1、CHAPTER 16STATEMENT OF CASH FLOWSChapter 16Statement of Cash Flows401Chapter 16Statement of Cash FlowsTRUE/FALSE1. The statement of cash flows is not one of the basic financial statements.ANS: F DIF: 1 OBJ: 012. Cash, as the term is used for the statement of cash flows, could indicate either cash or
2、 cash equivalents.ANS: T DIF: 1 OBJ: 013. The statement of cash flows is an optional financial statement.ANS: F DIF: 1 OBJ: 014. The statement of cash flows shows the effects on cash of a companys operating, investing, and financing activities.ANS: T DIF: 1 OBJ: 015. The statement of cash flows repo
3、rts a firms major sources of cash receipts and major uses of cash payments for a period.ANS: T DIF: 1 OBJ: 016. Cash flows from operating activities, as part of the statement of cash flows, include cash transactions that enter into the determination of net income.ANS: T DIF: 1 OBJ: 017. To arrive at
4、 cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.ANS: T DIF: 2 OBJ: 018. Cash flows from investing activities, as part of the statement of cash flows, include receipts from the sale of land.ANS: T DIF: 2 OBJ: 019. Cash
5、 flows from financing activities, as part of the statement of cash flows, include payments for dividends.ANS: T DIF: 2 OBJ: 01Chapter 16Statement of Cash Flows40210. Cash flows from investing activities, as part of the statement of cash flows, include payments for the purchase of treasury stock.ANS:
6、 F DIF: 2 OBJ: 0111. Cash flows from investing activities, as part of the statement of cash flows, include receipts from the issuance of bonds payable.ANS: F DIF: 2 OBJ: 0112. There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1) the direct
7、method and (2) the indirect method.ANS: T DIF: 1 OBJ: 0113. The direct method of preparing the operating activities section of the statement of cash flows reports major classes of gross cash receipts and gross cash payments.ANS: T DIF: 1 OBJ: 0114. Under the direct method of reporting cash flows fro
8、m operations, the major source of cash is cash received from customers.ANS: T DIF: 1 OBJ: 0115. The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.ANS: T DIF: 2 OBJ: 0116. A major disadvantage of the
9、indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is not emphasized.ANS: F DIF: 2 OBJ: 0117. Cash outflows from financing activities include the payment of cash dividends, the acquisi
10、tion of treasury stock, and the repayment of amounts borrowed.ANS: T DIF: 2 OBJ: 0118. Cash flows from investing activities, as part of the statement of cash flows, include payments for the acquisition of fixed assets.ANS: T DIF: 2 OBJ: 01Chapter 16Statement of Cash Flows40319. The acquisition of la
11、nd in exchange for common stock is an example of noncash investing and financing activity.ANS: T DIF: 2 OBJ: 0120. If a business issued bonds payable in exchange for land, the transaction would be reported in a separate schedule on the statement of cash flows.ANS: T DIF: 2 OBJ: 0121. A cash flow per
12、 share amount should be reported on the statement of cash flows.ANS: F DIF: 1 OBJ: 0122. Although there is no order in which the noncash balance sheet accounts must be analyzed in determining data for preparing the statement of cash flows by the indirect method, time can be saved and greater accurac
13、y can be achieved by selecting the accounts in the reverse order in which they appear on the balance sheet.ANS: T DIF: 1 OBJ: 0223. The 2002 edition of Accounting Trends and Techniques reported that 90% of the companies surveyed used the indirect method to report changes in cash flows from operation
14、s.ANS: F DIF: 2 OBJ: 0224. Rarely would the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.ANS: T DIF: 2 OBJ: 0225. If land costing $75,000 was sold for $135,000, the amount reported in the investing ac
15、tivities section of the statement of cash flows would be $75,000.ANS: F DIF: 2 OBJ: 0226. If land costing $150,000 was sold for $205,000, the $55,000 gain on the sale would be added to net income in converting the net income reported on the income statement to cash flows from operating activities fo
16、r the statement of cash flows prepared by the indirect method.ANS: F DIF: 2 OBJ: 0227. In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the net decrease in inventories from the beginning to the end of the period is added to net inco
17、me for the period.ANS: T DIF: 2 OBJ: 02Chapter 16Statement of Cash Flows40428. In determining the cash flows from operating activities for the statement of cash flows by the indirect method, the depreciation expense for the period is added to the net income for the period.ANS: T DIF: 2 OBJ: 0229. In
18、 preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the amortization of bond discount for the period is deducted from the net income for the period.ANS: F DIF: 2 OBJ: 0230. If cash dividends of $145,000 were declared during the year and
19、the decrease in dividends payable from the beginning to the end of the year was $7,000, the statement of cash flows would report $152,000 in the financing activities section.ANS: T DIF: 2 OBJ: 0231. The declaration and issuance of a stock dividend would be reported on the statement of cash flows.ANS
20、: F DIF: 2 OBJ: 0232. If 900 shares of $40 par common stock are sold for $48,000, the $48,000 would be reported in the cash flows from financing activities section of the statement of cash flows.ANS: T DIF: 2 OBJ: 0233. If $500,000 of bonds payable are sold at 101, $500,000 would be reported in the
21、cash flows from financing activities section of the statement of cash flows.ANS: F DIF: 2 OBJ: 0234. Net income was $ 52,000 for the year. The accumulated depreciation balance increased by $17,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities.
