____ to convert net income to cash flow from operating activities. a) Added b) Subtracted
Subtracted
How is the statement of cash flows connected to the balance sheet? a) The changes in all revenue and expense accounts are calculated and then listed as cash inflows or outflows b) Changes in asset accounts are recorded as operating activities, changes in liability accounts are recorded as financing activities, and changes in equity accounts are recorded as investing activities c) The changes in all of the balance sheet accounts are calculated and then listed as inflows or outflows, except for cash d) The statement of cash flows shows changes in the asset and liability accounts to explain cash from operating activities
The changes in all of the balance sheet accounts are calculated and then listed as inflows or outflows, except for cash
T/F: Cash flow from operations represents the "cash" income from the company's business operations.
True
T/F: Cash outflows result from increases in asset accounts and decreases in liability and equity accounts.
True
T/F: The statement of cash flows shows the changes in the balance sheet accounts between periods.
True
Which of the following statements is false? a) The statement of cash flows shows how cash has been generated and how it has been used for an accounting period b) Firms only have financial difficulties when both the net income and cash flow from operations are negative c) The statement of cash flows is prepared by calculating changes in all balance sheet accounts d) Understanding how to prepare a statement of cash flows helps the analyst to better understand and analyze the cash flow statement
Firms only have financial difficulties when both the net income and cash flow from operations are negative