Ch 5
A decrease in current assets represents
Source of funds
An increase in owners equity represents
Source of funds
Net changes in cash
g. A representation of all cash inflows minus cash outflows from operating, investing, and financing activities.
Principal (loan)
q. The amount borrowed on a loan.
Net cash flow from operating activities = 105,367; net cash flow from investing activities = (326,889); net cash flow from financing activities = 345,112. What is the net increase (decrease) in cash?
$123,590
The net cash flow from operating activities the yr is 312,000. Last yr this figure was 299,050. Calculate the percentage variance.
4.33%
The net cash flow from operating activities is $108,750, and the total revenues for the year were $418,000. $8,800 was spent on a new range for the kitchen. Calculate the free cash flow.
99,950
3. When comparing assets from last year's balance sheet to this year's balance sheet, decreases in assets represent a.Sources of funds b.Uses of funds c.Increases in retained earnings d.Decreases in retained earnings
A
8. Borrowing and repaying borrowed money are examples of a. Financing activities b. Operating activities c. Supplementary activities d. Investing activities
A
2. Solvency refers to a business's ability to a.Convert its assets to cash b.Pay its debts as they become due c.Pay out dividends for its owners d.Provide bonuses for its managers
B
4. When comparing liabilities from last year's balance sheet to this year's balance sheet, decreases in liabilities represent a.Sources of funds b.Uses of funds c.Increases in fixed assets d.Decreases in fixed assets
B
7.Selling marketable securities and buying a building are examples of a.Operating activities b.Investing activities c.Financing activities d.Supplementary activities
B
10. Which of the following is not shown on a supplementary schedule to the statement of cash flows? a. Noncash investing activities b. Cash paid for dividends to stockholders c. Cash paid for interest to lenders d. Cash paid for income taxes to government agencies
B cash paid dividends to stockholders
1. The report which indicates how cash inflows and outflows affected a business during a specific accounting period is called a.Cash accounting report b.Balance sheet c.Statement of cash flows d.Retained earnings statement
C
6.Depreciation is a method of a.Marking down an asset that has been damaged b.Adjusting an asset's value to reflect its current market value c.Allocating the cost of a fixed asset over the useful life of the asset d.Allowing a company to pay for its fixed assets over a period of time
C
9. The net investing activities this year at Peter's Pizza Parlor are $56,100 and the net investing activities last year were $48,300. Calculate the percentage variance. a. 13.9% b. 86.1% c. 16.2% d. 116.2%
C
10. The net cash flow from operating activities at Peter's Pizza Parlor is $98,750. Peter spent $10,800 on a new ice machine for his restaurant. Calculate Peter's free cash flow. a. $109,550 b. $ 80,750 c. $154,850 d. $ 87,950
D
5. Selling food and paying employees are examples of a restaurant's a.Investing activities b.Financing activities c.Supplementary activities d.Operating activities
D
Chief Financial Officer (CFO)
Corporate officer responsible for managing the financial operations of a company.
Statement of changes in financial position
D. A statement that intends to indicate how cash inflows and outflows affect the business during a specific accounting period.
Statement of cash flows (SCF)
K. A statement that shows all sources and uses of funds from operating, investing, and financing activities of a business.
Noncash transaction
Non monetary exchange of the value of an investing or financing activity.
Free cash flow
The result of all of the transactions and events that normally make up a business's day to day activities.
Which of the following is not included in calculating net cash flow from operating activities? a. Net income b. Interest and dividend income c. The sale of property and buildings d. Depreciation
The sale of property and buildings
A decrease in liabilities represents
Use of funds
An increase in fixed assets represents
Use of funds
Cash flow from investing activities
a. The result of all the transactions and events involving the purchase and sale of marketable securities, investments, land, buildings, equipment, and other assets not generally purchased for resale.
Cash flow from operating activities
b. The result of all of the transactions and events that normally make up a business's day to day activities.
Sources and uses of funds
f. Inflows and outflows of money affecting the cash position.
Statement of retained earnings
i. A statement that reports the changes in the accumulated account of profits over the life of the business that have not been distributed as dividends from last year to this year.
Supplementary schedules
j. Additional information on the statement of cash flows that reports noncash investing and financing activities and cash paid for interest and income taxes.
Cash equivalents
l. Short-term, temporary investments such as treasury bills, certificates of deposit, or commercial paper that can be quickly and easily converted to cash.
Solvency
m. The ability of a business to pay its debts as they become due.
Consolidated income statement
n. A statement that combines the revenue, expense, and profit information from each individual sub-statement of a company.
Cash
o. The money held in cash banks, checking or savings accounts, electronic fund transfers from payment card companies, and certificates of deposit.
Condensed income statement
p. A statement that reports the revenues, expenses, and profits in a summary format, absent of specific departmental and undistributed expense details.
Cash flow from financing activities
r. The result of all the transactions and events involving buying or selling company stocks, payment of dividends, and borrowing and repayment of short and long-term debt.
Which of the following represents source of funds a. ↑ Assets ↓ Liabilities ↓ Owners' Equity ↓ Depreciation b. ↑ Assets ↓ Liabilities ↑ Owners' Equity ↑ Depreciation c. ↓ Assets ↑ Liabilities ↓ Owners' Equity ↑ Depreciation d. ↓ Assets ↑ Liabilities ↑ Owners' Equity ↑ Depreciation
↓ Assets ↑ Liabilities ↑ Owners' Equity ↑ Depreciation
