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

Multiple 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