51. The reporting of financing activities is identical under either the direct and indirect methods for preparing the statement of cash flows.
52. The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used.
53. The gain or loss from retirement of debt is reported under cash flows from operations on the statement of cash flows using the direct method.
Multiple Choice Questions
54. The statement of cash flows reports:
A. Assets, liabilities, and equity.
B. Revenues, gains, expenses, and losses.
C. Cash inflows and outflows for an accounting period.
D. Equity, net income, and dividends.
E. Changes in equity.
55. The statement of cash flows is:
A. The only financial statement that reports the cash balance of a company.
B. A financial statement that presents information about changes in equity during a period.
C. A financial statement that reports the cash inflows and outflows for an accounting period and that classifies those cash flows as operating activities, investing activities, or financing activities.
D. A financial statement that lists the types and amounts of assets, liabilities, and equity of a business on a specific date.
E. A financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period.
56. An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes is a(n):
A. Short-term marketable equity security.
B. Operating activity.
C. Common stock.
D. Cash equivalent.
E. Financing activity.
57. The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Schedule of noncash investing or financing activity.
E. None of these as this is not reported on the statement of cash flows.
58. The appropriate section in the statement of cash flows for reporting the cash payment of wages is:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Schedule of noncash investing or financing activity.
E. None of these as this is not reported on the statement of cash flows.
59. The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:
A. Operating activities.
B. Financing activities.
C. Investing activities.
D. Schedule of noncash investing or financing activity.
E. None of these as this is not reported on the statement of cash flows.
60. A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:
A. Operating activities
B. Investing activities
C. Financing activities
D. Direct activities
E. Indirect activities