21.1   Learning Objective 21-1


1) A statement of cash flows:

A) has three main sections: net cash flow from operating, investing, and financing activities.

B) may be computed directly or indirectly.

C) is a statement used to better understand the financing and investing activities.

D) All of the above are correct.


2) The cash flow statement has all of the following sections except:

A) net cash flow from managing activities.

B) net cash flow from operating activities.

C) net cash flow from investing activities.

D) net cash flow from financing activities.


3) A statement of cash flows is helpful in:

A) evaluating.

B) comparing.

C) predicting future cash flows.

D) All of these answers are correct.


4) The statement of cash flows provides information about all of the following except:

A) organizing activities.

B) investing activities.

C) operating activities.

D) financing activities.

5) The difference between the direct and indirect method of computing the cash flow statement occurs in the:

A) financing activities section.

B) operating activities section.

C) investing activities section.

D) managing activities section.


6) A statement of cash flow’s purpose is to:

A) show the revenue earned.

B) show the profits that were generated.

C) show the expenses that were incurred.

D) show how cash was generated and used during an accounting period.


7) An inflow of cash from investing activities would be:

A) the issuance of stock.

B) the sale of investment in equity securities.

C) interest received on loans.

D) the purchase of fixed assets.


8) The activity that is probably the most important indicator of financial health is the net cash flow from:

A) buying and selling activities.

B) financing activities.

C) operating activities.

D) investing activities.

9) A cash outflow from a financing activity would be:

A) paying cash dividends.

B) buying debt and equity securities.

C) paying interest on notes payable.

D) making payments for additional inventory.


10) Transactions involving the purchase and sale of fixed assets would be considered:

A) buying and selling activities.

B) financing activities.

C) operating activities.

D) investing activities.





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *