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Unformatted text preview: CHAPTER 23 STATEMENT OF CASH FLOWS IFRS questions are available at the end of this chapter. TRUE-FALSE Conceptual Answer No. Description F 1. Primary purpose of the statement of cash flows. T 2. Information provided by statement of cash flows. T 3. Classification of operating activities. F 4. First step in cash flow statement preparation. T 5. Reconciling beginning and ending cash balances. F 6. Net income and net cash flow from operating activities. T 7. Converting net income to net cash flow from operating activities. F 8. Reporting cash receipts/disbursements in direct method. T 9. Indirect method adjustments. F 10. FASBs recommended method. T 11. Decrease in accounts receivable and cash-basis revenues. F 12. Decrease in prepaid expenses. F 13. Income from equity method investment. T 14. Computing cash receipts from customers. F 15. Computing cash payments for operating expenses. F 16. Amortization of bond premium. T 17. Purchases and sales of trading securities. T 18. Disclosing noncash investing and financing activities. F 19. Use of cash flow worksheet. T 20. Reporting stock dividends on worksheet. MULTIPLE CHOICE Conceptual Answer No. Description c 21. Objective of the statement of cash flows. c 22. Primary purpose of the statement of cash flows. c S 23. Answers provided by the statement of cash flows. b S 24. First step in cash flow statement preparation. d 25. Definition of cash equivalents. d 26. Cash flow effect of a short-term nontrade note payable. c S 27. Reporting revenues and expenses on a cash basis. b 28. The effect of an inventory increase on cash flows from operating activities. b 29. Cash flow effects of a stock dividend. b 30. Effect of a change in dividends payable. d 31. Effect of cash dividend declaration on operating cash flows. c 32. Cash flow effects of major repairs on machinery. c P 33. Classifying items as investing activities. b P 34. Classification of a financing activity. b S 35. Reporting amortization of bond premium. c S 36. Converting accrual based expense to cash basis. b 37. Adjustment to income for inventory increase. c 38. Adjustment under the direct and indirect methods. c 39. Adjustment to cost of goods sold under the direct method. Test Bank for Intermediate Accounting, Thirteenth Edition 23 - 2 MULTIPLE CHOICE Conceptual (cont.) Answer No. Description a 40. Adjustment for an increase in accounts payable. a 41. Adjustment for a decrease in prepaid insurance. b 42. Direct method vs. indirect method. c 43. Direct method vs. indirect method. c 44. Addition to net income under indirect method. b 45. Deduction from net income under indirect method. b 46. Statement of cash flows information. d 47. Adjustment for equity method investment income....
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- Spring '10