Question :
31. Firms receive cash inflows and disburse cash outflows for financing : 1245949
31. Firms receive cash inflows and disburse cash outflows for financing activities such as to
A. acquire property, plant, and equipment.
B. pay dividends to shareholders.
C. purchase intellectual property.
D. pay interest on borrowings.
E. all of the above.
32. _____ usually represents a major ongoing use of cash.
A. Borrowing funds
B. Sales of existing noncurrent assets
C. Issuance of common shares
D. Acquisition of noncurrent assets, particularly property, plant, and equipment
E. All of the above are major ongoing uses of cash.
33. A firm obtains cash from all of the following except for:
A. short-term borrowing.
B. issuing common shares.
C. issuing preferred shares.
D. paying dividends to shareholders.
E. long-term borrowing.
34. A firm uses cash to _____ These amounts appear as cash flow from financing activities in the statement of cash flows.
A. pay dividends to shareholders
B. repay borrowing
C. reacquire outstanding common shares
D. reacquire outstanding preferred shares
E. all of the above
35. In the Statement of Cash Flows, U.S. GAAP views cash received in the form of interest and dividends as coming from _____.
A. investing activities
B. operating activities
C. financing activities
D. exchange activities
E. economic activities
36. IFRS permits firms to classify cash from interest and dividend revenue as _____ activities, provided the classification is consistently applied across periods.
A. operating
B. investing
C. financing
D. operating, investing, or financing
E. None of the above are correct.
37. U.S. GAAP requires that firms classify cash payments for interest expense as a(n) _____ activity.
A. operating
B. financing
C. investing,
D. operating, investing, or financing
E. None of the above are correct.
38. Under U.S. GAAP, the classification of interest expense as a(n) _____ activity and dividends paid on common or preferred shares as a(n) _____ activity appears inconsistent to some observers as both are payments to suppliers of funds.
A. operating; financing
B. investing; financing
C. financing; investing
D. financing; operating
E. investing; operating
39. Under U.S. GAAP, the classification of interest expense as an operating activity and dividends paid on common or preferred shares as a financing activity appears inconsistent to some observers as both are payments to suppliers of funds. Authoritative guidance requires the different treatments because
A. interest is an expense in computing net income.
B. dividends represent a distribution of assets generated by net income not an expense reducing net income.
C. interest represent a distribution of assets generated by net income not an expense reducing net income.
D. dividends is an expense in computing net income.
E. both choices a and b are correct.
40. Both U.S. GAAP and IFRS permit considerable flexibility with respect to the display of information in the statement of cash flows. Firms must report cash flows from operations, investing, and financing for the _____.
A. current year
B. current year and the prior year
C. current year and the prior two years
D. current year and the prior three years
E. current year and the prior four years
