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1 which of the following statements is not true a the information in the statement o 4299919

1. Which of the following statements is not true? 
A. The information in the statement of cash flows helps investors, creditors, and others to assess a company's ability to produce future cash inflows.
B. The information in the statement of cash flows helps investors, creditors, and others to judge a company's ability to meet it future obligations.
C. The information in the statement of cash flows helps investors, creditors, and others to estimate the company's needs for external financing.
D. The information in the statement of cash flows helps investors, creditors, and others to show the inflows and outflows of net income on the accrual basis.

 

2. Special Inc. reported net income of $150,000 for 2012, but its cash balance decreased $40,000. Which financial statement should Special's management refer to for an explanation of this situation? 
A. Balance sheet
B. Income statement
C. Statement of retained earnings
D. Statement of cash flows

 

3. National Co. reported a net loss of $30,000 for 2012, yet its cash balance increased during the year. Which financial statement should National's management refer to for an explanation of this situation? 
A. Balance sheet
B. Income statement
C. Statement of retained earnings
D. Statement of cash flows

 

4. Which of the following statements regarding the statement of cash flows is true? 
A. The statement of cash flows analyzes the change in cash.
B. The statement of cash flows is organized to present classifications for total cash inflows and not cash outflows.
C. The statement of cash flows analyzes only the changes in current assets and current liabilities.
D. The statement of cash flows is an optional financial statement.

 

5. The primary purpose of the statement of cash flows is to provide information about: 
A. the financial position of the company.
B. the profitability of the company.
C. the investing and financing activities of the company.
D. the cash inflows and outflows of the company.

 

6. Which of the following is not a current reporting requirement for a statement that reports changes in cash over a period of time? 
A. This statement must classify cash flows into three categories: operating, investing, and financing activities.
B. Cash equivalents must be combined with cash in preparing this statement.
C. Working capital may be used as a substitute for cash in preparing this statement.
D. The operating activities section can be prepared using either the direct method or the indirect method.

 

7. Cash flows from acquiring and selling products are classified as: 
A. operating activities.
B. investing activities.
C. financing activities.
D. distribution activities.

 

8. Occasionally, companies engage in important investing and financing activities which do not affect cash. If the amount of the transaction is significant, how should it be disclosed when financial statements are prepared? 
A. In a separate section in the statement of cash flows with a corresponding zero balance.
B. In the investing activities section of the statement of cash flows.
C. On the face of the statement of cash flows or in the notes to the financial statements.
D. In both the investing and the financing activities statement of cash flows.

 

9. Morgan Corporation acquired land by issuing its common stock. How should this transaction be disclosed when a statement of cash flows is prepared? 
A. On the face of the statement of cash flows or in the notes to the financial statements.
B. The acquisition of land should be reported as an investing activity and the issuance of the stock as a financing activity.
C. In the operating activities section under the indirect method.
D. The transaction does not need to be disclosed.

 

10. Which of the following operating activities results in a cash outflow? 
A. Paying creditors for inventory
B. Collecting accounts receivable
C. Making cash sales
D. Receiving deposits recorded as unearned revenue

 

 

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