C214, Topic 3 Question and answers
verified to pass 2025/2026
operations, investing, and financing - correct answer ✔The three cash flow areas are from
___________.
managerial discretion or manipulation - correct answer ✔CFO is subject to ___________________.
Net income doesn't account for the change in cash - correct answer ✔Which of the following is not a
reason for the difference between CFO and net income?
The change will decrease CFO by $100 - correct answer ✔Suppose a firm shows an increase in accounts
receivable of $100 during a period. Considered in isolation, which of the follow best describes the
impact of this change on the Statement of Cash Flows?
CFO = NI + Depreciation expense + changes in operating accounts - correct answer ✔Which of the
following best describes the simplified calculation of CFO:
will not - correct answer ✔A change in notes payable __________ impact CFO.
Accounts receivable and inventory - correct answer ✔Which of the following represent operating asset
accounts considered in the calculation of CFO?
DarkTec has a higher net income than Brighton due to longer term depreciation expense. - correct
answer ✔Brighton and DarkTec are identical companies: both companies sell computers to identical
clients, recognize the same amount of revenue, and purchased the same capital equipment at the same
cost at the beginning of this year. However, Brighton's sales are 1/3 on credit while 2/3 of DarkTec's
sales are on credit. In addition, while both companies use straight-line depreciation, Brighton calculates
depreciation of the new equipment based on an 8-year useful life while DarkTec calculates depreciation
, based on 10-year life (i.e. Depreciation Expense = Cost of Machine/Life of the Machine). Assume both
companies had exactly the same balance sheets at the beginning of the year. Which of the following
statements is most likely correct?
decrease - correct answer ✔An increase in inventory will ___________ CFO.
$1,900 - correct answer ✔Logan Enterprises Cash Flow 20x2 20x1
Gross PP&E $22,500 $20,600
Less: Acc. Depr $????? $5,400
Net PP&E $????? $15,200
What is the firm's CFI?
$700 - correct answer ✔Last year a firm recorded Net PP&E of $4,600 while this year the same firm
recorded Net PP&E of $4,500. If the depreciation expense for last year and this year are $500 and $800
respectively, what is the CFI of the company? (assume no asset disposals)
$1,300 - correct answer ✔A firm recorded Gross PP&E of $5,000 in 20x1 and $6,300 in 20x2. Further,
accumulated depreciation was $2,000 and $2,400 in 20x1 and 20x2, respectively. Assuming no asset
disposals, CFI is closest to which of the following?
$1,800 - correct answer ✔Logan Enterprises Cash Flow 20x2 20x1
Gross PP&E $22,500 $?????
Less: Acc. Depr $7,100 $?????
Net PP&E $15,400 $15,200
Using the data above and assuming no asset disposals, what is the firm's CFI for the year 20x2? Assume
that the firm claims $1,600 in depreciation expense during the period.
verified to pass 2025/2026
operations, investing, and financing - correct answer ✔The three cash flow areas are from
___________.
managerial discretion or manipulation - correct answer ✔CFO is subject to ___________________.
Net income doesn't account for the change in cash - correct answer ✔Which of the following is not a
reason for the difference between CFO and net income?
The change will decrease CFO by $100 - correct answer ✔Suppose a firm shows an increase in accounts
receivable of $100 during a period. Considered in isolation, which of the follow best describes the
impact of this change on the Statement of Cash Flows?
CFO = NI + Depreciation expense + changes in operating accounts - correct answer ✔Which of the
following best describes the simplified calculation of CFO:
will not - correct answer ✔A change in notes payable __________ impact CFO.
Accounts receivable and inventory - correct answer ✔Which of the following represent operating asset
accounts considered in the calculation of CFO?
DarkTec has a higher net income than Brighton due to longer term depreciation expense. - correct
answer ✔Brighton and DarkTec are identical companies: both companies sell computers to identical
clients, recognize the same amount of revenue, and purchased the same capital equipment at the same
cost at the beginning of this year. However, Brighton's sales are 1/3 on credit while 2/3 of DarkTec's
sales are on credit. In addition, while both companies use straight-line depreciation, Brighton calculates
depreciation of the new equipment based on an 8-year useful life while DarkTec calculates depreciation
, based on 10-year life (i.e. Depreciation Expense = Cost of Machine/Life of the Machine). Assume both
companies had exactly the same balance sheets at the beginning of the year. Which of the following
statements is most likely correct?
decrease - correct answer ✔An increase in inventory will ___________ CFO.
$1,900 - correct answer ✔Logan Enterprises Cash Flow 20x2 20x1
Gross PP&E $22,500 $20,600
Less: Acc. Depr $????? $5,400
Net PP&E $????? $15,200
What is the firm's CFI?
$700 - correct answer ✔Last year a firm recorded Net PP&E of $4,600 while this year the same firm
recorded Net PP&E of $4,500. If the depreciation expense for last year and this year are $500 and $800
respectively, what is the CFI of the company? (assume no asset disposals)
$1,300 - correct answer ✔A firm recorded Gross PP&E of $5,000 in 20x1 and $6,300 in 20x2. Further,
accumulated depreciation was $2,000 and $2,400 in 20x1 and 20x2, respectively. Assuming no asset
disposals, CFI is closest to which of the following?
$1,800 - correct answer ✔Logan Enterprises Cash Flow 20x2 20x1
Gross PP&E $22,500 $?????
Less: Acc. Depr $7,100 $?????
Net PP&E $15,400 $15,200
Using the data above and assuming no asset disposals, what is the firm's CFI for the year 20x2? Assume
that the firm claims $1,600 in depreciation expense during the period.
