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Cash Flow Statement MCQs

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MCQs 1-10

1. Which of the following items would be

subtracted from net income when using
the indirect method of calculating cash
flows provided by operating activities?

(a) Depreciation expense

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

Wrong !

2. Which of the following would be

considered a cash-flow item from a
"financing" activity?

(d) A cash outflow to purchase bonds issued by another

company

Wrong !

3. The method for presenting Net cash

provided by operating activities that
starts with net income and adjusts it for
items that affected reported net income
but that did not affect cash is called the? 2

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

(c) Indirect method

Correct !

4. Cash paid for preferred stock

dividends should be shown on the
statement of cash flows under?

(b) Financing activities

Correct !

5. Which of the following would not be 2

considered a cash flow from “operating”
activities?

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

(c) Tax payments

Wrong !

6. In the long run, a business must

generate positive net cash flow from
which of the following activities, if it is
to survive?

(b) Financing activities

Wrong !
2

7. Depreciation is added back to profit

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

when arriving at the cash flow from

operating activities because?

(b) Depreciation does not affect profit

Wrong !

8. A company purchased the land in

exchange for the capital stock; it would
affect which of the following?

(d) It would not affect any section

2
Correct !

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

9. Which of the following would not

represent the cash outflows for the
business?

(b) The sale of land for cash

Correct !

10. The statement of cash flows does not

include cash inflows and outflows for
which of the following activities?

(a) Financing activities

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

Wrong !

 PLAY AGAIN !

MCQs 11-20

11. The primary purpose of the

statement of cash flows is to?

(a) Provide information about the investing and financing

activities during a period

Correct !

2
12. If a company purchased treasury
stock with cash, this would be reported

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

on the statement of cash flows as?

(a) An operating cash outflow

Wrong !

13. When equipment is sold for cash, the

amount received is reflected as cash?

(b) Inflow in the financing section

Wrong ! 2

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14. Which of the following is not an

example of cash equivalents?

(b) Money market accounts

Wrong !

15. Which of the following cash flows

results from an operating activity?

(b) Repaying note payable

2
Wrong !

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

16. Which of the following cash flows

results from a financing activity?

(c) Purchasing an investment in another company

Wrong !

17. Which of the following cash flows

results from a financing activity?

(a) Borrowing money from the bank

2
Correct !

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

18. The two approaches to reporting

cash flows provided by operating
activities are?

(a) Direct and indirect methods

Correct !

19. In preparing cash flows provided by

operating activities using the indirect
method, which of the following items is
added to net income?

(b) Gains on investing and financing transactions

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Cash Flow Statement MCQs I Multiple choice Questions CFS http://www.accountancyknowledge.com/cash-flow-statement-mcqs/

Wrong !

20. Which of the following would be

considered an investing activity and a
source of cash?

(a) Purchase of equipment

Wrong !

 PLAY AGAIN !

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