Question : 51. The _____ method begins with net income for a period : 1230582

51. The _____ method begins with net income for a period and then shows adjustments to net income to convert revenues to cash received from customers and to convert expenses to cash disbursed to various suppliers of goods and services. Most companies use this method.  
A. direct
B. indirect
C. adjustment
D. income
E. free cash

52. A recent AICPA survey of 600 large companies reported in the AICPA’s annual Accounting Trends and Techniques showed that only _____ use the direct method. 
A. six to eight companies, about 1%
B. sixty, about 10%
C. ninety, about 15%,
D. one hundred and twenty companies, about 20%
E. three hundred, about 50%

53. There are several types of adjustments required to compute cash flow from operations from net income.  One adjustment is an addition to net income each year for _____ because it uses no cash during that period.  
A. payments to employees
B. payments to suppliers
C. tax payments
D. depreciation and amortization
E. none of the above

54. The amount of cash a department store received from customers during a period equals the sales for the period, reduced by the _____ during this period or increased by the _____ during the period. 
A. decrease in accounts payable; increase in accounts payable
B. increase in accounts payable; decrease in accounts payable
C. decrease in accounts receivable; increase in accounts receivable
D. increase in accounts receivable; decrease in accounts receivable
E. none of the above

55. Firms have some choice as to when they disburse cash. Delaying payments to suppliers and others during the last several days of an accounting period conserves cash and thereby _____ cash flow from operations for that period, and _____ cash flow from operations during the second period.  
A. increases; decreases
B. increases; increases
C. decreases; ; increases
D. decreases; decreases
E. increases; has no effect

56. A growing firm that delays payments at the end of each period reports larger cash flow from operations each period than if it had not delayed making the cash payments at the end of each period. Which of the following is true? 
A. The firm is, in effect, obtaining short-term financing from its suppliers.
B. Absent contracts or other agreements that preclude delayed payments, this business practice is legal.
C. Sufficiently delayed payments might harm a firm’s reputation.
D. Sufficiently delayed payments might harm a firm’s credit rating.
E. all of the above are true

57. The statement of cash flows reports the effects of a firm’s operating, investing, and financing activities on cash flows. Information in the statement helps in understanding which of the following concept(s)? 
A. The effect of operations on the liquidity of a firm.
B. The level of capital expenditures needed to support ongoing and growing levels of activity.
C. The major changes in the financing of a firm.
D. all of the above
E. none of the above

58. To prepare the statement of cash flows requires analyzing changes in balance sheet accounts during the accounting period.  As an outcome of correct double-entry recording of all transactions, the net change in cash will be _____ the net change in all noncash accounts.  
A. greater than
B. less than
C. equal to
D. greater than or be less than
E. greater than or be equal to

59. Some firms use the direct approach for the statement of cash flows to present cash flow from _____, listing all revenues that provide cash and subtracting all expenses that use cash.  
A. operating activities, only
B. investing activities, only
C. financing activities, only
D. operating, financing, and investing activities
E. operating, and investing activities, only

60. The statement of cash flows usually presents cash flow from operations in the _____ format, beginning with net income for the period. The statement then adjusts for revenues not providing cash, for expenses not using cash, and for changes in working capital accounts.  
A. funds flow
B. direct
C. indirect
D. profit and loss
E. working capital