ACG 2021 Financial Accounting questions and answers

ACG 2021 Financial Accounting questions and answers - ACG...

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ACG 2021 Financial Accounting ?????????????????????? Statement of Cash Flows Sample Yes-No Questions 1. The direct method for reporting cash flows is quicker and shorter than the indirect method. NO; The direct method requires a reconciliation; the indirect method does not. 2. Operating activities appear on both the income statement and on the statement of cash flows. Yes; Though in addition to operating, the SCF also has other activities. 3. A decrease in accounts payable means that credit purchases exceeded payments on account. NO; This means that more payments were made than the amount charged during the period. 4. If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, an additional computation of net income to net cash flows from operating activities is required. Yes 5. Losses are cash outflows in operating activities under the direct method. No; A loss is an expense, not a cash flow. 7. The only difference in presenting a statement of cash flows using the direct method rather than the indirect method is the details given for investing activities. No The only section on the statement of cash flows that would appear differently using the direct method instead of the indirect method is the operating activities section. 8. ??If there is a change in cash, there will be a change in one or more noncash accounts. Yes 9. ??When a cash dividend is paid, the cash outflow is classified as an operating activity. Yes. The payment of dividends is classified as a financing activity because it affects the company?s owners. 10. ??Cash equivalents are defined as short-term, highly liquid investments that are readily convertible into known amounts of cash and so near their maturity that there is insignificant risk of changes in their value due to interest rate changes. Yes 11. ??The statement of cash flows is the only financial statement prepared on the cash basis of accounting rather than on the accrual basis of accounting. Yes 12. ??The payment to stockholders for repurchase of treasury stock is a cash flow from a financing activity. ??Yes ???????? 13. ?? Interest on a note payable is a cash flow from an operating activity. Yes ????????
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14. ??Dividends collected from a long-term investment are cash flows from investing activities. No. Collections of dividends from investments are classified as cash flows from operating activities. Only the purchase and sale of the investment are included in the investing activities section of the statement of cash flows. 15. ?Very few companies use the direct method for disclosing their cash flows from operating activities. Yes 16. ? If a company has no cash equivalents,he net increase (or decrease) in cash that is reported on the statement of cash flows should be the same as the change in the balance of the cash account for the two most recent years on the comparative balance sheets. Yes
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ACG 2021 Financial Accounting questions and answers - ACG...

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