Cash Flow Statement MCQs (1-10)

1. Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?

(a) Depreciation expense

(b) Repayment of bonds payable

(c) A gain on the sale of land

(d) A loss on the sale of equipment

Correct! Wrong!

2. Which of the following would be considered a cash-flow item from a "financing" activity?

(a) A cash outflow to the government for taxes

(b) A cash outflow to repurchase the firm's own common stock

(c) A cash outflow to lenders as interest

(d) A cash outflow to purchase bonds issued by another company

Correct! Wrong!

3. The method for presenting Net cash provided by operating activities that starts with net income and adjusts it for items that affected reported net income but that did not affect cash is called the?

(a) Direct method

(b) Working capital method

(c) Indirect method

(d) Cost-benefit method

Correct! Wrong!

4. Cash paid for preferred stock dividends should be shown on the statement of cash flows under?

(a) Investing activities

(b) Financing activities

(c) Noncash investing and financing activities

(d) Operating activities

Correct! Wrong!

5. Which of the following would not be considered a cash flow from “operating” activities?

(a) Payments for the inventory

(b) Interest received on loans

(c) Tax payments

(d) Payment of debt principle

Correct! Wrong!

6. In the long run, a business must generate positive net cash flow from which of the following activities, if it is to survive?

(a) Investing activities

(b) Financing activities

(c) Operating activities

(d) Non cash activities

Correct! Wrong!

7. Depreciation is added back to profit when arriving at the cash flow from operating activities because?

(a) Depreciation is only an estimated amount

(b) Depreciation does not affect profit

(c) Depreciation only affects the balance sheet, not the profit and loss account

(d) None of Above

Correct! Wrong!

8. A company purchased the land in exchange for the capital stock; it would affect which of the following?

(a) Cash flow from operating activities

(b) Cash flow from investing activities

(c) Cash flow from financing activities

(d) It would not affect any section

Correct! Wrong!

9. Which of the following would not represent the cash outflows for the business?

(a) Purchase of building for cash

(b) The sale of land for cash

(c) Retirement of long term debt

(d) The payment of cash for dividends

Correct! Wrong!

10. The statement of cash flows does not include cash inflows and outflows for which of the following activities?

(a) Financing activities

(b) Investing activities

(c) Operating activities

(d) Revenue activities

Correct! Wrong!

1. Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?

2. Which of the following would be considered a cash-flow item from a "financing" activity?

3. The method for presenting Net cash provided by operating activities that starts with net income and adjusts it for items that affected reported net income but that did not affect cash is called the?

4. Cash paid for preferred stock dividends should be shown on the statement of cash flows under?

5. Which of the following would not be considered a cash flow from “operating” activities?

6. In the long run, a business must generate positive net cash flow from which of the following activities, if it is to survive?

7. Depreciation is added back to profit when arriving at the cash flow from operating activities because?

8. A company purchased the land in exchange for the capital stock; it would affect which of the following?

9. Which of the following would not represent the cash outflows for the business?

10. The statement of cash flows does not include cash inflows and outflows for which of the following activities?

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