Question : 1. Net income for a particular period will likely differ from : 1230431

1. Net income for a particular period will likely differ from cash flow from operations for the same period.  

2. Firms typically report cash flows from operations using the direct method.  

3. The proper interpretation of information in the statement of cash flows requires an understanding of the economic characteristics of the industries in which a firm conducts operations and a multi-period view.  

4. Some investing and financing transactions do not involve cash but appear on the statement of cash flows.  

5. When using the indirect method to calculate cash flow from operations, add back the subtraction for minority interest in earnings of consolidated, but less than 100%-owned subsidiaries to derive cash flow from operations.  

6. The statement of cash flows explains the reasons for the change in cash and cash equivalents during a period. This statement classifies the reasons as relating to  A. operating decisions, only. B. investing decisions, only. C. financing decisions, only. . D. operating, investing, or financing decisions. E. operating, investing, financing, or exchange decisions.

 

7. Which of the following is/are true? A. Revenues from sales of goods or services to customers during a particular period do not necessarily equal cash received from customers during the same period. B. The receipt of cash can precede, coincide with, or follow the recognition of revenue.  C. Expenses incurred to generate revenues during a particular period do not necessarily equal cash expended for the goods and services consumed in operations during the same period. D. The expenditure of cash can precede, or coincide with, or follow the recognition of expenses. E. all of the above

 

8. Which of the following is/are not true? A. Revenues from sales of goods or services to customers during a particular period do not necessarily equal cash received from customers during the same period. B. The receipt of cash can precede, coincide with, or follow the recognition of revenue.  C. Expenses incurred to generate revenues during a particular period do not necessarily equal cash expended for the goods and services consumed in operations during the same period. D. The expenditure of cash can precede, coincide with, or follow the recognition of expenses. E. The net income for a particular period will likely equal the cash flow from operations for the same period.

 

9. Firms typically report cash flows from operations using the indirect method. The indirect method starts with net income, then adds any expense amount that does not use cash, and subtracts any revenue amount that does not provide cash. The adjustments to convert net income to cash flow from operations generally does not involve A. adding the amount by which an expense exceeds the related cash expenditure for the period.B. subtracting the amount by which a revenue exceeds the related cash receipt for the period.C. adding credit changes in operating non-cash working capital accounts.D. subtracting debit changes in operating working capital accounts.E. subtracting the amount by which an expense exceeds the related cash expenditure for the period.

 

10. Cash flow from investing activities includes  A. cash purchases of property, plant, and equipment.B. cash sales of marketable securities and investments in securities.C. cash sales of property, plant, and equipment.D. cash sales of intangibles.E. all of the above

 

 

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