Podcast
Questions and Answers
Which of the following are significant non-cash activities? (Select all that apply)
Which of the following are significant non-cash activities? (Select all that apply)
- Acquiring equipment by issuing a long-term note (correct)
- Selling land
- Issuing common stock for cash
- Acquiring land by issuing common stock (correct)
The statement of cash flows classifies items as:
The statement of cash flows classifies items as:
operating, investing, and financing
The statement of cash flows provides summary information about cash __ and cash __ during the year.
The statement of cash flows provides summary information about cash __ and cash __ during the year.
inflows, outflows
Indicate whether each item is a cash inflow or a cash outflow from operating activities:
Indicate whether each item is a cash inflow or a cash outflow from operating activities:
Transactions reported on the statement of cash flows that do not increase or decrease cash, but that result in significant investing and financing activities are referred to as __ __ activities.
Transactions reported on the statement of cash flows that do not increase or decrease cash, but that result in significant investing and financing activities are referred to as __ __ activities.
Which of the following are cash outflows from financing activities? (Select all that apply)
Which of the following are cash outflows from financing activities? (Select all that apply)
Which of the following are cash outflows from investing activities? (Select all that apply)
Which of the following are cash outflows from investing activities? (Select all that apply)
When using the indirect method to prepare the operating activities section of the statement of cash flows, the first amount listed is __ __.
When using the indirect method to prepare the operating activities section of the statement of cash flows, the first amount listed is __ __.
Changes to current assets and current liabilities require adjustment of net income under the indirect method because:
Changes to current assets and current liabilities require adjustment of net income under the indirect method because:
Cash flows from __ activities include both inflows and outflows of cash from the external funding of a business.
Cash flows from __ activities include both inflows and outflows of cash from the external funding of a business.
In order to determine cash flows from financing activities, we need to examine changes to:
In order to determine cash flows from financing activities, we need to examine changes to:
Depreciation expense and amortization expense represent - items requiring adjustments to net income under the indirect method.
Depreciation expense and amortization expense represent - items requiring adjustments to net income under the indirect method.
Which of the following items are classified as cash inflows from operating activities on the statement of cash flows? (Select all that apply)
Which of the following items are classified as cash inflows from operating activities on the statement of cash flows? (Select all that apply)
Adjustments to net income in calculating operating cash flows include: (Select all that apply)
Adjustments to net income in calculating operating cash flows include: (Select all that apply)
Study Notes
Non-Cash Activities
- Significant non-cash activities include acquiring equipment via a long-term note and acquiring land by issuing common stock.
Statement of Cash Flows Classification
- The statement of cash flows categorizes activities into operating, investing, and financing.
Cash Flow Summary
- Provides an overview of cash inflows and outflows during the year.
Operating Activities Cash Flows
- Collection on account represents a cash inflow.
- Payment of salaries and payment on account are classified as cash outflows.
- Sale of services for cash also signifies a cash inflow.
Non-Cash Activities Definition
- Transactions that do not affect cash but involve significant investing or financing are termed non-cash activities.
Cash Outflows from Financing Activities
- Cash outflows include paying dividends and repaying bank loans; receiving interest and issuing common stock do not qualify as cash outflows.
Cash Outflows from Investing Activities
- Cash outflows from investing activities comprise the purchase of land, long-term investments, and buildings.
Indirect Method Starting Point
- The indirect method for preparing the operating activities section begins with net income.
Current Assets and Liabilities Adjustment
- Adjustments to net income due to changes in current assets and liabilities are necessary as these can impact cash flow more than the accrued amounts in net income.
Cash Flows from Financing Activities
- Financing activities involve both inflows and outflows related to external funding.
Changes to Long-Term Accounts
- To ascertain cash flows from financing activities, observe changes in long-term liabilities and stockholders’ equity (SHE) accounts.
Depreciation and Amortization
- Both depreciation and amortization are non-cash expenses requiring adjustments to net income when using the indirect method.
Cash Inflows from Operating Activities
- Cash inflows from operating activities include collections from customers and receipts of interest, while borrowing from banks, sale of a building, and payment of utilities do not qualify.
Adjustments in Operating Cash Flow Calculation
- Necessary adjustments to net income in calculating operating cash flows consist of non-operating items, changes in current assets and liabilities, and non-cash items.
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Description
Test your knowledge on significant non-cash activities and the classification of items in the statement of cash flows with this quiz. Ideal for students studying accounting principles, this flashcard set covers crucial concepts that form the basis of financial reporting.
