chapter 13 smartbook

Question 1

Financing activities include ______.

issuing new common stock

purchase of stock in another company

payment of cash dividends to stockholders

purchase of land for resale

Answer 1

issuing new common stock

payment of cash dividends to stockholders

Question 2

When preparing a statement of cash flows under the direct method, ______ from a statement prepared using the indirect method.

the operating, investing and financial sections differ

only the investing and financing sections differ

only the operating activities section differs

Answer 2

only the operating activities section differs

Question 3

The statement of cash flows ______.

focuses on activities that affect net income

answers the same questions that are answered by the statement of retained earnings

is optional for all public companies

is one of the required financial statements

Answer 3

is one of the required financial statements

Question 4

Changes in noncash balance sheet accounts that directly affect net income are classified as ____________activities.

Answer 4

operating

Question 5

Cardinal Company issues new common stock for $50,000. This transaction is a(n) ____________activity on the statement of cash flows.

Answer 5

financing

Question 6

When using the ____________method to compute cash provided (used) by operating activities, U.S. GAAP and IFRS require the ______________method to be disclosed in a separate schedule accompanying the statement of cash flows.

Answer 6

direct; indirect

Question 7

The statement of cash flows:

is not one of the required financial statements.

focuses on activities that affect the cash balance.

reports changes in net operating income.

answers the same questions that are answered by the balance sheet.

Answer 7

focuses on activities that affect the cash balance.

Question 8

Operating activities include ______.

corporate income taxes payments

wage payments to employees

interest on notes receivable or notes payable

dividend payments to stockholders

Answer 8

corporate income taxes payments

wage payments to employees

interest on notes receivable or notes payable