Question : 111.Which of the following would not be presented in the : 1237495

 

 

111.Which of the following would not be presented in the cash flows from operating activities section of the statement of cash flows when the direct method is used?   

A. Dividends paid.

 

B. Dividends received.

 

C. Neither dividends paid nor dividends received would be shown.

 

D. Both dividends paid and dividends received would be shown.

 

 

 

 

112.Which statement is true as to the FASB’s position on the presentation of the statement of cash flows?   

A. The FASB recommends the use of the indirect method, but most companies use the direct method.

 

B. The FASB recommends the use of the direct method, but most companies use the indirect method.

 

C. The FASB recommends the use of the direct method, and most companies use the direct method.

 

D. The FASB recommends the use of the indirect method, and most companies use the indirect method.

 

 

 

 

113.Which of the following does not create a difference between net income and the net cash flow from operations?   

A. Non-operating gains and losses.

 

B. Depreciation expense.

 

C. Timing differences between credit sales and collections from customers.

 

D. Payment of a cash dividend.

 

 

 

 

114.Cigna Corporation’s 2015 net income is smaller than net cash flow from operating activities. Which of the following would not be an explanation of why net income is smaller than net cash flow from operating activities?   

A. Cigna paid dividends to shareholders during 2015.

 

B. Cigna’s accounts payable increased during 2015.

 

C. Cigna recognized depreciation expense in 2015.

 

D. Cigna sold equipment at a loss in 2015.

 

 

 

 

115.When using the indirect method, depreciation expense:   

A. Increases net cash flow from operations.

 

B. Decreases net cash flow from operations.

 

C. Does not affect net income.

 

D. Does not affect net cash flow from operations.

 

 

 

 

116.Which of the following is not true regarding the direct and indirect methods of computing net cash flow from operating activities?   

A. Both methods result in the same dollar amount of cash flow from operating activities.

 

B. Both methods involve adjusting entries to the company’s books so that the accounting records reflect the figures shown in the statement of cash flows.

 

C. Both methods are acceptable to the FASB for reporting purposes.

 

D. Both methods convert accrual-based income statement amounts to cash flow results.

 

 

 

 

117.Craig Corporation’s reported net income for 2015 is less than its net cash flow from operating activities. One reason for this could be:   

A. The sale of machinery at a loss in 2015.

 

B. An increase in inventory levels during 2015.

 

C. The sale of investments at a gain in 2015.

 

D. An error in the preparation of the statement of cash flows; net income should be greater than or equal to net cash flow from operating activities.

 

 

 

 

118.The Nelson Corporation reported net income in excess of its net cash flow from operating activities for the current year. An explanation for this may be:   

A. A loss on the sale of equipment in the current year.

 

B. An increase in accounts payable during the year.

 

C. Depreciation expense recognized for the year.

 

D. A gain on the sale of investments during the year.

 

 

 

 

119.All of the following are advantages of an increasing cash flow from operations except:   

A. A company is likely to pay its current bills with cash from operations not earnings.

 

B. A company with cash is in a better position to fund growth.

 

C. Large cash flows eliminate the need for borrowing.

 

D. Earnings are viewed better if cash flows from operations closely match net income.

 

 

 

 

120.When net cash flow from operating activities is presented by the direct method, the statement of cash flows is accompanied by a supplementary schedule reconciling:   

A. Net cash flow from operating activities with net sales.

 

B. Net income with the net increase or decrease in cash and cash equivalents.

 

C. Net income with net cash flow from operating activities.

 

D. Net cash flow from operating activities shown in the statement with that which would result from use of the indirect method.

 

 

 

 

 

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