Chapter 22 Quiz - ACCT 328 (Liu) || A+ Graded.
Statement of Cash Flows provides useful information to help assess what? correct answers - An
entity's ability to generate future cash flows
- An entity's ability to pay dividends and meet obligations
- Indicator of a company's financial flexibility or ability to use cash for unexpected needs and
opportunities
- Reasons for difference between net income and net cash flow from operating activities
- Cash and noncash investing and financing transactions
What are the 3 categories in the statement of cash flows? correct answers - Operating Activities
- Investing Activities
- Financing Activities
What category in the statement of cash flows is the cash activities from the core operations of the
business? correct answers Operating Activities
What category in the statement of cash flows is the cash activities related to investments the firm
makes (e.g., equipment, land, investments in debt or equity (not for resale))? correct answers
Investing Activities
What category in the statement of cash flows is the cash activities related to how the firm
finances its operations (e.g., debt financing like bonds, equity financing like stock)? correct
answers Financing Activities
What are some of the typical cash inflows received from Operating Activities? correct answers -
Sale of goods / services
- Refunds from suppliers
- Dividends from investments
- Interest on receivables
- Settlement of lawsuit
- Proceeds from sale of investments held for resale in a trading account (not included in NI)
- Collection on a long-term note receivable from a customer related to sale of goods (not
included in NI)
What are some of the typical cash outflows received from Operating Activities? correct answers
- Purchase of goods for resale
- Salaries and other operating expenses
- Income taxes, duties, and fines
- Interest on liabilities
- Settlement of lawsuit
- Purchases of investments held for resale in a trading account (not included in NI)
- Principal payment on a note issued to acquire goods for resale (not included in NI)
What is a short-term or long-term TRADE note receivable (payable) considered? correct answers
Operating Asset (Liability)
, If notes are issued for reasons other than operating activities such as for a fixed asset, the cash
flows are NOT what? correct answers NOT classified as operating
What are some of the typical cash inflows received from Investing Activities? correct answers -
Sale of PP&E
- Sale of debt and equity investments in other companies (if held for resale then it would be
operating)
- Collection of a loan (excluding interest, which is an operating activity)
- Sale of patents on other intangible assets
What are some of the typical cash outflows received from Investing Activities? correct answers -
Purchase of PP&E
- Investments in debt and equity investments in other companies (if held for resale then this
would be operating)
- Loans to other entities
- Purchase of patents or other intangible assets
What are some of the typical cash inflows received from Financing Activities? correct answers -
Issuance of a company's own stock
- Sale of treasury stock
- Issuance of bonds or other debt (short-term and long-term nontrade debt)
What are some of the typical cash outflows received from Financing Activities? correct answers
- Dividends and other cash distributions to owners
- Reacquiring previously issued capital stock
- Principal payments on loans, payments to retire bonds or other debt, debt issue costs, and
principal payments on FINANCE LEASES
What type of activity is paying dividends? correct answers Financing
What type of activity is paying interest? correct answers Operating
What type of activity is receiving dividends? correct answers Operating
What type of activity is receiving interest? correct answers Operating
Cash paid for interest that is capitalized during an acquisition of fixed assets is classified as
what? correct answers Investing Cash Flow
What type of activity is the operating lease for the lessee? correct answers Operating
What type of activity is a finance lease for the lessee? correct answers Principal: Financing
What type of activity is the operating lease for the Lessor? correct answers Operating
What type of activity is the sales-type lease for the Lessor? correct answers Operating
Statement of Cash Flows provides useful information to help assess what? correct answers - An
entity's ability to generate future cash flows
- An entity's ability to pay dividends and meet obligations
- Indicator of a company's financial flexibility or ability to use cash for unexpected needs and
opportunities
- Reasons for difference between net income and net cash flow from operating activities
- Cash and noncash investing and financing transactions
What are the 3 categories in the statement of cash flows? correct answers - Operating Activities
- Investing Activities
- Financing Activities
What category in the statement of cash flows is the cash activities from the core operations of the
business? correct answers Operating Activities
What category in the statement of cash flows is the cash activities related to investments the firm
makes (e.g., equipment, land, investments in debt or equity (not for resale))? correct answers
Investing Activities
What category in the statement of cash flows is the cash activities related to how the firm
finances its operations (e.g., debt financing like bonds, equity financing like stock)? correct
answers Financing Activities
What are some of the typical cash inflows received from Operating Activities? correct answers -
Sale of goods / services
- Refunds from suppliers
- Dividends from investments
- Interest on receivables
- Settlement of lawsuit
- Proceeds from sale of investments held for resale in a trading account (not included in NI)
- Collection on a long-term note receivable from a customer related to sale of goods (not
included in NI)
What are some of the typical cash outflows received from Operating Activities? correct answers
- Purchase of goods for resale
- Salaries and other operating expenses
- Income taxes, duties, and fines
- Interest on liabilities
- Settlement of lawsuit
- Purchases of investments held for resale in a trading account (not included in NI)
- Principal payment on a note issued to acquire goods for resale (not included in NI)
What is a short-term or long-term TRADE note receivable (payable) considered? correct answers
Operating Asset (Liability)
, If notes are issued for reasons other than operating activities such as for a fixed asset, the cash
flows are NOT what? correct answers NOT classified as operating
What are some of the typical cash inflows received from Investing Activities? correct answers -
Sale of PP&E
- Sale of debt and equity investments in other companies (if held for resale then it would be
operating)
- Collection of a loan (excluding interest, which is an operating activity)
- Sale of patents on other intangible assets
What are some of the typical cash outflows received from Investing Activities? correct answers -
Purchase of PP&E
- Investments in debt and equity investments in other companies (if held for resale then this
would be operating)
- Loans to other entities
- Purchase of patents or other intangible assets
What are some of the typical cash inflows received from Financing Activities? correct answers -
Issuance of a company's own stock
- Sale of treasury stock
- Issuance of bonds or other debt (short-term and long-term nontrade debt)
What are some of the typical cash outflows received from Financing Activities? correct answers
- Dividends and other cash distributions to owners
- Reacquiring previously issued capital stock
- Principal payments on loans, payments to retire bonds or other debt, debt issue costs, and
principal payments on FINANCE LEASES
What type of activity is paying dividends? correct answers Financing
What type of activity is paying interest? correct answers Operating
What type of activity is receiving dividends? correct answers Operating
What type of activity is receiving interest? correct answers Operating
Cash paid for interest that is capitalized during an acquisition of fixed assets is classified as
what? correct answers Investing Cash Flow
What type of activity is the operating lease for the lessee? correct answers Operating
What type of activity is a finance lease for the lessee? correct answers Principal: Financing
What type of activity is the operating lease for the Lessor? correct answers Operating
What type of activity is the sales-type lease for the Lessor? correct answers Operating
