CONCEPT CHECKERS

1. Using the following information, what is the firms cash flow from operations?
Net income
Decrease in accounts receivable
Depreciation
Increase in inventory
Increase in accounts payable
Decrease in wages payable
Increase in deferred tax liabilities
Profit from the sale of land
a. $158

$ 120
20
25
10
7
5
15
2

b. $170
c. $174
Assuming US.GAAp, use the following data to answer Question 2 through 4:
Net income
Depreciation
Taxes paid
Interest paid
Dividends paid
Cash received from sale of company building
Sale of preferred stock
Repurchase of common stock
Purchase of machinery
Issuance of bonds
Debt retired through issuance of common stock
Paid off long term bank borrowings
Profit on sale of building
2. Cash flow of operations is:
a. $70
b. $ 100
c. $ 120
3. Cash flow from investing activities is:
a. $ -30

$ 45
75
25
5
10
40
35
30
20
50
45
15
20

b. $20
c. $ 50
4. Cash flow from financing activities is:
a. $30
b. $55
c. $75
5. Given the following:
Sales
Increase in inventory
Depreciation
Increase in accounts receivable
Decrease in accounts payable
After tax profit margin
Gain on sale of machinery
Cash flow from operation is:

$ 1500
100
150
50
70
25%
30

a. $115
b. $275
c. $375
6. Which of the following items is least likely considered a cash flow from financing activity
under US.GAAP?
a. Receipt of cash from the sale of bonds
b. Payment of cash for dividends
c. Payment of interest on debt
7. Which of the following would be least likely to cause a change in investing cash flow?
a. The sale of a division of the company
b. The purchase of new machinery
c. An increase in depreciation expense
8. Which of the following is least likely a change in cash flow from operations under US.GAAP?
a. A decrease in notes payable

b. An increase in interest expense

c. An increase in accounts payable
9. Where are dividends paid to shareholders reported in the cash flow statement under US.GAAp
and IFRS?
US.GAAP

IFRS

a. Operating or financing activities

Operating or financing activities

b. Financing activities

Operating or financing activities

c. Operating activities

Financing activities

10. Sales of inventory would be classified as:

a. Operating cash flow
b. Investing cash flow
c. Financing cash flow
11. Issuing bonds would be classified as:
a. Investing cash flow
b. Financing cash flow
c. No cash flow impact
12. Sale of land would be classified as:
a. Operating cash flow
b. Investing cash flow
c. Financing cash flow
13. Under US.GAAP taxes paid would be classified as:
a. Operating cash flow
b. Financing cash flow
c. No cash flow impact
14. An increase in notes payable would be classified as:

a. Investing cash flow

b. Financing cash flow
c. No cash flow impact
15. Under US.GAAP, interest paid would be classified as:
a. Operating cash flow
b. Financing cash flow
c. No cash flow impact
16. Continental Corporation reported sales revenue of $ 150.000 for the current year. If accounts
receivable decreased $ 10.000 during the year and accounts payable increased $4.000 during the
year, cash collections were:
a. $154.000
b. $160.000
c. $164.000
17. The write off of obsolete equipment would be classified as:
a. Operating cash flow
b. Investing cash flow
c. No cash flow impact
18. Sale of obsolete equipment would be classified as:
a. Operating cash flow
b. Investing cash flow
c. Financing cash flow
19. Under IFRS, interest expense would be classified as:
a. Either operating cash flow or financing cash flow
b. Operating cash flow only
c. Financing cash flow only
20. Depreciation expense would be classified as:

a. Operating cash flow

b. Investing cash flow
c. No cash flow impact
21. Under US.GAAP, dividends from investments would be classified as:
a. Operating cash flow
b. Investing cash flow
c. Financing cash flow
22. Torval, Inc. retires debt securities by issuing equity securities. This is considered a:
a. Cash flow from investing
b. Cash flow from financing
c. Noncash transaction
23. Net income for Monique, Inc. for the year ended December 31,20X7 was $78.000. Its
accounts receivable balance sheet at December 31, 20X7 was $121.000 and this balance was
$69.000 at December 31, 20X6. The accounts payable balance at December 31, 20X7 was
$72.000 and was $43.000 at December 31, 20X6. Depreciation for 20X7 was $12.000, and there
was an unrealized gain of $15.000 included in 20X7 income from the change in value of trading
securities. Which of the following amounts represents Moniques cash flow form operations for
20X7?
a. $52.000
b. $67.000
c. $82.000
24. Martin Inc had the following transactions during 20X7:
- Purchased new fixed assets for $75.000
- Converted $70.000 worth of preferred shares to common shares.
- Received cash dividends of $12.000. Paid cash dividends of $21.000
- Repaid mortgage principal of $17.000
Assuming Martin follows U.S GAAP, which of the following amounts represents Martins cash
flows from investing and cash flows from financing in 20X7, respectively?

Cash flow from investing

Cash flow form financing

a. ($5000)

($21.000)

b. ($75.000)

($21.000)

c. ($75.000)

($38.000)

25. In preparing a common size cash flow statement, each cash flow is expressed as a percentage
of:
a. Total assets
b. Total revenue
c. The change in cash