Chapter 12 accounting

Question 1

Statement of cash flow is used for what?

Answer 1

Determine a companies ability to generate cash, meet their debt obligation, where cash came and went, shows change in cash during the year and is required by the GAAP.

Question 2

Operating activities in cash flow are in regards to what

Answer 2

revenues and expenses related to net income

Question 3

Investing activities in cash flow are in regards to what?

Answer 3

Buying and selling/disposing of long term assets and investments.

Question 4

Financing activities in cash flow are in regards to what?

Answer 4

External financing from owners and lenders.

Question 5

In a statement of cash flow, do we recognize cash when it is received or earned?

Answer 5

When received.

Question 6

Examples of cash out flow in financing activities would include what?

Answer 6

repaying principle to lenders, repurchasing stock and distributing cash dividends.

Question 7

Direct method deal with?

Answer 7

+ cash revenues - cash expenses = cash net income

Question 8

Indirect method deal with?

Answer 8

Starts with net income (+/-) adjustments = cash net income.