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Basic Accounting Cash Flow MCQ

1.

Which of the following transactions would be shown on a cash flow statement, but does not affect cash?

Answer

Correct Answer: Exchange of land for stock

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2.

Which of the following transactions would be shown as a cash flow from financing?

Answer

Correct Answer: Cash paid for dividends

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3.

In 2007, XYZ Company had a net income of $312,000 and reported the following:

Decrease in accounts receivable: $10,000

Gain on sale of building: $14,000

Increase in accounts payable: $12,000

Issuance of common stock: $90,000

Retirement of debt: $45,000

Given this data, the amount of cash flow from operations was ______________.

Answer

Correct Answer: $320,000

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4.

Cash received from the issue of debt would be shown as ____________________.

Answer

Correct Answer: cash flow from financing

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5.

XYZ Company reported the following information on its balance sheet:

01/01/07 Building: $800,000 Accumulated Depreciation: $200,000

12/31/07 Building: $785,000 Accumulated Depreciation: $225,000

In 2007, the company also purchased a building at a cost of $100,000.

Considering the above data, did the company sell any building during the year, and if so, what was its original cost?

Answer

Correct Answer: Yes, and its original cost was $115,000.

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6.

Purchasing inventory with a check will cause cash to ______________ .

Answer

Correct Answer: decrease

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7.

New equipment purchased by issuing a long-term note payable would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: It would not appear on the statement.

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8.

Which of the following statements expresses the objective of a cash flow statement?

Answer

Correct Answer: All of the above

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9.

Acquisition of treasury stock would be shown _____________________.

Answer

Correct Answer: as an adjustment to net income for the difference in price paid versus the original issue price

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10.

Treasury stock sold for an amount greater than its repurchase price would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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11.

Which of the following would NOT be shown in the investing section of a cash flow statement?

Answer

Correct Answer: All of the above are shown in the investing section of a cash flow statement

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12.

In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000

Depreciation expense: $30,000

Increase in accounts payable: $15,000

Issuance of stock: $100,000

Retirement of debt: $50,000

Given this data, the net change in cash for 2007 was ______________.

Answer

Correct Answer: ($105,000)

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13.

In determining cash flow from operations, which of the following would be added to net income?

Answer

Correct Answer: Increased accounts payable

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14.

When preparing cash flow statements, the practice of presenting cash from operations by listing all cash-generating revenues followed by all cash expenses is called the ______________.

Answer

Correct Answer: direct method

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15.

Paying cash to retire preferred stock will cause cash to ______________ .

Answer

Correct Answer: decrease

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16.

Which of the following statements does NOT illustrate a proper interpretation of information in a cash flow statement?

Answer

Correct Answer: Capital-intensive firms would likely show a substantially smaller add-back to net income for depreciation than service firms would show.

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17.

The major components of a cash flow statement are ________________________.

Answer

Correct Answer: cash flow from operations, cash flow from investing, and cash flow from financing

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18.

On a cash flow statement, depreciation expense ________________.

Answer

Correct Answer: should be added to net income when determining cash provided by operations

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19.

Which of the following typically happens during the introduction phase of a product's life cycle?

Answer

Correct Answer: All of the above

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20.

Which of the following is NOT a characteristic of growing firms?

Answer

Correct Answer: Reporting in the cash flow statement a deduction adjustment to net income for change in deferred taxes

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21.

When determining cash flow from operations, which of the following would NOT be added back to net income?

Answer

Correct Answer: Equity in affiliate's losses

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22.

Land acquired by issuing preferred stock would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: It would not appear on the statement.

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23.

The acquisition of a patent would be shown __________________.

Answer

Correct Answer: in the investing section

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24.

During 2007, XYZ Company experienced the following changes:

Current liabilities: $75,000 increase

Non-current liabilities: $45,000 decrease

Owners' equity: $51,000 decrease

Non-current assets: $42,000 increase

Current assets (other than Cash): $18,000 increase

Given the above data, the change in cash for 2007 was ____________.

Answer

Correct Answer: ($81,000)

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25.

Cash received from sale of investment would be shown on a cash flow statement as ___________.

Answer

Correct Answer: cash flow from investing

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26.

Prepaid rent that increased during the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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27.

Accruing an income tax liability will cause cash to ______________ .

Answer

Correct Answer: decrease

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28.

In determining cash flow from operations, which of the following would be an add-back to net income?

Answer

Correct Answer: Loss on sale of building

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29.

Unearned revenue that had been reduced during the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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30.

Accounts receivable that increased during the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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31.

In most countries, the preparation of a __________________ is a common practice.

Answer

Correct Answer: statement of sources and uses of funds

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32.

Which of the following would be included in the investing section of a cash flow statement?

Answer

Correct Answer: Proceeds from sale of equipment

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33.

Long-term investments sold for cash with a recognized gain would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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34.

Salaries paid during the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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35.

Which of the following would be shown in the financing section of a cash flow statement?

Answer

Correct Answer: All of the above

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36.

When determining cash flow from operations, which of the following would be a deduction from net income?

Answer

Correct Answer: Increased accounts receivable

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37.

