Cash Flow Statement MCQs (11-20)

11. The primary purpose of the statement of cash flows is to?

(a) Provide information about the investing and financing activities during a period

(b) Prove that revenues exceed expenses if there is a net income

(c) Provide information about the cash receipts and cash payments during a period

(d) Facilitate banking relationships

Correct! Wrong!

12. If a company purchased treasury stock with cash, this would be reported on the statement of cash flows as?

(a) An operating cash outflow

(b) An investing cash outflow

(c) A financing cash outflow

(d) A financing cash inflow

Correct! Wrong!

13. When equipment is sold for cash, the amount received is reflected as cash?

(a) Inflow in the operating section

(b) Inflow in the financing section

(c) Inflow in the investing section

(d) Outflow in the operating section

Correct! Wrong!

14. Which of the following is not an example of cash equivalents?

(a) Certificates of Deposit

(b) Money market accounts

(c) Money market mutual funds

(d) Euro Bond

Correct! Wrong!

15. Which of the following cash flows results from an operating activity?

(a) Paying dividends to stockholders

(b) Repaying note payable

(c) Receiving interest on investment

(d) Purchasing equipment

Correct! Wrong!

16. Which of the following cash flows results from a financing activity?

(a) Receiving dividends on investment in another company

(b) Repaying long-term debt

(c) Purchasing an investment in another company

(d) Receiving payment from a customer

Correct! Wrong!

17. Which of the following cash flows results from a financing activity?

(a) Borrowing money from the bank

(b) Receiving a stock dividend worth Rs. 3 per share

(c) Paying income taxes at end of year

(d) All of the above result from financing activities

Correct! Wrong!

18. The two approaches to reporting cash flows provided by operating activities are?

(a) Direct and indirect methods

(b) The basic and standard methods

(c) The gross margin and contribution margin methods

(d) The liquidity and profitability methods

Correct! Wrong!

19. In preparing cash flows provided by operating activities using the indirect method, which of the following items is added to net income?

(a) Non-cash expenses such as depreciation

(b) Gains on investing and financing transactions

(c) Increases in current asset balances

(d) Decreases in current liability balances

Correct! Wrong!

20. Which of the following would be considered an investing activity and a source of cash?

(a) Purchase of equipment

(b) Sale of BBB’s stock held as an investment

(c) Issuance of corporate stock

(d) Receipt of interest on savings account

Correct! Wrong!

11. The primary purpose of the statement of cash flows is to?

12. If a company purchased treasury stock with cash, this would be reported on the statement of cash flows as?

13. When equipment is sold for cash, the amount received is reflected as cash?

14. Which of the following is not an example of cash equivalents?

15. Which of the following cash flows results from an operating activity?

16. Which of the following cash flows results from a financing activity?

17. Which of the following cash flows results from a financing activity?

18. The two approaches to reporting cash flows provided by operating activities are?

19. In preparing cash flows provided by operating activities using the indirect method, which of the following items is added to net income?

20. Which of the following would be considered an investing activity and a source of cash?

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