Q7. Which of the following would NOT be a component of cash flow from investing?

A)   Purchase of equipment.

B)   Dividends paid.

C)   Sale of land.

Q8. What are the main components of cash flow from operations?

A)   Capitalization activities, sale of assets, and purchasing securities.

B)   Repayment of bonds, issuance of common stock, and stock splits.

C)   Changes in accounts receivable, inventory, accounts payable, and items that flow through the income statement.

Q9. Which of the following should be classified as cash flows from investing (CFI) by Elegant, Inc., which reports under U.S. GAAP?

A)   Interest received by Elegant, Inc. on a bond Elegant, Inc. purchased from an outside investor.

B)   Dividends received by Elegant, Inc. from an investment in another firm.

C)   Elegant's payment to purchase equipment to be used in its business.

Q10. Which of the following items is NOT found in the financing cash flow part of the statement of cash flows?

A)   Change in long-term debt.

B)   Dividends paid.

C)   Change in retained earnings.

Q11. Jodi Lein, small business consultant, is currently working with RJ Landscaping, a sole proprietorship. She is trying to educate the owner on the importance of monitoring cash flows. Operating information as of the end of the most recent month appears below:

• Cash from sale of truck of $7,000.

• Cash salaries paid of $17,000.

• Cash from customers of $45,000.

• Depreciation expense of $5,500.

• Interest on bank line of credit of $1,000.

• Cash paid to suppliers of $22,000.

• Other cash expenses, including rent, of $6,300.

• No taxes due.

Using this information, what is the cash flow from operations for the month?

A)   $11,200.

B)   -$300.

C)   -$1,300.

答案和详解如下：

Q7. Which of the following would NOT be a component of cash flow from investing?

A)   Purchase of equipment.

B)   Dividends paid.

C)   Sale of land.

Correct answer is B)

Dividends paid is not a component of cash flow from investing, it is a component of cash flow from financing. The other items are all components of cash flow from investing.

Q8. What are the main components of cash flow from operations?

A)   Capitalization activities, sale of assets, and purchasing securities.

B)   Repayment of bonds, issuance of common stock, and stock splits.

C)   Changes in accounts receivable, inventory, accounts payable, and items that flow through the income statement.

Correct answer is C)         

The main components of cash flow from operations are changes in working capital items (accounts receivable, inventory, accounts payable), and items that flow through the income statement. Capitalization activities, sale of assets and purchases of securities would all be part of cash flows from investing. Repayment of bonds and issuance of common stock would also be part of cash flows from financing. The stock split would be a non-cash activity.

Q9. Which of the following should be classified as cash flows from investing (CFI) by Elegant, Inc., which reports under U.S. GAAP?

A)   Interest received by Elegant, Inc. on a bond Elegant, Inc. purchased from an outside investor.

B)   Dividends received by Elegant, Inc. from an investment in another firm.

C)   Elegant's payment to purchase equipment to be used in its business.

Correct answer is C)         

Purchases of equipment are considered to be cash flows from investing. Interest paid or received and dividends received are considered to be cash flows from operations under U.S. GAAP.

Q10. Which of the following items is NOT found in the financing cash flow part of the statement of cash flows?

A)   Change in long-term debt.

B)   Dividends paid.

C)   Change in retained earnings.

Correct answer is C)         

Changes in retained earnings are not included in the calculation of financing cash flows.

Q11. Jodi Lein, small business consultant, is currently working with RJ Landscaping, a sole proprietorship. She is trying to educate the owner on the importance of monitoring cash flows. Operating information as of the end of the most recent month appears below:

• Cash from sale of truck of $7,000.

• Cash salaries paid of $17,000.

• Cash from customers of $45,000.

• Depreciation expense of $5,500.

• Interest on bank line of credit of $1,000.

• Cash paid to suppliers of $22,000.

• Other cash expenses, including rent, of $6,300.

• No taxes due.

Using this information, what is the cash flow from operations for the month?

A)   $11,200.

B)   -$300.

C)   -$1,300.

Correct answer is C)         

The format of the question information suggests the use of the direct cash flow method. In this method, depreciation is not a component of cash flow from operations. Cash flow from operations = (all numbers in thousands of dollars) 45 – 17 – 22 – 6.3 – 1.0 = -1.3, or -$1,300.

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