1. Which of the following is false with respect to the Statement of Cash Flows? A Investing activities include expenditures for property, plant and equipment (capex),
expenditures for intangible assets, and cash flows from security investment activities. B Financing activities include fund flows related to stock issuances, debt,
share repurchases, and dividend payments. C Cash outflows from investing activities typically revolve around spending for capex and the payment of debt. D Share
repurchases and dividend payments will create cash outflows for financing activities. 2. Which of the following is false with respect to the Statement of Cash Flows?
A Cash flows from operating activities convert the company’s net income to cash by adjusting earnings for noncash expenses, nonoperating gains/losses, and accruals
taken on operating items from the balance sheet. B Decreases in accounts receivables, decreases in inventories, and increases in payables will all result in cash
inflows from operations. C Noncash expenses, like depreciation and amortization expenses, as well as, nonoperating losses are added back to net income to arrive at
cash flows from operating activities. D Increases in accounts receivables, increases in inventories and increases in accounts payables all generate cash inflows for
the period. 3. Which of the following is correct analysis for the Statement of Cash Flows? A Net income which significantly exceeds cash flows from operating
activities for a seasoned company is a sign of high quality earnings. B A negative amount for cash flows from investing activities due to capex or acquisitions is an
indication that the firm’s strategic focus is on growth. C A negative amount for cash flows for financing activities is an indication that the firm is taking on
additional debt D A negative amount for financing activities is always a sign of financial stress for a company. 4. What is a major difference between the income
statement and the statement of cash flows? A The statement of cash flows refers to a single point in time, rather than a period of time like a month, quarter or year
for the income statement. B The statement of cash flows excludes noncash revenues and expenses. C The statement of cash flows provides a breakdown of revenues,
expenses, and profits. D The income statement is prepared for a single point in time, rather than a period of time like a month, quarter or year for the statement of
cash flows. 5. Statement of Cash Flows – which of the following is incorrect when using the indirect method? A Gains on sales of assets are subtracted from net income
to determine cash flows from operating activities. B Losses on sales of assets are added to net income to determine cash flows from operating activities. C Increases
in operating current assets are subtracted to determine cash flows from operating activities. D Increases in operating current liabilities are added to determine cash
flows from operating activities. E Declaration and payment of dividends on company stocks are subtracted to determine cash flows from operating activities. 6. Which
of the following does not factor in to the calculation of cash flows from operating activities under the indirect method? A Depreciation expense. B Share-based
compensation expense. C A decrease in the balance of accounts receivable. D The total proceeds from the sale of equipment. E The loss on the sale of the equipment. 7.
Which of the following does not factor in to the calculation of cash flows from operating activities under the indirect method? A The amortization expense associated
with an intangible asset. B The proceeds from issuing additional common stock. C A gain on the sale of a fixed asset. D A decrease in the current liability income
taxes payable. E The Bad debt expense associated with the allowance for doubtful accounts. 8. Statement of Cash Flows – which of the following is incorrect? A The
section for operating cash flows removes non-operating items from net income and converts the items reported on the income statement from the accrual basis of
accounting to cash. B The section for investing activities reports cash inflows/outflows for capital expenditures, security investments, company acquisitions, and
intangible assets. C The section for financing activities reports cash inflows/outflows for debt activity, share issuance/buy-backs, and dividends. D Supplemental
information reports the exchange of significant items that did not involve cash and reports the amount of income taxes and interest paid. E The sum of operating cash
flows, investing cash flows, and financing cash flows, for the period will represent the total assets for the company on the reporting date.
