FIN 3403- Chapter 3

According to the statement of cash flows, an increase in interest expense will _____ the cash flow from _____ activities. A. Decrease; operating. B. Decrease; financing. C. Increase; operating. D. Increase; financing. E. Increase; investment.

A. Decrease; operating.

On the statement of cash flows, which of the following are considered financing activities? I. Increase in long-term debt. II. Decrease in accounts payable. III. Interest paid. IV. Dividends paid. A. I and IV only. B. III and IV only. C. II and III only. D. I, III, and IV only. E. I, II, III, and IV.

A. I and IV only.

Which one of the following is a source of cash? A. Repurchase of common stock, B. Acquisition of debt, C. Purchase of inventory, D. Payment to a supplier, E. Granting credit to a customer,

B. Acquisition of debt,

Activities of a firm that require the spending of cash are known as: A. Sources of cash. B. Uses of cash. C. Cash collections. D. Cash receipts. E. Cash on hand.

B. Uses of cash.

According to the statement of cash flows, an increase in inventory will _____ the cash flow from _____ activities. A. Increase; operating. B. Decrease; financing. C. Decrease; operating. D. Increase; financing. E. Increase; investment.

C. Decrease; operating.

On the statement of cash flows, which of the following are considered operating activities? I. Costs of goods sold. II. Decrease in accounts payable. III. Purchase of equipment. IV. Dividends paid. A. I and III only. B. III and IV only. C. I and II only. D. I, III, and IV only. E. I, II, III, and IV.

C. I and II only.

Which one of the following is a source of cash for a non-tax-paying firm? A. Increase in accounts receivable. B. Increase in depreciation. C. Decrease in accounts payable. D. Increase in common stock. E. Increase in inventory.

D. Increase in common stock.

The sources and uses of cash over a stated period of time are reflected on the: A. Income statement. B. Balance sheet. C. Tax reconciliation statement. D. Statement of cash flows. E. Statement of operating position.

D. Statement of cash flows.

Which one of the following is a use of cash? A. Decrease in fixed assets. B. Decrease in inventory. C. Increase in long-term debt. D. Decrease in accounts receivables. E. Decrease in accounts payable.

E. Decrease in accounts payable.

Which one of the following is a source of cash? A. Increase in accounts receivable, B. Decrease in common stock, C. Increase in fixed assets, D. Decrease in accounts payable, E. Decrease in inventory,

E. Decrease in inventory,