60.1K

Verified Solution

Link Copied!

16) Which of the following is the first step in preparing the statement of cash flows?

a) Determine the net cash flow from operating activities.

b) Determine the net income.

c) Determine the cash flow from investing activities.

d) Determine the change in cash.

17) The issuance of a stock split would be classified as

a) an operating activity.

b) an investing activity.

c) a financing activity.

d) none of the above.

18) Of the following questions, which one would not be answered by the statement of cash flows?

a) Where did the cash come from during the period?

b) What was the cash used for during the period?

c) Were all the cash expenditures of benefit to the company during the period?

d) What was the change in the cash balance during the period?

19) If a plant asset is sold for cash and a gain results, which activities are affected in the statement of cash flows under the indirect method?

a) investing only

b) financing only

c) operating and investing

d) operating and financing

20) Which of the following is not one of the benefits that creditors and investors can derive from the statement of cash flows?

a) Assess the effectiveness of management's borrowing policy.

b) Assess the company's ability to generate future cash flows.

c) Assess the company's ability to pay future cash dividends.

d) Explain the difference between net income and net cash flow from operating activities.

Answer & Explanation Solved by verified expert

See Answer