30 MCQ The statement of cash flows

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Question 1
The statement of cash flows
Answer
must be prepared on a daily basis.
summarizes the operating, financing, and investing activities of an entity.
is another name for the income statement.
is a special section of the income statement.
10 points
Question 2
Which one of the following items is not generally used in preparing a statement of cash flows?
Answer
Adjusted trial balance.
Comparative balance sheets.
Current income statement.
Additional information.
10 points
Question 3
If a company reports a net loss, it
Answer
may still have a net increase in cash.
will not be able to pay cash dividends.
will not be able to get a loan.
will not be able to make capital expenditures.
10 points
Question 4
The statement of cash flows will not report the
Answer
amount of checks outstanding at the end of the period.
sources of cash in the current period.
uses of cash in the current period.
change in the cash balance for the current period.
10 points
Question 5
Which of the following transactions does not affect cash during a period?
Answer
Write-off of an uncollectible account.
Collection of an accounts receivable.
Sale of treasury stock.
Redeeming bonds before maturity.
10 points
Question 6
Zoum Corporation had the following transactions during 2014:
1. Issued $125,000 of par value common stock for cash.
2. Recorded and paid wages expense of $60,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash dividend of $10,000.
5. Sold a long-term investment (cost $3,000) for cash of $3,000.
6. Recorded cash sales of $400,000.
7. Bought inventory for cash of $160,000.
8. Acquired an investment in Zynga stock for cash of $21,000.
9. Converted bonds payable to common stock in the amount of $500,000.
10. Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by operating activities?
Answer
$305,000.
$290,000.
$240,000.
$180,000.
10 points
Question 7
Zoum Corporation had the following transactions during 2014:
1. Issued $125,000 of par value common stock for cash.
2. Recorded and paid wages expense of $60,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash dividend of $10,000.
5. Sold a long-term investment (cost $3,000) for cash of $3,000.
6. Recorded cash sales of $400,000.
7. Bought inventory for cash of $160,000.
8. Acquired an investment in Zynga stock for cash of $21,000.
9. Converted bonds payable to common stock in the amount of $500,000.
10. Repaid a 6 year note payable in the amount of $220,000.
What is the net cash provided by financing activities?
Answer
$<105,000>.
$395,000.
$115,000.
$<605,000>.
Question 8
Accounts receivable arising from sales to customers amounted to $120,000 and $105,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $407,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
Answer
$407,000.
$422,000.
$512,000.
$392,000.
10 points
Question 9
Which one of the following affects cash during a period?
Answer
Recording depreciation expense.
Declaration of a cash dividend.
Write-off of an uncollectible account receivable.
Payment of an accounts payable.
10 points
Question 10
Peninsula Company reported net income of $260,000 for the year. During the year, accounts receivable increased by $21,000, accounts payable decreased by $9,000 and depreciation expense of $45,000 was recorded. Net cash provided by operating activities for the year is
Answer
$275,000.
$245,000.
$227,000.
$260,000.
10 points
Question 11
An extraordinary item must meet which of the following two criteria?
Answer
Foreseeable and material
Infrequent and unusual
Substantial and measurable
Unusual and measurable
10 points
Question 12
All of the following are reported on the income statement net of tax except
Answer
irregular items.
other comprehensive income items.
income from operations.
extraordinary items.
10 points
Question 13
An income statement would not include
Answer
other revenue and gains.
extraordinary items.
discontinued operations.
dividends paid.
10 points
Question 14
When a change in depreciation method occurs
Answer
prior years’ financial statements should be changed to reflect the newly adopted method.
the change should be reported in current and future years.
the cumulative effect of the change should be reflected on the income statement as of the beginning of the next year.
the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement.
10 points
Question 15
Which of the following is not an irregular item on the income statement?
Answer
Discontinued operations
Extraordinary items
Other revenues and expenses
Loss on disposal of a significant component of a business
10 points
Question 16
Horizontal analysis is also known as
Answer
vertical analysis.
linear analysis.
trend analysis.
common size analysis.
10 points
Question 17
Comparative balance sheets
Answer
are usually prepared for at least one year.
are usually prepared for at least two years.
do not show both dollar amount and percentage changes.
do not show a comparison of total stockholders’ equity.
10 points
Question 18
In a common size income statement, the 100% figure is
Answer
net income.
cost of goods sold.
gross profit.
net sales.
10 points
Question 19
Cochran Corporation, Inc. has the following income statement (in millions):
COCHRAN CORPORATION, INC.
Income Statement
For the Year Ended December 31, 2014
Net Sales $240
Cost of Goods Sold 80
Gross Profit 160
Operating Expenses 65
Net Income $ 95
Using vertical analysis, what percentage is assigned to net income?
Answer
100%
60%
40%
33%
10 points
Question 20
Which one of the following is not a characteristic generally evaluated in ratio analysis?
Answer
Liquidity
Profitability
Marketability
Solvency
10 points
Question 21
When expenses exceed revenues, which of the following is true?
Answer
a net loss results
a net income results
assets equal liabilities
assets are increased
10 points
Question 22
Dividends are reported on the
Answer
income statement.
retained earnings statement.
balance sheet.
income statement and balance sheet.
10 points
Question 23
Liabilities of a company are owed to
Answer
debtors.
owners.
creditors.
stockholders.
10 points
Question 24
Stockholders’ equity
Answer
is equal to liabilities and retained earnings.
is usually equal to cash on hand.
includes retained earnings and common stock.
is shown on the income statement.
10 points
Question 25
Elston Company compiled the following financial information as of December 31, 2014:
Service revenue $700,000
Common stock 150,000
Equipment 200,000
Operating expenses 625,000
Cash 175,000
Dividends 50,000
Supplies 25,000
Accounts payable 100,000
Accounts receivable 75,000
Retained earnings, 1/1/14 375,000
Elston’s assets on December 31, 2014 are
Answer
$1,175,000.
$850,000.
$400,000.
$475,000.
10 points
Question 26
Elston Company compiled the following financial information as of December 31, 2014:
Service revenue $700,000
Common stock 150,000
Equipment 200,000
Operating expenses 625,000
Cash 175,000
Dividends 50,000
Supplies Inventory 25,000
Accounts payable 100,000
Accounts receivable 75,000
Retained earnings, 1/1/14 375,000
Elston’s retained earnings on December 31, 2014 are
Answer
$450,000.
$375,000.
$400,000.
$ 25,000.
10 points
Question 27
Benedict Company compiled the following financial information as of December 31, 2014:
Service revenue $560,000
Common stock 120,000
Equipment 160,000
Operating expenses 500,000
Cash 140,000
Dividends 40,000
Supplies 20,000
Accounts payable 80,000
Accounts receivable 60,000
Retained earnings, 1/1/14 300,000
Benedict’s assets on December 31, 2014 are
Answer
$940,000.
$680,000.
$320,000.
$380,000.
10 points
Question 28
An annual report includes all of the following except
Answer
management discussion and analysis section.
notes to the financial statements.
an auditor’s report.
salary information for all the executives.
10 points
Question 29
In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results?
Answer
Notes to the financial statements
Management discussion and analysis section
Balance sheet
Auditor’s report
10 points
Question 30
Which of the following statements is true?
Answer
Publicly traded U.S. companies must provide an annual report to their shareholders when operating conditions change significantly.
An unqualified independent auditor’s report must be included in the annual report.
Notes to the financial statements do not need to be included in the annual report because that information is only for internal users.
None of these answer choices are correct.

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