KA2e_SelfStudy_Ch12

KA2e_SelfStudy_Ch12 - File:ch12,Chapter12: MultipleChoice...

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File: ch12, Chapter 12: Statement of Cash Flows Multiple Choice 1. Which of the following is incorrect about the statement of cash flows? a) It is a fourth basic financial statement. b) It provides information about cash receipts and cash payments of an entity during a period. c) It reconciles the ending cash account balance to the balance per the bank statement. d) It provides information about the operating, investing, and financing activities of the business. Ans: c Response A: The statement is a fourth basic financial statement in addition to the balance sheet, income statement and statement of retained earnings. Responses B: This is an accurate statement about the statement of cash flows. Response C: Correct! Response D: This is an accurate statement about the statement of cash flows. 2. The statement of cash flows classifies cash receipts and cash payments by these activities: a) operating and nonoperating. b) investing, financing, and operating. c) financing, operating, and nonoperating. d) investing, financing, and nonoperating. Ans: b Response A: Operating, investing, and financing are the three classifications of cash payments and cash receipts used in the statement of cash flows. Response B: Correct! Response C: Operating, investing, and financing are the three classifications of cash payments and cash receipts used in the statement of cash flows. Response D: Operating, investing, and financing are the three classifications of cash payments and cash receipts used in the statement of cash flows. 3. Which is an example of a cash flow from an operating activity? a) Payment of cash to lenders for interest. b) Receipt of cash from the sale of capital stock. c) Payment of cash dividends to the company’s stockholders. d) None of the above. Ans: a Response A: Correct! Response B: Receipt of cash from the sale of capital stock is a financing activity. Response C: Payment of cash dividends to the company’s stockholders is a financing activity. Response D: Since answer a is correct, this answer cannot be correct. 4. Which is an example of a cash flow from an investing activity? a) Receipt of cash from the issuance of bonds payable. b) Payment of cash to repurchase outstanding capital stock. c) Receipt of cash from the sale of equipment.
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d) Payment of cash to suppliers for inventory. Ans: c Response A: The receipt of cash from the issuance of bonds payable is a financing activity. Response B: Payment of cash to repurchase outstanding capital stock is a financing activity. Response C: Correct!
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This note was uploaded on 04/22/2009 for the course BCOR 2000 taught by Professor Brush during the Spring '07 term at Colorado.

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KA2e_SelfStudy_Ch12 - File:ch12,Chapter12: MultipleChoice...

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