Choose the correction answer
15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.
T F
16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.
T F
17. Anobjective of the statement of cash flows is to
a. disclose changes during the period in all assetand all equity accounts.
b. disclose the change in working capital during theperiod.
c. provide information about the operating,investing, and financing activities of an entity during aperiod.
d. None of these answers are correct.
18. Theprimary purpose of the statement of cash flows is to provideinformation
a. about the operating, investing, and financingactivities of an entity during a period.
b. that is useful in assessing future cash flowprospects.
c. about the cash receipts and cash payments of anentity during a period.
d. about the entity's ability to meet itsobligations and to pay dividends.
19. Cash equivalents are
a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.
b. investments with original maturities of threemonths or less.
c. readily convertible into known amounts ofcash.
d. All of these answers are correct.
20. Xanthe Corporation had the following transactions occur in thecurrent year:
1. Cash sale of merchandise inventory.
2. Sale of delivery truck at book value.
3. Sale of Xanthe common stock for cash.
4. Issuance of a note payable to a bank forcash.
5. Sale of a security held as anavailable-for-sale investment.
6. Collection of loan receivable.
How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?
a. Five items
b. Four items
c. Three items
d. Two items
Choose the correction answer
15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.
T F
16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.
T F
17. Anobjective of the statement of cash flows is to
a. disclose changes during the period in all assetand all equity accounts.
b. disclose the change in working capital during theperiod.
c. provide information about the operating,investing, and financing activities of an entity during aperiod.
d. None of these answers are correct.
18. Theprimary purpose of the statement of cash flows is to provideinformation
a. about the operating, investing, and financingactivities of an entity during a period.
b. that is useful in assessing future cash flowprospects.
c. about the cash receipts and cash payments of anentity during a period.
d. about the entity's ability to meet itsobligations and to pay dividends.
19. Cash equivalents are
a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.
b. investments with original maturities of threemonths or less.
c. readily convertible into known amounts ofcash.
d. All of these answers are correct.
20. Xanthe Corporation had the following transactions occur in thecurrent year:
1. Cash sale of merchandise inventory.
2. Sale of delivery truck at book value.
3. Sale of Xanthe common stock for cash.
4. Issuance of a note payable to a bank forcash.
5. Sale of a security held as anavailable-for-sale investment.
6. Collection of loan receivable.
How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?
a. Five items
b. Four items
c. Three items
d. Two items
Related questions
1. Fill in the table by indicating if it is an increasing (+) or decreasing (-) transaction. Also indicate if it is an operating (O), investing (I), or financing (F), activity. + or - O, I, or F
| Cash payment of dividends | 2,000 | ||
| Cash payment for inventory | 120,650 | ||
| Cash payment for expenses | 61,000 | ||
| Cash payment for wages | 45,250 | ||
| Cash payment for interest expense | 925 | ||
| Cash payment for purchase of equipment | 25,350 | ||
| Cash payment for repayment of debt | 14,000 | ||
| Cash collection of accounts receivable | 340,500 | ||
| Cash collection of interest revenue | 12,500 | ||
| Cash collection of dividend revenue | 10,500 | ||
| Cash proceeds from sale of equipment | 12,000 | ||
| Cash proceeds from sale of common stock | 55,000 |
2. Using the information in the table from question 1, complete the following statement of cash flows using the direct method. List each transaction and amount under the appropriate section. Be sure to indicate if it is increasing or decreasing (+ or -). You may not need to use all of the lines.
| Cash from Operating Activity | Amount |
| Net cash __ (provided or used) by operating activity | |
| Cash from Investing activity | Amount |
| Net cash _____ (provided or used) by investing activity | |
| Cash from Financing Activity | Amount |
| Net cash __ (provided or used) by financing activity |
Net change in cash during period
Cash at beginning of period 27,000
Cash at end of period
