Chapter 15 “How Well Am I Doing?”--Statement of Cash Flows

Chapter 15 “How Well Am I Doing?”--Statement of Cash FlowsMultiple Choice Questions 16.Which of the following would be considered a “use” of cash for purposes of constructing a statement of cash flows?A)a decrease in accounts receivable.B)an increase in accounts payable.C)an increase in common stock.D)a decrease in bonds payable.Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 17.Which of the following would be considered a “source” of cash for purposes of constructing a statement of cash flows?A)an increase in accounts payable.B)dividends paid to the company's own shareholders.C)a decrease in accrued liabilities.D)an increase in accounts receivable.Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 18.Evita Corporation prepares its statement of cash flows using the indirect method. Evita's statement showed “Net cash provided by operating activities” to be $46,000. Under the direct method, this number would have been:A)$0.B)$46,000.C)greater than $46,000.D)less than $46,000 but greater than $0.Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 15 LO: 2,3,4 Level: Easy 19.Under the indirect method, which item would be deducted from net income as part of the process of arriving at cash provided by operating activities on the statement of cash flows?A)Patent amortization expenseB)Increase in accounts payableC)Increase in prepaid expensesD)Decrease in accounts receivableAns: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3 Level: MediumGarrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition15-5 Chapter 15 “How Well Am I Doing?”--Statement of Cash Flows 20.A decrease in the prepaid expenses account of $1,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:A)an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.B)a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities.C)an addition of $1,000 under financing activities.D)a deduction of $1,000 under financing activities.Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2,3