Which of the following typically happens during the growth phase of a product's life cycle?

Answer

Correct Answer: Cash inflow exceeds cash outflow from financing activities.

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38.

A cash payment for land acquisition would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Investing section

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39.

Recording a depreciation expense will cause cash to ______________ .

Answer

Correct Answer: show no change

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40.

Deferred income tax payable that increased during the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: It would not appear on the statement.

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41.

At the beginning and end of 2007, XYZ Company reported the following balances for Bonds Payable:

Jan 1: $100,000

Dec 31: $140,000

In addition, $60,000 In bonds was retired In 2007.

Given the above data, the amount of Bonds Payable issued during the year was ______________.

Answer

Correct Answer: $100,000

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42.

In 2007, XYZ Company had a net income of $100,000 and reported the following account changes on its balance sheet:

Accounts Receivable: $6,000 increase

Accounts Payable: $2,000 increase

Building: $8,000 decrease

Accumulated Depreciation: $3,000 increase

Bonds Payable: $16,000 increase

Given this data, the amount of cash flow from operations was ______________.

Answer

Correct Answer: $99,000

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43.

Amortized discount on bonds payable would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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44.

Declaring dividends will cause cash to ______________ .

Answer

Correct Answer: show no change

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45.

Cash paid for land would be shown as ________________.

Answer

Correct Answer: cash flow from investing

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46.

A payment made from accounts payable will cause cash to ______________ .

Answer

Correct Answer: decrease

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47.

 XYZ reported balances in the Accumulated Depreciation account of $130,000 on 01/01/07 and $120,000 on 12/31/07. During 2007, an asset costing $100,000 (with an accumulated depreciation of $80,000) was sold for $20,000.

Given this data, the depreciation expense for 2007 was _____________.

Answer

Correct Answer: $70,000

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48.

When determining cash flow from operations, which of the following would be added back to net income?

Answer

Correct Answer: All of the above

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49.

The use of a bond sinking fund to retire a long-term debt at maturity would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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50.

Treasury stock purchased for cash would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Financing section

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51.

Paying previously declared dividends will cause cash to ______________ .

Answer

Correct Answer: decrease

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52.

Which of the following typically happens during the maturation phase of a product's life cycle?

Answer

Correct Answer: Cash inflow exceeds cash outflow from financing activities.

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53.

An investment in the stock of another company would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Financing section

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54.

Which of the following statements about depreciation expense is true?

Answer

Correct Answer: All of the above statements are true.

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55.

When determining cash flow from operations, which of the following would NOT be deducted from net income?

Answer

Correct Answer: Loss on sale of equipment

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56.

An amortization of a bond discount would be shown __________________.

Answer

Correct Answer: as an add-back to net income when determining cash flow from operations

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57.

Preferred stock converted into common stock would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: It would not appear on the statement.

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58.

The amortization of a recorded patent would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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59.

The most popular method of presenting cash from operations in a cash flow statement is the _________________.

Answer

Correct Answer: direct method

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60.

Preferred stock issued for cash would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Financing section

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61.

In 2007, XYZ Company had a net income of $150,000 and reported the following:

Depreciation expense: $21,000

Issuance of debt: $120,000

Loss on sale of equipment: $23,000

Purchase of building: $110,000

Increase in inventory: $12,000

Given this data, the amount of cash flow from operations was ______________.

Answer

Correct Answer: $182,000

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62.

Collecting receivables will cause cash to ______________ .

Answer

Correct Answer: increase

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63.

Cash borrowed from a bank by issuing a short-term note payable would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Financing section

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64.

Depreciation recorded on equipment would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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65.

The acquisition of a building and/or land by entering into a lease that meets the capital lease criteria would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Financing section

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66.

Warranties payable that increased during the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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67.

Pre-paying a one-year insurance policy will cause cash to ______________ .

Answer

Correct Answer: decrease

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68.

An increase in the accounts payable balance would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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69.

The sale of equipment for cash with a recognized loss would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Operating section

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70.

Which of the following would be shown in the investing section of a cash flow statement?

Answer

Correct Answer: None of the above

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71.

A cash flow statement is typically prepared _____________________.

Answer

Correct Answer: after both the balance sheet and the income statement are prepared

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72.

Issuing ten-year bonds will cause cash to ______________ .

Answer

Correct Answer: increase

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73.

Equity income from an affiliate would be shown _____________________.

Answer

Correct Answer: in the investing section

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74.

Dividends paid for the year would appear in which of the following sections of the cash flow statement?

Answer

Correct Answer: Financing section

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75.

In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000

Depreciation expense: $30,000

Increase in accounts payable: $15,000

Issuance of stock: $100,000

Retirement of debt: $50,000

Given this data, the amount of cash flow from operations was ______________.

Answer

Correct Answer: ($115,000)

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76. Which of the following would be shown in the investing section of a cash flow statement?


Answer

Correct Answer: None of the above

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77. Equity in the undistributed earnings of a recognized affiliate would appear in which of the following sections of the cash flow statement?


Answer

Correct Answer: Operating section

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