Question 1

Which of these causes a difference between the profit in the income statement and the net cash increase in the statement of cash flows?

Accepted Answer

A)   Depreciation.
B)   Prepaid insurance.
C)   Credit purchases not yet paid.
D)   All of the above.E) B) and C)
F) A) and C) D

Question 2

Using the information below,the net cash flow from operating activities is:
  Cash received from customers$213000Cash paid for salaries and other expenses185000Cash received from the sale of equipment 12000Gain on the sale of equipment 8000\begin{array}{|l|r|}\hline	ext{ Cash received from customers} & \$ 213000 \\hline 	ext{Cash paid for salaries and other expenses} & 185000 \\hline 	ext{Cash received from the sale of equipment }& 12000 \\hline 	ext{Gain on the sale of equipment }& 8000 \\hline\end{array} Cash received from customersCash paid for salaries and other expensesCash received from the sale of equipment Gain on the sale of equipment ​$213000185000120008000​​

Accepted Answer

A)   inflow of $20 000.
B)   inflow of $12 000.
C)   inflow of $28 000.
D)   inflow of $8 000. E) A) and D)
F) All of the above

Question 3

Which of the following is not an early warning indicator of cash flow problems?

Accepted Answer

A)   Operating activities are paid for using proceeds raised from the issue of shares.
B)   Cash received from customers is greater than cash paid to suppliers.
C)   Operating cash outflows.
D)   The entity continues to borrow more money than it repays.E) A) and B)
F) A) and C)

Question 4

A business purchases equipment worth $50 000 to be used in their manufacturing process.This transaction would be classified as which type of activity in the statement of cash flows?

Accepted Answer

A)   Financing.
B)   Non-cash.
C)   Operating.
D)   Investing.E) All of the above
F) B) and D)

Question 5

Which of the following statements concerning the cash flow ratio is true?

Accepted Answer

A)   The cash flow ratio is a better measure of liquidity than the current ratio because it is calculated using cash flow generated over a whole reporting period rather than the current assets at a point in time.
B)   The cash flow ratio is used to assess liquidity.
C)   The cash flow ratio compares the cash flow from operating activities with the current liabilities.
D)   All of the above statements are true.E) A) and D)
F) A) and B)

Question 6

Cash outflows from financing activities include:

Accepted Answer

A)   cash paid for the purchase of shares.
B)   the lending of money to another business.
C)   payment of income tax.
D)   dividends paid to shareholders.E) B) and D)
F) A) and B)

Question 7

In the current financial period,accrued expenses are recorded as $250 000 and the cash paid for expenses,as shown in the statement of cash flows,is $180 000.This means that:

Accepted Answer

A)   expenses may have been paid for in advance in the previous period.
B)   expenses may have been incurred in the current period and have not been paid by the end of the current period.
C)   depreciation may have been recorded in the statement of profit or loss.
D)   all of the options are correct.E) A) and B)
F) A) and D)

Question 8

A net total cash outflow in investing activities is considered ____________(normal or abnormal)for a healthy growing business.

Accepted Answer

The answer of A net total cash outflow in investing...

Question 9

A healthy business would normally expect to have a net cash __________ (inflow or outflow)from operating activities.

Accepted Answer

The answer of A healthy business would normally expect to...

Question 10

The receipt of dividends would be classified as a cash inflow from ______________ activities.

Accepted Answer

The answer of The receipt of dividends would be classified...

Question 11

Which of these would not be classified as an operating activity in a statement of cash flows?

Accepted Answer

A)   Payment of interest expense.
B)   Cash received as payment for the purchase of goods on credit.
C)   Cash dividends received.
D)   Loan repayments.E) None of the above
F) B) and C)

Question 12

Which of the following statements concerning the cash adequacy ratio is true?

Accepted Answer

A)   It measures the entity's ability to reinvest in its operations and to make distributions to owners from its operating cash flow.
B)   It expresses the cash flow from operating activities as a percentage of capital expenditure plus dividends.
C)   A ratio result greater than one suggests a good performance.
D)   All of the statements are true.E) C) and D)
F) A) and C)

Question 13

Changes in non-current liabilities and equity in the balance sheet appear in the statement of cash flows under:

Accepted Answer

A)   the reconciliation of operating profit with cash flow from operating activities.
B)   operating activities.
C)   investing activities.
D)   financing activities.E) None of the above
F) C) and D)

Question 14

From the information below,the net cash flow from operating activities is:
Cash contributions from owner $8000
Receipt of bank interest $50
Dividend payment to shareholders $2500
Cash receipts from customers $4500
Cash purchase of computer $2100
Depreciation on computer $50
Cash payments to suppliers $3500

Accepted Answer

A)   an inflow of $5500.
B)   an inflow of $1050.
C)   an outflow of $2100.
D)   an inflow of $6900.E) A) and C)
F) All of the above B

Question 15

Cash receipts from dividends are classified as which activity in the statement of cash flows?

Accepted Answer

A)   Financing.
B)   Investing.
C)   Operating.
D)   Financing or investing.E) A) and C)
F) B) and C) C

Question 16

Comparing an entity's profit or loss with its' net cash from operating activities can indicate how well an entity is managing its ______________ _____________.

Accepted Answer

The answer of Comparing an entity's profit or loss with...

Question 17

If the opening balance of accrued expenses is $34 000,the closing balance is $38 000 and accrued expenses recognised at the end of the period is $20 000,how much was paid for accrued expenses during the period?

