Test Bank For Intermediate Accounting 19th Edition Earl K Stice James D Stice
CHAPTER 5
MULTIPLE CHOICE
1.In a statement of cash flows, payments to acquire debt instruments of other entities would typically be classified as cash outflows for
a.
financing activities.
b.
equity activities.
c.
operating activities.
d.
investing activities.
ANS: D PTS: 1 DIF: Medium OBJ: LO 2
TOP: AICPA FN-Reporting MSC: AACSB Reflective Thinking
2.A gain on the sale of a plant asset in the ordinary course of business should be presented in a statement of cash flows prepared using the indirect method as
a.
a cash inflow from investing activities.
b.
a cash inflow from financing activities.
c.
a deduction from net income.
d.
an addition to net income.
ANS: C PTS: 1 DIF: Medium OBJ: LO 3
TOP: AICPA FN-Reporting MSC: AACSB Reflective Thinking
3.In a statement of cash flows prepared using the direct method, if wages payable increased during the year, the cash paid for wages would be
a.
the same as salary expense.
b.
salary expense plus wages payable at the beginning of the year.
c.
salary expense plus the increase in wages payable from the beginning to the end of the year.
d.
salary expense less the increase in wages payable from the beginning to the end of the year.
ANS: D PTS: 1 DIF: Medium OBJ: LO 3
TOP:AICPA FN-MeasurementMSC:AACSB Analytic
4.In a statement of cash flows using the direct method, which of the following would increase reported cash flows from operating activities?
a.
Dividends received from investments
b.
Gain on sale of equipment
c.
Gain on sale of a business segment
d.
Sale of treasury stock
ANS: A PTS: 1 DIF: Medium OBJ: LO 3
TOP:AICPA FN-MeasurementMSC:AACSB Analytic
5.In a statement of cash flows, if equipment is sold at a gain, the amount shown as a cash inflow from investing activities equals the carrying amount of the equipment
a.
with no addition or subtraction.
b.
plus the gain and less the amount of tax attributable to the gain.
c.
plus the gain only.
d.
plus both the gain and the amount of tax attributable to the gain.
ANS: C PTS: 1 DIF: Medium OBJ: LO 2
TOP:AICPA FN-MeasurementMSC:AACSB Analytic
6.In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from
a.
brokerage activities.
b.
financing activities.
c.
investing activities.
d.
operating activities.
ANS: B PTS: 1 DIF: Medium OBJ: LO 2
TOP: AICPA FN-Reporting MSC: AACSB Reflective Thinking
7.When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a(n)
a.
increase in cash flows from investing activities.
b.
reduction in cash flows from investing activities.
c.
increase in cash flows from operating activities.
d.
reduction in cash flows from operating activities.
ANS: C PTS: 1 DIF: Medium OBJ: LO 3
TOP: AICPA FN-Reporting MSC: AACSB Reflective Thinking
8.A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows (indirect method) as
a.
an addition to net income.
b.
a deduction from net income.
c.
an inflow and outflow of cash.
d.
an outflow of cash.
ANS: A PTS: 1 DIF: Medium OBJ: LO 3
TOP:AICPA FN-MeasurementMSC:AACSB Analytic
9.When preparing a statement of cash flows using the direct method, amortization of a patent is
a.
shown as an increase in cash flows from operating activities.
b.
shown as a reduction in cash flows from operating activities.
c.
included with supplemental disclosures of noncash transactions.
d.
not reported in the statement of cash flows or related disclosures.
ANS: D PTS: 1 DIF: Medium OBJ: LO 3
TOP:AICPA FN-MeasurementMSC:AACSB Analytic
10.Cash equivalents would not include short-term investments in
a.
money market funds.
b.
available-for-sale securities.
c.
commercial paper.
d.
certificates of deposit.
ANS: B PTS: 1 DIF: Medium OBJ: LO 2
TOP: AICPA FN-Reporting MSC: AACSB Reflective Thinking
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