22、 The cash flow from operations is $35,000ANS: F DIF: 2 OBJ: 0235. Net income for the year was $29,000. Accounts receivable increased $2,500, and accounts payable increased $5,100. The cash flow from operations is $31,600.ANS: T DIF: 2 OBJ: 02Chapter 16Statement of Cash Flows40536. A building with a
23、cost of $153,000 and accumulated depreciation of $42,000 was sold for an $11,000 gain. The cash generated from this investing activity was $121,000.ANS: F DIF: 2 OBJ: 0237. The indirect method reports cash received from customers in the cash flows from operating activities section of the statement o
24、f cash flows.ANS: F DIF: 2 OBJ: 0238. Cash paid to acquire treasury stock should be shown on the statement of cash flows from investing activities.ANS: F DIF: 2 OBJ: 0239. Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.ANS: F DIF: 2 OBJ:
25、0240. Acquiring equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section.ANS: F DIF: 2 OBJ: 0241. In reporting cash flows from investing activities on the statement of cash flows, the cash inflows are usually reported first, followed
26、 by the cash outflows.ANS: T DIF: 1 OBJ: 0242.Cash inflows and outflows are not netted in any activity section of the statement of cash flows but are separately disclosed to give the reader full information.ANS: T DIF: 1 OBJ: 0243. The manner of reporting cash flows from investing and financing acti
27、vities will be different under the direct method as compared to the indirect method.ANS: F DIF: 1 OBJ: 0344. Sales reported on the income statement were $375,000. The accounts receivable balance declined $6,500 over the year. The amount of cash received from customers was $368,500.ANS: F DIF: 2 OBJ:
28、 03Chapter 16Statement of Cash Flows40645. To determine cash payments for merchandise for the cash flow statement using the direct method, a decrease in accounts payable is added to the cost of merchandise sold.ANS: T DIF: 2 OBJ: 0346. To determine cash payments for operating expenses for the cash f
29、low statement using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.ANS: F DIF: 2 OBJ: 0347. To determine cash payments for operating expenses for the cash flow statement using the direct method, a decrease in accrued expenses is added to oper
30、ating expenses other than depreciation.ANS: T DIF: 2 OBJ: 0348. To determine cash payments for income tax for the cash flow statement using the direct method, an increase in income taxes payable is added to the income tax expense.ANS: F DIF: 2 OBJ: 0349. Free cash flow is cash flow from operations,
31、less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends.ANS: T DIF: 1 OBJ: 0450. Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity
32、and dividends.ANS: T DIF: 1 OBJ: 04MULTIPLE CHOICE1. Which of the following is not one of the four basic financial statements?a. balance sheetb. statement of cash flowsc. statement of changes in financial positiond. income statementANS: C DIF: 1 OBJ: 01Chapter 16Statement of Cash Flows4072. Which of
33、 the following concepts of cash is not appropriate to use in preparing the statement of cash flows?a. cashb. cash and money market fundsc. cash and cash equivalentsd. cash and U.S. treasury bondsANS: D DIF: 2 OBJ: 013. The statement of cash flows reports a. cash flows from operating activitiesb. tot
34、al assetsc. total changes in stockholders equityd. changes in retained earningsANS: A DIF: 1 OBJ: 014. On the statement of cash flows, the cash flows from operating activities section would include a. receipts from the issuance of capital stockb. receipts from the sale of investmentsc. payments for
35、the acquisition of investmentsd. cash receipts from sales activitiesANS: D DIF: 2 OBJ: 015. Preferred stock issued in exchange for land would be reported in the statement of cash flows in a. the cash flows from financing activities sectionb. the cash flows from investing activities sectionc. a separ
