When the indirect method of preparing the operating section of the statement of cash flows is used, which of the following is true?

The operating section begins with net income

The depreciation expense is added to the investing section instead of the operating section as it is in the direct method

The gain on a sale of land or investments is ignored

Increases in non$-$cash current asset account balances are included in the calculations of this section

Question $2$

$1$

Point

Which of the following is not one of the sections of the statement of cash flows?

budgeting

operating

financing

investing

Question $3$

$1$

Point

Which two methods exist for preparation of the operating section of the statement of cash flows?

direct and indirect

direct and non$-$direct

indirect and exclusionary

none of the choices are correct

Question $4$

$1$

Point

What is the purpose of a Statement of Cash Flows?

All choices are correct

To monitor cash for investment

To determine if cash needs to be raised for new operations

To monitor cash needed for operations

Question $5$

$1$

Point

Cash receipt from a mortgage loan is categorized as which type of cash flow?

operating

investing

financing

non$-$cash investing and financing

Question $6$

$1$

Point

In order to be successful over the long run, the main source of a company$$s cash must come from:

operating activities

investing activities

financing activities

managerial activities

Question $7$

$1$

Point

If there is a dividend declared of $$50,000$ and a decrease to the dividends payable account of $$5,000,$ which of the following statements is true about cash flow?

Cash paid for dividends is $$50,000$

Cash paid for dividends is $$45,000$

Cash paid for dividends is $$5,000$

Cash paid for dividends is $$55,000$

Question $8$

$1$

Point

Sale of land, including a gain or loss, is categorized as which type of cash flow?

financing

operating

non$-$cash investing and financing

investing

Question $9$

$1$

Point

Which of the following would appear in the investing activities section of the statement of cash flows?

purchase of inventory

issuing of company stock

payment of a note payable

purchase of equipment

Question $10$

$1$

Point

If the income statement shows a gain on sale of investments of $$5,000$ and the balance sheet shows a decrease in the investments account of $$12,000,$ which of the following statements is true about cash flow?

Investments were sold for $5,000$

Investments were sold for $$7,000$

Investments were sold for $$17,000$

Investments were sold for $$12,000$

Question $11$

$1$

Point

If net income were $$8,000,$ depreciation expense was $$1,000,$ there was a gain on sale of investments of $$800$ and accounts receivable decreased by $$500,$ what is the cash flow from operating activities?

$$10,300$

$8,700$

$$6,700$

Not enough information exists to answer the question

Question $12$

$1$

Point

Which section of the statement of cash flows is prepared using either the direct method or indirect method?

financing

non$-$cash investing and financing

investing

operating

Question $13$

$1$

Point

Cash paid for the purchase of treasury stock is categorized as which type of cash flow?

financing

operating

investing

non$-$cash investing and financing

Question $14$

$1$

Point

The cash flow statement is the communicating link between the:

Income statement and the statement of stockholders$$ equity.

Balance sheet and the accrual based income statement.

Balance sheet and the statement of stockholders$$ equity

Statement of stockholders$$ equity and the cash reported on the balance sheet.

Question $15$

$1$

Point

If cash received from sale of land is $$40,000,$ cash received from sale of investments is $$22,000$ and cash paid for purchase of building is $$100,000,$ which of the following is true about the cash flows from investing activities?

There is a cash outflow of $$100,000$

There is a cash outflow of $$60,000$

There is a cash outflow of $$38,000$

There is a cash inflow of $$62,000$