FINANCE 104

Financial Reporting and

Analysis

1. The primary purpose of the

statement of cash flows is
A. To provide relevant information about
cash receipts and cash payments of an
entity during the period
B. To help investors, creditors and other
users to assess the entitys ability to
generate positive future net cash flows.
C. To disclose separately non-cash
investing and financing transactions
D. To assess the ability of the company to
pay dividends to shareholders

2. An entity shall prepare a statement

of cash flows as
A. Supplementary financial
statements
B. Notes to financial statement
C. Supporting schedule for the
amount
appearing as cash and
cash equivalent
D. Integral part of the entitys basic
financial statement.

3. Cash receipts from fees, royalties,

commissions and other revenues are
A. Cash outflows from operating
activities
B. Cash inflows from operating
activities
C. Cash inflows from investing
activities
D. Cash outflows from financing
activities

4. In a statement of cash flows,

dividend payments to owners shall be
classified as
A. Cash outflow from investing
activities
B. Cash inflow from investing activities
C. Cash inflow from financing activities
D. Cash outflow from financing
activities

5. An entity shall report cash flows

from operating activities using
A. Direct method
B. Indirect method
C. Either A or B
D. Neither A nor B

6. An entity shall report separately

cash flows arising from investing and
financing activities using
A. Direct method
B. Indirect method
C. Either A or B
D. Neither A nor B

7. An entity acquired a building , paying a

portion of the purchase price in cash
and issuing a mortgage note payable to
the seller for the balance. In a
statement of cash flows, what amount is
included in investing activities for the
transaction?
A. Cash payment.
B. Acquisition price
C. Zero
D. Mortgage amount

8. Which of the following is required to

be disclosed only in the notes when
preparing cash flow statement?
I. Conversion of long-term debt to
ordinary shares
II. Conversion of preference share
to ordinary shares
A. I only
B. II only
C. Both I and II
D. Neither 1 nor II

9. In a statement of cash flows using

indirect method approach for
operating activities, an increase in
inventory is presented as
A. Outflow of cash
B. Inflow and outflow of cash
C. Addition to net income
D. Deduction from net income

10. Which of the following is not added

to net income as an adjustment to
reconcile net income to cash flow
from operating activities in the
statement of cash flows?
A. Increase in an accrued liability
B. Amortization of discount on bonds
payable
C. Loss on sale of non-operating
asset
D. Increase in deferred tax asset

11. Oakwood Company provided the

following data for the current year
Cash balance, Jan 1 1,300,000
Cash flow from financing activities
Total equity, Dec 31 2,300,000
Cash flow from operating activities
Cash flow from investing activities
total equity, Jan 1
2,000,000

1,000,000
400,000
(1,500,000)

What is the cash balance as at the end of the

current year?
A. 1,200,000
C. 1,400,000
B. 1,600,000
D. 1,700,000

12. The following information is available for Santana

Company for the current year
Dec 31
Jan 1
Cash
1,500,000
1,000,000
Retained earnings
7,000,000
5,400,000
Cash flows from
operating activities
?
Cash flows from
investing activities
(4,800,000)
Cash flows from
financing activities
1,800,000
Dividends declared
and paid
2,000,000
Net income
3,600,000
How much was the cash flow from operating activities?
A. 3,500,000
B. 2,500,000
C. 4,500,000
D. 3,600,000

13. The net income for the current year for Roger
Company was P3,520,000. Additional data are as
follows:
Purchase of plant asset 2,800,000
Depreciation of plant asset
1,480,000
Dividends declared 970,000
Net decrease in noncash current asset
290,000
Loss on sale of equipment
130,000
What is the net cash provided by operating
activities in the statement of cash flows for the
current year using the indirect method
A. 5,420,000
B. 5,130,000
C. 7,250,000
D. 5,290,000

14. Bumper Companys statement of cash

flows for the current year shows cash flow
from operating activities of P1,840,000. The
following items also appear on the statement
of financial position and income statement:
Depreciation expense 400,000
Account receivable increase 120,000
Inventory increase 280,000
Accounts receivable decrease
80,000
What is the net income for the current year?
A. 1,360,000
B. 2,320,000
C. 1,440,000
D. 1,840,000

15. Star company provided the following data for the

preparation of the statement for cash flows for the
current year using direct method:
Cash balance-beginning
1,500,000
Cash paid to purchase inventory
7,800,000
Cash received from sale of
building
5,600,000
Cash paid for interest
450,000
Cash paid to repay a loan
1,000,000
Cash collected from customers
10,000,000
Cash received from issuance of
ordinary shares 1,200,000
Cash paid for dividends
780,000
Cash paid for income taxes
1,320,000
Cash paid to purchase machinery 1,950,000
What is the net cash flow from operating activities?
A. 1,750,000
C. 880,000
B.
970,000 D. 430,000

16. Kings Company provided the following

account balances for the preparation of
statement of cash flows for the current year:
Jan 1
Dec 31
Accounts receivable
115,000 145,000
Allowance for bad debts

4,000

5,000

Prepaid rent expense 62,000

41,000
Accounts payable
97,000 112,000
Kings net income for the year was 750,000.
What is the net cash provided by operating
activities for the current year?
A. 727,000 C. 755,000
B. 743,000 D. 757,000

17. Bumper Companys statement of cash

flows for the current year shows cash flow
from operations of P1,840,000. The following
items also appear on the statement of
financial position and income statement:
Depreciation expense 400,000
Accounts receivable increase
120,000
Inventory decrease
280,000
Accounts payable decrease 80,000
What is the net income for the current year?
A. 1,360,000
B. 2,320,000
C. 1,440,000
D. 1,840,000

18. The transactions of Koll Company for the

current year included the following:
Cash borrowed from the bank 5,500,000
Sale of investment securities 5,000,000
Dividends paid
6,000,000
Issuance of ordinary shares for cash 2,500,000
Purchase of patent for cash
1,250,000
Payment of bank loan
1,500,000
Customers deposits 200,000
Issuance of bonds payable for cash 3,000,000
What is the net cash flow from financing
activities? A. 5,000,000 B. 3,500,000 C. 4,500,000 D. 5,500,000
What is the net cash flow from investing
activities? A. 3,750,000 B. 6,750,000 C. 1,750,000 D.
500,000