ACC221 MIAMI UNIVERSITY TEST PAPER 2026
FULL SOLUTION VERIFIED
◉ Paying rent in advance is a... Answer: Operating activity
◉ Buying supplies and consuming them immediately is a... Answer:
Operating activity
◉ Purchasing Inventory is a... Answer: Operating activity
◉ Receiving cash from a customer is a... Answer: Operating activity
◉ Paying wages to employees is a... Answer: Operating activity
◉ What does the Operating section do? Answer: Starts with Net
Income (from the period) and converts it to Cash for the period by
making a series of adjustments to take accural basis N/I to Cash
◉ If the final number of Operating section is negative, that is...
Answer: BAD
, ◉ If Cash flow from operating activities is consistantly greater than
net income, then this is a... Answer: High Quality company
◉ If Cash flow from operating activities is consistantly less than net
income, then this is a... Answer: Red Flag
◉ Cash Flow from Investing Activities Answer: This is a measure of
how much cash was generated by activities related to investing in
the company
◉ What are uses of cash for Investing activities? Answer: Negative
cash flow: Purchase PP&E, Invest in other companies, Acquire/Buy
another company
◉ What are sources of cash for investing activities? Answer: Positive
cash flow: Sell PP&E, Sell an investment in another company, Receive
a dividend from our investment
◉ Cash Flow from Financing Activities Answer: This is a measure of
how much cash was generated (used) by activites related to
financing
◉ What are uses of cash for financing activities? Answer: Payback
loan, purchase treasure stock, pay dividends to shareholders
FULL SOLUTION VERIFIED
◉ Paying rent in advance is a... Answer: Operating activity
◉ Buying supplies and consuming them immediately is a... Answer:
Operating activity
◉ Purchasing Inventory is a... Answer: Operating activity
◉ Receiving cash from a customer is a... Answer: Operating activity
◉ Paying wages to employees is a... Answer: Operating activity
◉ What does the Operating section do? Answer: Starts with Net
Income (from the period) and converts it to Cash for the period by
making a series of adjustments to take accural basis N/I to Cash
◉ If the final number of Operating section is negative, that is...
Answer: BAD
, ◉ If Cash flow from operating activities is consistantly greater than
net income, then this is a... Answer: High Quality company
◉ If Cash flow from operating activities is consistantly less than net
income, then this is a... Answer: Red Flag
◉ Cash Flow from Investing Activities Answer: This is a measure of
how much cash was generated by activities related to investing in
the company
◉ What are uses of cash for Investing activities? Answer: Negative
cash flow: Purchase PP&E, Invest in other companies, Acquire/Buy
another company
◉ What are sources of cash for investing activities? Answer: Positive
cash flow: Sell PP&E, Sell an investment in another company, Receive
a dividend from our investment
◉ Cash Flow from Financing Activities Answer: This is a measure of
how much cash was generated (used) by activites related to
financing
◉ What are uses of cash for financing activities? Answer: Payback
loan, purchase treasure stock, pay dividends to shareholders