36、ate scheduled. the cash flows from operating activities sectionANS: C DIF: 2 OBJ: 016. Cash paid to purchase long-term investments would be reported in the statement of cash flows in a. the cash flows from operating activities sectionb. the cash flows from financing activities sectionc. the cash flo
37、ws from investing activities sectiond. a separate scheduleANS: C DIF: 2 OBJ: 01Chapter 16Statement of Cash Flows4087. A statement of cash flows would not disclose the effects of which of the following transactions?a. stock dividends declaredb. bonds payable exchanged for capital stockc. purchase of
38、treasury stockd. capital stock issued to acquire fixed assetsANS: A DIF: 2 OBJ: 018. Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?a. purchase of noncurrent assetsb. purchase of treasury stockc. discar
39、ding an asset that had been fully depreciatedd. payment of cash dividendsANS: C DIF: 2 OBJ: 019. Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?a. appropriation of retained earningsb. acquisition of treasury stockc. declaration of s
40、tock dividendsd. issuance of long-term debtANS: D DIF: 2 OBJ: 0110. A ten-year bond was issued at par for $150,000 cash. This transaction should be shown on a statement of cash flows under a. investing activitiesb. financing activitiesc. noncash investing and financing activitiesd. operating activit
41、iesANS: B DIF: 1 OBJ: 0111. Cash paid for preferred stock dividends should be shown on the statement of cash flows under a. investing activitiesb. financing activitiesc. noncash investing and financing activitiesd. operating activitiesANS: B DIF: 2 OBJ: 01Chapter 16Statement of Cash Flows40912. The
42、last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports a. the increase or decrease in cashb. cash at the end of the yearc. net cash flow from investing activitiesd. net cash flow from financing activitiesANS: B DIF: 2 OBJ: 0113. Which of
43、the following is a noncash investing and financing activity?a. payment of a cash dividendb. payment of a six-month note payablec. purchase of merchandise inventory on accountd. issuance of common stock to acquire landANS: D DIF: 2 OBJ: 0114. Which of the following should be shown on a statement of c
44、ash flows under the financing activity section?a. the purchase of a long-term investment in the common stock of another companyb. the payment of cash to retire a long-term note c. the proceeds from the sale of a buildingd. the issuance of a long-term note to acquire landANS: B DIF: 2 OBJ: 0115. A co
45、mpany purchases equipment for $29,000 cash. This transaction should be shown on the statement of cash flows under a. investing activitiesb. financing activitiesc. noncash investing and financing activitiesd. operating activitiesANS: A DIF: 2 OBJ: 0116. Cash flow per share is a. required to be report
46、ed on the balance sheetb. required to be reported on the income statementc. required to be reported on the statement of cash flowsd. not required to be reported on any statementANS: D DIF: 1 OBJ: 01Chapter 16Statement of Cash Flows41017. On the statement of cash flows prepared by the indirect method
47、, the cash flows from operating activities section would include a. receipts from the sale of investmentsb. amortization of premium on bonds payablec. payments for cash dividendsd. receipts from the issuance of capital stockANS: B DIF: 2 OBJ: 0118. The statement of cash flows may be used by manageme
48、nt to a. assess the liquidity of the businessb. assess the major policy decisions involving investments and financingc. determine dividend policyd. do all of the aboveANS: D DIF: 1 OBJ: 0119. Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect
49、method in a. the cash flows from financing activities sectionb. the cash flows from investing activities sectionc. a separate scheduled. the cash flows from operating activities sectionANS: D DIF: 2 OBJ: 0220. Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?a. an increase in inventoryb. a decrease in accounts payablec. preferred dividends declared and paidd. a decrease in accounts receivableANS: D DIF: 2 OBJ: 0221. Which of the following should be deducted from net income in calculating net cash