Accepted Answer

A)   $14 000
B)   $16 000
C)   $18 000
D)   $28 000E) None of the above
F) A) and B)

Question 18

A reconciliation between the operating profit after tax and the net cash flow from operating activities:

Accepted Answer

A)   highlights changes in the working capital accounts from one year to the next.
B)   reinforces the link between the cash received from operating activities and the reported profit or loss for the period.
C)   shows the differences in accrual transactions and cash flow.
D)   all the above options are correct.E) A) and B)
F) B) and D)

Question 19

Which of the following items would be classified as investing activities in a statement of cash flows?

Accepted Answer

A)   Proceeds from dividends.
B)   Proceeds from borrowings.
C)   Proceeds from customers.
D)   Proceeds from sale of machinery.E) None of the above
F) All of the above

Question 20

Investors have increased their reliance on the statement of cash flows due to:

Accepted Answer

A)   the relative difficulty in manipulating the statement of cash flows compared with the ability to manipulate the statement of profit or loss.
B)   the comparison of profit or loss to the cash flow from operating activities providing insight to an entity's ability to meet its obligations.
C)   the statement highlighting an entity's ability to reinvest in its operations.
D)   all of the options are correct.E) All of the above
F) C) and D)

Exam 7: Statement of Cash Flows

Which of these causes a difference between the profit in the income statement and the net cash increase in the statement of cash flows?

Correct Answer
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D

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Which of the following is not an early warning indicator of cash flow problems?

Correct Answer
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A business purchases equipment worth $50 000 to be used in their manufacturing process.This transaction would be classified as which type of activity in the statement of cash flows?

Correct Answer
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Which of the following statements concerning the cash flow ratio is true?

Correct Answer
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Cash outflows from financing activities include:

Correct Answer
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In the current financial period,accrued expenses are recorded as $250 000 and the cash paid for expenses,as shown in the statement of cash flows,is $180 000.This means that:

Correct Answer
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A net total cash outflow in investing activities is considered ____________(normal or abnormal)for a healthy growing business.

Correct Answer
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A healthy business would normally expect to have a net cash __________ (inflow or outflow)from operating activities.

Correct Answer
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The receipt of dividends would be classified as a cash inflow from ______________ activities.

Correct Answer
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Which of these would not be classified as an operating activity in a statement of cash flows?

Correct Answer
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Which of the following statements concerning the cash adequacy ratio is true?

Correct Answer
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Changes in non-current liabilities and equity in the balance sheet appear in the statement of cash flows under:

Correct Answer
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B

Cash receipts from dividends are classified as which activity in the statement of cash flows?

Correct Answer
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C

Comparing an entity's profit or loss with its' net cash from operating activities can indicate how well an entity is managing its __ _.

Correct Answer
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If the opening balance of accrued expenses is $34 000,the closing balance is $38 000 and accrued expenses recognised at the end of the period is $20 000,how much was paid for accrued expenses during the period?

Correct Answer
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A reconciliation between the operating profit after tax and the net cash flow from operating activities:

Correct Answer
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Which of the following items would be classified as investing activities in a statement of cash flows?

Correct Answer
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Investors have increased their reliance on the statement of cash flows due to:

Correct Answer
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Exam 7: Statement of Cash Flows

Which of these causes a difference between the profit in the income statement and the net cash increase in the statement of cash flows?

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

Which of the following is not an early warning indicator of cash flow problems?

Correct AnswerverifiedShow Answer

A business purchases equipment worth $50 000 to be used in their manufacturing process.This transaction would be classified as which type of activity in the statement of cash flows?

Correct AnswerverifiedShow Answer

Which of the following statements concerning the cash flow ratio is true?

Correct AnswerverifiedShow Answer

Cash outflows from financing activities include:

Correct AnswerverifiedShow Answer

In the current financial period,accrued expenses are recorded as $250 000 and the cash paid for expenses,as shown in the statement of cash flows,is $180 000.This means that:

Correct AnswerverifiedShow Answer

A net total cash outflow in investing activities is considered ____________(normal or abnormal)for a healthy growing business.

Correct AnswerverifiedShow Answer

A healthy business would normally expect to have a net cash __________ (inflow or outflow)from operating activities.

Correct AnswerverifiedShow Answer

The receipt of dividends would be classified as a cash inflow from ______________ activities.

Correct AnswerverifiedShow Answer

Which of these would not be classified as an operating activity in a statement of cash flows?

Correct AnswerverifiedShow Answer

Which of the following statements concerning the cash adequacy ratio is true?

Correct AnswerverifiedShow Answer

Changes in non-current liabilities and equity in the balance sheet appear in the statement of cash flows under:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

Cash receipts from dividends are classified as which activity in the statement of cash flows?

Correct AnswerverifiedC

Comparing an entity's profit or loss with its' net cash from operating activities can indicate how well an entity is managing its ______________ _____________.

Correct AnswerverifiedShow Answer

If the opening balance of accrued expenses is $34 000,the closing balance is $38 000 and accrued expenses recognised at the end of the period is $20 000,how much was paid for accrued expenses during the period?

Correct AnswerverifiedShow Answer

A reconciliation between the operating profit after tax and the net cash flow from operating activities:

Correct AnswerverifiedShow Answer

Which of the following items would be classified as investing activities in a statement of cash flows?

Correct AnswerverifiedShow Answer

Investors have increased their reliance on the statement of cash flows due to:

Correct AnswerverifiedShow Answer

Correct Answer
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D

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B

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C

Comparing an entity's profit or loss with its' net cash from operating activities can indicate how well an entity is managing its __ _.

Correct Answer
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