1. A company sells an old piece of equipment for $5,000 cash. The book value of the equipment sold is $4,500. Under indirect method, the gain of $500 ($5,000 $4,500) would affect. (a) operating activities section (b) investing activities section (c) financing activities section (d) notes to the financial statements.
Q1: MULTIPLE-CHOICE QUESTIONS
1. A company sells an old piece of equipment for $5,000 cash. The book value of the equipment sold is $4,500. Under indirect method, the gain of $500 ($5,000 $4,500) would affect.
(a) operating activities section
(b) investing activities section
(c) financing activities section
(d) notes to the financial statements.
2. Irene & Co. had sales of € 15,000 during 2004, 80% of them on credit and 20% for cash. During the year, trade and other receivables increased from € 1,200 to € 1,600, an increase of € 400. What amount of cash was received from customers during 2004?
(a) € 15,400
(b) € 3,400
(c). € 3,000
(d). € 14,600
3. The cash flow direct method calculates cash generated from operations from (a). operating profit
(b). analysis of all receipts and payments relating to operating activities
(c). analysis of the changes in cash and overdraft levels
(d) changes in
4. The cash flow indirect method calculates cash generated from operations from
(a) operating profit and changes in working capital
(b) operating profit less capital expenditure
(c) operating profit and changes in working capital and non-cash adjustments
(d). operating profit and non-cash adjustments
5. Cash flow is
(a). not linked to the balance sheet or income statement
(b) linked only to the balance sheet
(c) linked only to the income statement
(d). linked to the balance sheet and income statement
6. Cash from operation is equal to :
(a) Net Profit + Increase in Current Assets
(b) Net Profit + Decrease in Current Liabilities.
(d) Operating Profit + Adjustment of Current Assets and Current Liabilities.
(c) All of the above.
7. Interest received by a finance company is classified under which kind of activity while preparing a Cash Flow Statement ?
(a) Cash Flow from Operating Activities
(b) Investing Activities
(c) Financing Activities
(d) Cash Equivalent
8. Where will you show purchase of
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent.
* Use the indirect method to solve Questions 9 through 11.
9. Net income is $132,000, accounts payable increased $10000 during the year, inventory decreased $6000 during the year, and
(a) $102,000. (c) $124,000.
(b) $112,000. (d) $136,000.
10. Items that are added back to net income in determining net cash provided by operating activities under the indirect method do not include:
(a)
(b) an increase in inventory.
(c) amortization expense.
(d) loss on disposal of equipment.
11.The following data are available for Allen Clapp corporation.
Net income $200,000
Depreciation expense 40,000
Dividends paid 60,000
Gain on disposal of land 10,000
Decrease in accounts receivable 20,000
Decrease in accounts payable 30,000
Net cash provided by operating activities is:
(a) $160,000. (c) $240,000.
(b) $220,000. (d) $280,000..
12. The statement of
(a) earn net income.
(b) generate future cash flows.
(c) pay dividends.
(d) meet obligations
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