ACCT 212 – Chapter 13 Homework (Liberty
University)
1. Purpose of Statement of Cash Flows
Q1. The primary purpose of the Statement of Cash Flows is to:
a) Show revenues and expenses for a period
b) Provide information about cash receipts and cash payments
c) Show net income
d) Show financial position at a point in time
Answer: b) Provide information about cash receipts and cash payments
2. Cash Flow Activities
Q2. Which of the following is NOT a cash flow from operating activities?
a) Cash received from customers
b) Cash paid to suppliers
c) Cash received from issuance of common stock
d) Cash paid for interest
Answer: c) Cash received from issuance of common stock
,3. Operating Activities
Q3. The operating section of the cash flow statement can be prepared using:
a) Direct method
b) Indirect method
c) Both a and b
d) Neither
Answer: c) Both a and b
4. Indirect Method Adjustments
Q4. Under the indirect method, net income is adjusted for:
a) Changes in non-cash current assets and liabilities
b) Non-cash expenses such as depreciation
c) Gains and losses from investing/financing activities
d) All of the above
Answer: d) All of the above
5. Depreciation
Q5. Why is depreciation added back to net income in the indirect method?
a) It is a cash expense
b) It is a non-cash expense
,c) It reduces cash outflow
d) It increases cash inflow
Answer: b) It is a non-cash expense
6. Investing Activities
Q6. Which of the following is a cash flow from investing activities?
a) Issuing bonds
b) Purchasing equipment
c) Paying dividends
d) Borrowing from a bank
Answer: b) Purchasing equipment
7. Financing Activities
Q7. Cash dividends paid are classified as:
a) Operating activity
b) Investing activity
c) Financing activity
d) Non-cash activity
Answer: c) Financing activity
, 8. Non-Cash Transactions
Q8. Which of the following is a significant non-cash activity that is disclosed separately?
a) Purchase of equipment with cash
b) Issuance of bonds for land
c) Paying salaries
d) Collecting cash from customers
Answer: b) Issuance of bonds for land
9. Cash Equivalents
Q9. Cash equivalents are:
a) Investments that mature in more than one year
b) Short-term, highly liquid investments
c) Accounts receivable
d) Inventories
Answer: b) Short-term, highly liquid investments
10. Comparative Balance Sheet
Q10. A comparative balance sheet is used in preparing a statement of cash flows to determine:
a) Changes in cash
b) Changes in stockholder equity
University)
1. Purpose of Statement of Cash Flows
Q1. The primary purpose of the Statement of Cash Flows is to:
a) Show revenues and expenses for a period
b) Provide information about cash receipts and cash payments
c) Show net income
d) Show financial position at a point in time
Answer: b) Provide information about cash receipts and cash payments
2. Cash Flow Activities
Q2. Which of the following is NOT a cash flow from operating activities?
a) Cash received from customers
b) Cash paid to suppliers
c) Cash received from issuance of common stock
d) Cash paid for interest
Answer: c) Cash received from issuance of common stock
,3. Operating Activities
Q3. The operating section of the cash flow statement can be prepared using:
a) Direct method
b) Indirect method
c) Both a and b
d) Neither
Answer: c) Both a and b
4. Indirect Method Adjustments
Q4. Under the indirect method, net income is adjusted for:
a) Changes in non-cash current assets and liabilities
b) Non-cash expenses such as depreciation
c) Gains and losses from investing/financing activities
d) All of the above
Answer: d) All of the above
5. Depreciation
Q5. Why is depreciation added back to net income in the indirect method?
a) It is a cash expense
b) It is a non-cash expense
,c) It reduces cash outflow
d) It increases cash inflow
Answer: b) It is a non-cash expense
6. Investing Activities
Q6. Which of the following is a cash flow from investing activities?
a) Issuing bonds
b) Purchasing equipment
c) Paying dividends
d) Borrowing from a bank
Answer: b) Purchasing equipment
7. Financing Activities
Q7. Cash dividends paid are classified as:
a) Operating activity
b) Investing activity
c) Financing activity
d) Non-cash activity
Answer: c) Financing activity
, 8. Non-Cash Transactions
Q8. Which of the following is a significant non-cash activity that is disclosed separately?
a) Purchase of equipment with cash
b) Issuance of bonds for land
c) Paying salaries
d) Collecting cash from customers
Answer: b) Issuance of bonds for land
9. Cash Equivalents
Q9. Cash equivalents are:
a) Investments that mature in more than one year
b) Short-term, highly liquid investments
c) Accounts receivable
d) Inventories
Answer: b) Short-term, highly liquid investments
10. Comparative Balance Sheet
Q10. A comparative balance sheet is used in preparing a statement of cash flows to determine:
a) Changes in cash
b) Changes in stockholder equity
