21. If a company is experiencing cash shortages, which of the following would help to resolve the problem of cash shortages?
A. If they increase the inventory conversion period.
B. If they decrease the payables deferral period.
C. If they decrease the inventory self-financing period.
D. If they increase the receivables conversion period.
22. What do you call the cycle by which an entity begins with cash, invests in resources, provides good to customers and then collects the cash from customers?
A. The cash cycle
B. The operating cycle
C. The business cycle
D. The accounting cycle
23. A furniture company is expanding its operations. Which of the following would be reflected in the cash flow statement but not in the income statement?
A. A build-up of inventory to support increased sales.
B. An increase in sales staff to handle the increased sales.
C. Rent paid for a larger showroom.
D. An increase in the amount of sales for cash.
24. Which of the following is not a category on the cash flow statement?
A. Cash flows from operations.
B. Cash flows from working capital.
C. Cash flows from investing activities.
D. Cash flows from financing activities.
25. Which of the following would not be included in the definition of "cash" on the cash flow statement?
A. Cash on hand.
B. Cash in foreign bank accounts.
C. Bonds owned by the company.
D. Short-term guaranteed investment certificates owned by the company.
26. Which of the following would be included in the definition of cash and cash equivalents on the cash flow statement?
A. Short term bonds payable maturing at the end of the year.
B. Cash on deposit in a foreign country that has restrictions about removing money from the country.
C. 90-day T-Bills.
D. An amount owed by a customer. They had sent a cheque but the bank returned it due to insufficient funds.
27. Which of the following could be classified as a cash flow from operations on the cash flow statement?
A. Interest paid.
B. Dividends paid.
C. Purchase of an intangible asset to be used in operations.
D. Repayment of a bank loan.
28. Which of the following would be classified as a cash flow from investing activities on the cash flow statement?
A. Interest paid.
B. Dividends paid.
C. Purchase of an intangible asset to be used in operations.
D. Repayment of an operating loan.
29. Which of the following would be classified as a cash flow from financing activities on the cash flow statement?
A. Interest received.
B. Dividends paid.
C. Purchase of an intangible asset to be used in operations.
D. Purchase of the securities of another company to be held for the long-term.
30. If a company had an overdraft at the bank, how would it be classified on the cash flow statement?
A. As a cash flow from operations.
B. As a cash flow from investing activities.
C. As a cash flow from financing activities.
D. As a cash and cash equivalent.