MBA Accounting questions and
answers
CHAPTER 11
What is the primary purpose of the statement of cash flow?
A. To provide information about the cash flow from operations for a period
B. To provide information about firm profitability
C. To provide pro forma information that helps users predict future cash flows
D. To provide information about where a company's cash comes from and where it
goes✔✔D. To provide information about where a company's cash comes from and
where it goes
Partial financial results are presented below for MCD Restaurant:
Operating profit: $435,000
Cash flow from:
Operations: 115,000
Investing: 125,600
Financing: (54,000)
What cash management actions most likely occurred during the year?
A. Hamburger Restaurant used cash from operations and from selling long-term
assets to pay dividends.
B. Hamburger Restaurant used cash from bank loans or from selling stock and from
operations to buy long-term assets.
C. Hamburger Restaurant used cash from bank loans or from selling stock to fund
operations and to buy long-term assets.
D. Hamburger Restaurant used cash from operations to buy long-term assets and to
repay debt.✔✔A. Hamburger Restaurant used cash from operations and from selling
long-term assets to pay dividends.
B's Power provided the following information:
Depreciation expense: $ 30,000
Funds borrowed from the bank: 200,000
Dividends paid to shareholders: 100,000
Proceeds from sale of building: 450,000
Purchase of inventories: 600,000
Purchase of equipment: 150,000
How much is the net cash from (for) investing activities?
A. $400,000
B. $300,000
C. ($200,000)
D. $330,000✔✔B. $300,000
, $450,000 - $150,000 = $300,000
Window Company provided the following income statement information:
Sales: $3,100,000
Cost of goods sold: 1,650,000
Restructuring charges: 320,000
Depreciation: 48,000
Interest expense: 21,500
Other operating expenses: 980,000
Income before taxes: 80,500
Income taxes expense: 28,175
Net income: $ 52,325
How much is the company's EBITDA?
A. $150,000
B. $80,500
C. $470,000
D.$ 11,000✔✔A. $150,000
$52,325 + $21,500 + 28,175+ $48,000 = $150,000
Which of the following situations would most likely be observed on the statement of
cash flow for a start-up company?
A. Operating Cash Flow- Positive
Investing Cash Flow- Positive
Financing Cash Flow- Positive
B. Operating Cash Flow- Negative
Investing Cash Flow- Negative
Financing Cash Flow- Negative
c. Operating Cash Flow - Positive
Investing Cash Flow -Positive
Financing Cash Flow- Negative
D. Operating Cash Flow- Negative
Investing Cash Flow- Positive
Financing Cash Flow- Positive
E. Operating Cash Flow- Negative
Investing Cash Flow- Negative
Financing Cash Flow- Positive✔✔E. Operating Cash Flow- Negative
Investing Cash Flow- Negative
Financing Cash Flow- Positive
The activities on the statement of cash flows relate to the Balance Sheet Equation as
follows:
answers
CHAPTER 11
What is the primary purpose of the statement of cash flow?
A. To provide information about the cash flow from operations for a period
B. To provide information about firm profitability
C. To provide pro forma information that helps users predict future cash flows
D. To provide information about where a company's cash comes from and where it
goes✔✔D. To provide information about where a company's cash comes from and
where it goes
Partial financial results are presented below for MCD Restaurant:
Operating profit: $435,000
Cash flow from:
Operations: 115,000
Investing: 125,600
Financing: (54,000)
What cash management actions most likely occurred during the year?
A. Hamburger Restaurant used cash from operations and from selling long-term
assets to pay dividends.
B. Hamburger Restaurant used cash from bank loans or from selling stock and from
operations to buy long-term assets.
C. Hamburger Restaurant used cash from bank loans or from selling stock to fund
operations and to buy long-term assets.
D. Hamburger Restaurant used cash from operations to buy long-term assets and to
repay debt.✔✔A. Hamburger Restaurant used cash from operations and from selling
long-term assets to pay dividends.
B's Power provided the following information:
Depreciation expense: $ 30,000
Funds borrowed from the bank: 200,000
Dividends paid to shareholders: 100,000
Proceeds from sale of building: 450,000
Purchase of inventories: 600,000
Purchase of equipment: 150,000
How much is the net cash from (for) investing activities?
A. $400,000
B. $300,000
C. ($200,000)
D. $330,000✔✔B. $300,000
, $450,000 - $150,000 = $300,000
Window Company provided the following income statement information:
Sales: $3,100,000
Cost of goods sold: 1,650,000
Restructuring charges: 320,000
Depreciation: 48,000
Interest expense: 21,500
Other operating expenses: 980,000
Income before taxes: 80,500
Income taxes expense: 28,175
Net income: $ 52,325
How much is the company's EBITDA?
A. $150,000
B. $80,500
C. $470,000
D.$ 11,000✔✔A. $150,000
$52,325 + $21,500 + 28,175+ $48,000 = $150,000
Which of the following situations would most likely be observed on the statement of
cash flow for a start-up company?
A. Operating Cash Flow- Positive
Investing Cash Flow- Positive
Financing Cash Flow- Positive
B. Operating Cash Flow- Negative
Investing Cash Flow- Negative
Financing Cash Flow- Negative
c. Operating Cash Flow - Positive
Investing Cash Flow -Positive
Financing Cash Flow- Negative
D. Operating Cash Flow- Negative
Investing Cash Flow- Positive
Financing Cash Flow- Positive
E. Operating Cash Flow- Negative
Investing Cash Flow- Negative
Financing Cash Flow- Positive✔✔E. Operating Cash Flow- Negative
Investing Cash Flow- Negative
Financing Cash Flow- Positive
The activities on the statement of cash flows relate to the Balance Sheet Equation as
follows:
