Question :
51. U.S. GAAP requires that the statement of cash flows disclose : 1245951
51. U.S. GAAP requires that the statement of cash flows disclose the amount of cash flows arising fromfinancing activities including
A. short-term and long-term borrowing and repaying short-term or long-term borrowing.
B. issuing of common or preferred stock and reacquiring shares of outstanding common or preferred stock.
C. payment of dividends to stockholders.
D. all of the above.
E. none of the above.
52. U.S. GAAP classifies all of the following as investing activities on the statement of cash flows except for
A. cash inflows from selling manufacturing equipment.
B. cash outflows from purchasing bonds (intended to be held to maturity) of other entities.
C. cash outflows to lender for interest.
D. cash inflows from selling a (long-term) portfolio of equity securities of other entities.
E. cash outflows from buying manufacturing equipment.
53. On the statement of cash flows, cash purchase of land is treated as a/an
A. investing activity.
B. financing activity.
C. outflow of cash from operations.
D. expenditure not requiring the use of cash.
E. none of the above.
54. Cash flows from operating activities include
A. selling goods and providing services.
B. acquiring buildings and equipment.
C. payment of dividends.
D. retiring long-term debt.
E. issuing stocks and bonds.
55. On the statement of cash flows, payment of dividends is treated as a/an
A. investing activity.
B. financing activity.
C. outflow of cash from operations.
D. expenditure not requiring the use of cash.
E. none of the above.
56. 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
57. The amount of cash flow from operations indicates:
A. the extent to which operating activities generate more cash than they use.
B. the extent to which revenues exceed expenses.
C. the extent to which liabilities exceed shareholders’ equity.
D. the extent to which more cash is generated from investing activities than financing activities.
E. how much free cash flow a company has.
58. Under U.S. GAAP, the statement of cash flows classifies cash expenditures for interest on debt as a(n) _____ activity and classifies cash expenditures for dividends to shareholders as a(n) _____ activity.
A. operating; operating
B. operating: investing
C. operating; financing
D. financing; operating
E. financing; financing
59. The following information is available from JB Corporation’s accounting records for the year ended December 31, Year 4:
Cash received from customers
$600,000
Dividends received from marketable securities
80,000
Cash paid for purchase of supplies
300,000
Income taxes paid
50,000
Cash dividends paid to shareholders
30,000
Net cash flow from operating activities for Year 4 totaled
A. $200,000
B. $250,000
C. $300,000
D. $330,000
E. $220,000
60. Alsup Company
Alsup Company had the following transactions during the fiscal year ended December 31, Year 4.
·Accounts receivable decreased from $115,000 on December 31, Year 3, to $100,000
on December 31, Year 4.
·Alsup’s Board of Directors declared dividends on December 31, Year 4, of $.05
per share on the 2.8 million shares outstanding, payable to shareholders of record
on January 31, Year 5. The company did not declare or pay dividends for fiscal year,
Year 3.
·Sold a truck with a net book value of $7,000 for $5,000 cash, reporting a loss of $2,000.
·Paid interest to bondholders of $780,000.
·Cash increased from $106,000 on December 31, Year 3, to $284,000 on December 31, Year 4.
(CMA Dec 95 #2) Refer to the Alsup Company example. Alsup Company uses the direct method to prepare its statement of cash flows at December 31, Year 4. The interest that is paid to bondholders would be reported in the
A. Financing Section, as a use or outflow of cash.
B. Operating Section, as a use or outflow of cash.
C. Investing Section, as a use or outflow of cash.
D. Debt Section, as a use or outflow of cash.
E. Financing Section, as a source or inflow of cash.
