Statement of Cash Flows
True
A balance sheet and income statement may be prepared directly from an adjusted trial balance
True
A loss on the sale of plant assets is an example of a "non-operating loss" that is added back to net income to arrive at net cash flow from operating activities under the indirect method
The profitability of business operations (income statement kasi to)
A statement of cash flow is not intended to assist investors in evaluating:
False
A statement of cash flows is organized into two major sections: cash receipts and cash payments
False
A statement of cash flows is usually prepared by classifying all the transactions recorded in the journals into the various categories shown in the statement
What was the average balance of cash account during the period
A statement of cash flows would be least useful in answering which of the following questions?
Operating Activities
A statement of cash flows, collections of accounts receivable are classified as:
Selling land in exchange for a note receivable
An example of non-cash investing and financing activity that is disclosed in a supplementary accompanying the statement of cash flow is:
False
Cash payments to purchase inventory are classified as investing activities.
False (it should be cash receipts)
Credits to the notes payable account represent cash payments relating to financing activities
Does not affect net cash flow from operations
Depreciation expense under the direct method:
True
Depreciation expenses reduces net income but not reduce the net cash flow from operating activities
The peso amount of overalls increase or decrease in cash for the current year
From the viewpoint of stockholders or potential investors, which of the following cash flow measurements would be of least importance?
None of the Above
In a statement of cash flows, cash transfers between a bank and a money market funds are classified as
True
In a statement of cash flows, the term cash includes both cash and cash equivalents.
Bank accounts, cash on hand, and cash equivalents Marketable Securities classified as current assets is not a cash equivalent
In a statement of cash flows, the term cash includes:
True
In a statement of cash flows, transfers of money between a company's bank account and its money market fund are not viewed as cash payments or cash receipts
This type of transaction is not classified as an operating activity
N Corporation used the indirect method to prepare its statement of cash flows. Following, this approach, a gain on sale of equipment was deducted from met income in computing net cash flow from operating activities. An explanation for this may be
True
Regardless of whether the direct method or indirect method is used, the statement of cash flows will report the same amount of net cash flow from operating activities
The sale of machinery at a loss in 20x6
Tandem Corporation's reported net income for 20x6 is less than its net cash flow from operating activities. One reason for this could be:
False
The Principal purpose of statement of cash flows is to measure the profitability of a business that maintains its accounting records on the cash basis.
A gain on the sale of investments during the year
The Ricer Corporation reported net income in excess of its net cash flow from operating activities for the current year. An explanation for this may be:
False
The direct method and indirect method are two acceptable alternatives to reporting net cash flow from investing and financing activities
False
The direct method of computing net cash flow from operating activities begins with net income and adjusts for changes in related balance sheet accounts, as well as for non-operating gains and losses included in net income
True
The sale of land that costs P50,000 for P70,000 cash does not increase net cash flow from operating activities
Non-operating gains
Warner Corporation reported net income in excess of its net cash flow from operations. A possible explanation of this difference is:
Net income with net cash flow from operating activities
When net cash flow from operating activities is presented by the direct method, the statement of cash flow is accompanied by supplementary schedule reconciling:
The direct method discloses the specific inflows and outflows constituting cash flow from operating activities, the indirect method begins with net income and makes adjustments to arrive at net cash flow from operating activities
Which of the following accurately contrasts the direct method with the indirect method of reporting cash flow from operating activities?
Credit entries in the marketable securities account
Which of the following indicate cash receipts?
Debit entries in the income taxes payable account
Which of the following indicate cash receipts?
Payment of interest to creditors Long-term borrowing (FA) Payment of dividend to stockholders (FA)
Which of the following is not classified among the financing activities in a statement of cash flows?
Payment of the principal amount owed on a bank loan (Financing Activities) Payment of interest on a bank loan (OA) Payment of an AP to a merchandise supplier (OA)
Which of the following is not classified among the operating activities in a statement of cash flows?
CGS, increase or decrease in inventory, increase or decrease in accounts payable
Which of the following sets of data is sufficient to compute the amount of cash paid for merchandise?
Although both methods result in the same net increase or decrease in cash for the year, net cash flow from operating activities will be different under the two methods
Which of the following statements regarding direct and indirect methods of reporting cash flow from operating activities is false?
