#1
Which of the following activities is considered an operating activity on a cash flow statement?
Purchasing new equipment
Issuing long-term debt
Receiving interest payments
Paying dividends to shareholders
#2
Which section of the cash flow statement would include payments for acquiring new machinery?
Operating activities
Investing activities
Financing activities
Non-cash activities
#3
Which financial statement provides information about cash receipts and cash payments of an entity during a specific period?
Income statement
Balance sheet
Statement of cash flows
Statement of changes in equity
#4
What is the formula to calculate free cash flow?
Net Income + Depreciation - Capital Expenditure
Operating Cash Flow - Capital Expenditure
Net Income - Dividends
Operating Cash Flow + Investing Cash Flow
#5
Which section of the cash flow statement reports the cash effects of transactions that create revenues and expenses?
Operating activities
Investing activities
Financing activities
Non-operating activities
#6
What does an increase in accounts receivable indicate for cash flow?
Cash flow from operations decreases
Cash flow from operations increases
No effect on cash flow from operations
Cash flow from investing increases
#7
Which of the following is a non-cash activity that appears in the cash flow statement?
Cash received from customers
Depreciation expense
Interest paid on loans
Purchase of inventory
#8
What does a positive cash flow from financing activities indicate?
The company is paying off debt
The company is repurchasing its own shares
The company is investing in new projects
The company is experiencing financial distress
#9
In the operating activities section of the cash flow statement, what is typically added back to net income to adjust for non-cash expenses?
Interest expense
Depreciation expense
Dividend expense
Income tax expense
#10
Which of the following is a cash outflow from investing activities?
Issuing bonds
Purchasing equipment
Receiving interest on loans
Paying dividends
#11
What does positive cash flow from operations indicate?
The company is making a profit
The company is experiencing financial distress
The company is investing heavily in capital assets
The company is facing liquidity issues
#12
Which of the following is NOT a component of the operating activities section of the cash flow statement?
Interest received
Dividends paid
Cash collected from customers
Cash paid to suppliers
#13
Under which activity would the payment of interest on long-term debt be classified?
Operating activities
Investing activities
Financing activities
Non-cash activities
#14
Which method of preparing the cash flow statement reconciles net income to cash flows from operating activities by adjusting for non-cash items?
Direct method
Indirect method
Accrual method
Cash basis method
#15
Which financial statement provides the starting point for preparing the statement of cash flows?
Income statement
Balance sheet
Statement of changes in equity
Statement of financial position
#16
How are cash dividends to shareholders classified in the cash flow statement?
Operating activities
Investing activities
Financing activities
Non-cash activities
#17
Which section of the cash flow statement includes cash transactions involving long-term investments and property?
Operating activities
Investing activities
Financing activities
Non-operating activities
#18
How do changes in working capital affect cash flow from operations?
Decreases in working capital increase cash flow
Increases in working capital decrease cash flow
Changes in working capital do not affect cash flow
Decreases in working capital decrease cash flow
#19
Which method is commonly used by companies to prepare the cash flow statement?
Cash basis method
Accrual method
Direct method
Indirect method
#20
What does a decrease in accounts payable indicate for cash flow?
Cash flow from operations decreases
Cash flow from operations increases
No effect on cash flow from operations
Cash flow from investing increases
#21
How does depreciation affect the cash flow statement?
It increases cash flow from operations
It decreases cash flow from financing activities
It is added to cash flow from investing activities
It is a non-cash expense and doesn't affect cash flow
#22
What does a negative cash flow from financing activities indicate?
The company is experiencing financial distress
The company is profitable
The company is investing in new projects
The company is reducing debt or raising equity capital
#23
What does a negative cash flow from investing activities usually indicate?
The company is selling off assets
The company is acquiring assets
The company is issuing debt
The company is increasing dividend payments
#24
Which of the following adjustments is made to reconcile net income to cash flow from operating activities using the indirect method?
Adding back depreciation expense
Deducting changes in accounts payable
Adding back dividends paid
Deducting changes in accounts receivable
#25
Which of the following is not included in the financing activities section of the cash flow statement?
Issuing stock
Paying dividends
Purchasing treasury stock
Issuing bonds payable