41.Which of the following is a FALSE statement?
a.noncash expenses are added to net income to arrive at cash from operations
b.payment of a current note payable is a financing activity but payment of interest on that note is an operating activity
c.the indirect format reconciles net income to cash flow from operating activities
d.issuance of stock is a financing activity but payment of dividends on that stock is an operating activity
42.Use the following information to calculate the cash from operating activities:
Net income$3,308
Depreciation expense712
Increase in accounts receivable500
Decrease in merchandise640
Increase in supplies86
Increase in accounts payable132
Decrease in wages payable75
Increase in interest payable56
Decrease in income tax payable140
a.$4,047
b.$3,991
c.$3,335
d.$2,569
43.In the long run, a company should attempt to meet most of its cash flow needs through its
a.income activities
b.financing activities
c.operating activities
d.investing activities
44.Which of the following situations would best indicate strong company performance?
operating cash flow investing cash flow
a.positive negative
b.positive positive
c.negative negative
d.negative positive
45.Cash outflow from financing activities may indicate that
a.the company has a lot of good investing opportunities
b.the company is performing well but does not have a lot of good investing opportunities
c.the company has no excess cash
d.the company cannot create enough cash from its operations to meet ongoing needs
46.Which pattern of cash flows would indicate that the company is experiencing serious financial problems?
operating investing financing
a.+ - +
b.- + +
c.+ - -
d.+ + -
47.Which of the following is a false statement?
a.a company can have a net income for the period but have a net decrease in cash from operations
b.a company that consistently reports net cash inflow from investing activities has many growth opportunities
c.a company that reports a net loss for the period may not necessarily report a net cash outflow from operating activities
d.depreciation expense is added back to net income to arrive at cash from operations
48.Net income for FJ Company was $1,000,000. Accounts payable at the beginning of the year was $200,000. Accounts payable balance at the end of the year was $225,000. When preparing the cash flow from operating activities under the indirect format, the required adjustment is
a.add $25,000 to net income
b.subtract $25,000 from net income
c.add $200,000 to net income
d.none