Question : Multiple Choice Questions 39.A statement of cash flows not intended to : 1259514

 

Multiple Choice Questions 

39.A statement of cash flows is not intended to assist investors in evaluating:   

A. Reasons for differences between the amount of net income and net cash flow from operations.

 

B. The company’s ability to meet its obligations and to pay dividends.

 

C. Non-cash aspects of investing and financing activities.

 

D. The profitability of business operations.

 

 

 

 

40.The “bottom line” in a statement of cash flows shows:   

A. The cash (including cash equivalents) on the balance sheet at the end of the period.

 

B. Net increase or decrease in cash during the period.

 

C. Net income, computed by the cash basis of accounting.

 

D. Net cash flow from operating activities.

 

 

 

 

41.All of the following are considered cash equivalents except:   

A. Marketable securities.

 

B. Money market funds.

 

C. Commercial paper.

 

D. Treasury bills.

 

 

 

 

42.In a statement of cash flows, cash transactions are classified into three major categories. Which of the following is not one of these three categories?   

A. Managing activities.

 

B. Operating activities.

 

C. Financing activities.

 

D. Investing activities.

 

 

 

 

43.In a statement of cash flows, the term cash includes:   

A. Only money on deposit in bank accounts.

 

B. Only bank accounts and cash on hand.

 

C. Bank accounts, cash on hand, and cash equivalents.

 

D. Bank accounts, cash on hand, cash equivalents, and marketable securities classified as current assets.

 

 

 

 

44.The FASB classifies interest received on investments and interest paid on debt financing as part of operating cash flows, while the IASB:   

A. Allows interest received to be classified as either operating or investing and interest paid as either operating or financing.

 

B. Allows interest received to be classified as either operating or financing and interest paid as either operating or investing.

 

C. Allows interest received to be classified only as investing and interest paid only as financing.

 

D. Allows interest received to be classified only as financing and interest paid only as investing.

 

 

 

 

45.Which of the following indicates a cash receipt?   

A. A decrease in accrued expenses, such as wages payable.

 

B. A decrease in accounts receivable.

 

C. An increase in inventory.

 

D. A decrease in accounts payable.

 

 

 

 

46.Cash flows from operating activities include all of the following except:   

A. Collections from customers for sales of goods.

 

B. Interest and dividends received.

 

C. Payments of interest.

 

D. Payments of dividends.

 

 

 

 

47.Net income differs from net cash flows from operations because of all the following except:   

A. Non-cash expenses such as depreciation.

 

B. Timing differences between recognizing revenue and expenses and their cash flows.

 

C. Gains and losses included in net income but classified as investing or financings activities.

 

D. Non-cash expenses such as depreciation, timing differences between recognizing revenue and expenses and their cash flows, and gains and losses included in net income but classified as investing or financings activities will all cause a difference between net income and cash flows.

 

 

 

 

48.In the statement of cash flows, the purchase of supplies is classified as:   

A. Operating activities.

 

B. Financing activities.

 

C. Investing activities.

 

D. This would not appear on a statement of cash flows.