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chap021 - Chapter 021 The Statement of Cash Flows Revisited...

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Chapter 021 The Statement of Cash Flows Revisited True / False Questions 1. Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows. FALSE AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 2 Level of Learning: 2 2. If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, a reconciliation of net income to net cash flows from operating activities also is required. TRUE AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 4 Level of Learning: 1 3. Cash paid for taxes and interest must be disclosed on the face of the statement or in the disclosure notes under both the direct and indirect methods of reporting cash flows from operating activities. TRUE AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 4 Level of Learning: 1 4. Generally speaking, cash flows from operating activities include the elements of net income reported on a cash basis. TRUE AACSB: Reflective thinking Blooms: Comprehension Learning Objective: 4 Level of Learning: 2 21-1
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Chapter 021 The Statement of Cash Flows Revisited 5. A decrease in cash dividends payable means that dividends declared were less than dividends paid. TRUE AACSB: Reflective thinking Blooms: Comprehension Learning Objective: 4 Level of Learning: 2 6. The purchase of treasury stock is an investing cash outflow. FALSE AACSB: Reflective thinking Blooms: Comprehension Learning Objective: 5 Level of Learning: 1 7. Interest payments on debt are classified as cash outflows from financing activities. FALSE AACSB: Reflective thinking Blooms: Comprehension Learning Objective: 6 Level of Learning: 2 8. Transactions that represent noncash investing and financing activities must be reported in the statement of cash flows or in disclosure notes. TRUE AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 7 Level of Learning: 2 21-2
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Chapter 021 The Statement of Cash Flows Revisited 9. In using a spreadsheet to prepare the statement of cash flows, the summary entries duplicate the actual journal entries used to record the transactions during the year. TRUE AACSB: Reflective thinking Blooms: Comprehension Learning Objective: 8 Level of Learning: 2 10. When one enters a $50,000 credit entry to the Land account in a spreadsheet for the statement of cash flows, it represents a negative change in that account and probably is due to selling such assets. TRUE AACSB: Analytic Blooms: Analysis Learning Objective: 8 Level of Learning: 2 Essay Questions Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the letter of the reporting classification in the space provided by each transaction. Terms: A. Operating cash inflow B. Operating cash outflow C. Investing cash inflow D. Investing cash outflow E. Financing cash inflow F. Financing cash outflow G. Noncash financing and investing activity H. Not reported in the statement of cash flows
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