Accounting ORION Ch 12

Which of the following describes free cash flow? Cash provided by operations less capital expenditures and cash dividends Cash provided by investing activities less capital expenditures Cash provided by investing activities less capital expenditures and cash dividends Cash provided by operations less cash dividends

Cash provided by operations less capital expenditures and cash dividends

Which of the following describes cash provided by operations less capital expenditures and cash dividends? Free cash flow Direct cash flow Indirect cash flow Adjusted cash flow

Free cash flow

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

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

Where is a conversion of bonds into common stock reported on a statement of cash flows? In the stockholder's equity section In the significant noncash activities In the financing section In the extraordinary section

In the significant noncash activities

The ________ method adjusts net income to find net cash provided by operating activities. Indirect Working capital Cost-benefit Direct

Indirect

Identify the type of activity that includes lending money and collecting on the loans? Investing activities Financing activities Operating activities Noncash investing and financing activities

Investing activities

Which of the following is associated with financing activities? Issuing debt Acquiring investments Acquiring long-lived assets Lending money

Issuing debt

What effect will a decrease in inventory have on free cash flow? It will stabilize free cash flows It will have no effect on free cash flows It will increase cash flows It will decrease cash flows

It will increase cash flows

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

Payment of accounts payable

_______ causes a change in cash during a period. Write off of an uncollectible account receivable Recording depreciation expense Payment of an account payable Declaration of a dividend

Payment of an account receivable

Michelle is investigating the financial statements of two companies. One company is in the maturity phase of the corporate life cycle, and the other company is in the decline phase. What financial activity might both companies be involved in? Taking out new loans Issuing bonds Purchasing treasury stock Issuing common stock

Purchasing treasury stock

Which of the following companies has the HIGHEST free cash flow? A company has $790,000 cash provided by operating activities, $137,000 in capital expenditures, and $63,000 in dividends paid. A company has $520,000 cash provided by operating activities, $85,000 in capital expenditures, and $22,000 in dividends paid. A company has $600,000 cash provided by operating activities, $96,000 in capital expenditures, and $42,000 in dividends paid. A company has $650,000 cash provided by operating activities, $109,000 in capital expenditures, and $74,000 in dividends paid.

A company has $790,000 cash provided by operating activities, $137,000 in capital expenditures, and $63,000 in dividends paid.

Which of the following companies paid the MOST in cash dividends during the year? A company with $623,000 in free cash flows, $812,000 in net cash provided by operating activities, and $64,000 in capital expenditures A company with $642,000 in free cash flows, $963,000 in net cash provided by operating activities, and $175,000 in capital expenditures A company with $546,000 in free cash flows, $894,000 in net cash provided by operating activities, and $153,000 in capital expenditures A company with $593,000 in free cash flows, $728,000 in net cash provided by operating activities, and $75,000 in capital expenditures

A company with $546,000 in free cash flows, $894,000 in net cash provided by operating activities, and $153,000 in capital expenditures

Which of the following companies is most likely in the introductory phase? A company with positive cash flows from operating activities, positive cash flows from capital expenditures, and negative cash flows from dividends A company with negative cash flows from operating activities and zero cash flows from capital expenditures and dividends A company with positive cash flows from operating activities, negative cash flows from capital expenditures, and negative cash flows from dividends A company with negative cash flows from operating activities, negative cash flows from capital expenditures, and zero cash flows from dividends

A company with negative cash flows from operating activities, negative cash flows from capital expenditures, and zero cash flows from dividends

An example of a noncash transaction that is not reported in The body of a statement of cash flows is Delivering payment of equipment obtaining capital from owners Repaying previously borrowed money Acquiring land by issuing common stock

Acquiring land by issuing common stock

On the statement of cash flows, how are cash receipts from interest and dividends classified? As significant noncash activities As financing activities As investing activities As operating activities

As operating activities W

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

Cash flows from operating activities

Which component of net income does not affect cash flow? Depreciation on plant assets Payment of cash dividends Issuance of notes payable Purchase of inventory

Depreciation on plant assets

What is the result of an increase in account payable during a period? Expenses on an accrual basis are less than expenses on a cash basis Revenue on an accrual basis are less than revenues on a cash basis Expenses on a accrual basis are the same as expenses on a cash basis Expenses on an accrual basis are greater than expenses on a cash basis

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

Jacob is assessing the corporate life cycle of two companies. He notices that Monaco Enterprises is purchasing many long-term assets and that Resendez Industries is selling many long-term assets. What should Jacob conclude about these two companies? Monaco Enterprises is in the maturity phase, whereas Resendez Industries is in the growth phase. Monaco Enterprises is in the introductory phase, whereas Resendez Industries is in the decline phase. Monaco Enterprises is in the decline phase, whereas Resendez Industries is in the maturity phase. Monaco Enterprises is in the growth phase, whereas Resendez Industries is in the introductory phase.

Monaco Enterprises is in the introductory phase, whereas Resendez Industries is in the decline phase.

What can be determined by converting net income from an accrual basis to a cash basis under either the direct or indirect method? Operating expenses Net cash provided by goods sold Gross sales revenue Net cash provided by operating activities

Net cash provided by operating activities

If a company uses the indirect method to depict cash flows, where, if at all, would accounts receivable collected be classified on the statement of cash flows? Financing activities section Noncash activities Operating activities section Investing activities section

Operating activities section

Jose is analyzing the financial statements of two companies. The first company has a net income that is significantly higher than their cash flows provided by operating activities, whereas the second company has net income and cash flows provided by operating activities that are very similar. What can Jose assume about these two companies? The first company is in the introductory phase of the corporate life cycle, whereas the second company is in the growth phase of the corporate life cycle. The first company is in the decline phase of the corporate life cycle, whereas the second company is in the growth phase of the corporate life cycle. The first company is in the maturity phase of the corporate life cycle, whereas the second company is in the decline phase of the corporate life cycle. The first company is in the growth phase of the corporate life cycle, whereas the second company is in the maturity phase of the corporate life cycle.

The first company is in the growth phase of the corporate life cycle, whereas the second company is in the maturity phase of the corporate life cycle.

When looking at the financial statements, you notice that a company has cash flows from operating and investing activities that are significantly lower than their cash flows from financing activities. What can you assume about the company? They are likely in either the maturity phase or the decline phase of the corporate life cycle. They are likely in either the introductory phase or growth phase of the corporate life cycle. They are likely in either the introductory phase or the maturity phase of the corporate life cycle. They are likely in either the growth phase or the maturity phase of the corporate life cycle.

They are likely in either the introductory phase or growth phase of the corporate life cycle