FIN575 - Quiz - 4 - SOLUTION - Graded 30/30

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1. (TCO B) Which of the following would affect cash flow from operations? (Points : 3)

      [removed] Sale of land for a gain
      [removed] Payment of dividends
      [removed] Depreciation of fixed assets
      [removed] Capitalizing costs that were previously expensed

Question 2.2. (TCO B) Depreciation expense decreases net income but is not a use of _________. (Points : 3)

      [removed] assets
      [removed] debt
      [removed] cash
      [removed] equity

Question 3.3. (TCO B) Which of the following is not a financing activity in the statement of cash flows? (Points : 3)

      [removed] Cash dividend
      [removed] Repurchase of common stock
      [removed] Payment of interest on debt
      [removed]  Issuance of new debt

Question 4.4. (TCO B) Taxes paid on capital gains from the sale of marketable securities are recorded as: (Points : 3)

      [removed] cash inflows from operations.
      [removed] no cash from operations
      [removed] cash outflows from operations.
      [removed] None of the above

Question 5.5. (TCO B) The statement of cash flows provides us with important clues on: (Points : 3)

      [removed] quality of earnings.
      [removed] future dividend payouts.
      [removed] ability to meet debt service requirements.
      [removed] All of the above

Question 6.6. (TCO B) An increase in accounts payable would be considered: (Points : 3)

      [removed] a source of cash.
      [removed] a use of cash.
      [removed] an adjusting entry.
      [removed] a noncash charge to income.

Question 7.7. (TCO B) Which of the following would require an adjustment in the computation of cash flow from operations using the indirect method? (Points : 3)

      [removed] Depreciation expense and loss on sale of asset
      [removed] Utility bill received and paid in cash
      [removed] Sale of services to customers for cash
      [removed] All of the above

Question 8.8. (TCO B) Beginning and ending plant assets are, respectively, $325,000 and $370,000. Beginning and ending accumulated depreciation are, respectively, $82,800 and $95,000. Depreciation expense for the period was $30,000, and new assets of $76,000 were purchased. Plant assets were sold at a $10,500 loss. What were the cash proceeds from the sale? (Points : 3)

      [removed] $17,800
      [removed] $3,100
      [removed] $2,700
      [removed] $31,000

Question 9.9. (TCO B) A decrease in liabilities would usually show as an: (Points : 3)

      [removed] outflow in the statement of cash flows.
      [removed] inflow in the statement of cash flows.
      [removed] equal flow in the statement of cash flows.
      [removed] None of the above

Question 10.10. (TCO B) A firm has net sales of $6,000, cash expenses (including taxes) of $2,800, and depreciation of $1,000. If accounts receivable increased in the period by $800, cash flows from operations equal _________. (Points : 3)

      [removed] $2,400
      [removed] $3,200
      [removed] $3,400
      [removed] $4,200

11 years ago

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