Cashflow MULTIPLE CHOICE Instructions: Circle the best answer for each of the fo

Question

Cashflow MULTIPLE CHOICE Instructions: Circle the best answer for each of the following questions. 1. Which of the following is not one of the major sections of the statement of cash flows? a. cash flows from financing activities cash flows from selling activities cash flows from operating activities b. c. d. cash flows from investing activities 2. Noncash investing and financing activities which may have a significant effect on future cash flows are reported: a. in the statement of cash flows b. in a separate schedule to accompany the statement of cash flows in the retained earnings statement c. d. in a footnote accompanying the balance sheet 3. Under the indirect method, which of the following items must be deducted from reported net income to determine net cash flow from operating activities? a. depreciation of fixed assets b. decreases in current assets c. decreases in current liabilities d. loss on sale of equipment 4. During the past year, Lockhart Inc. declared $40,000 in cash dividends. If the beginning and ending balance of the dividends payable account was $12,000 and $10,000, respectively, what amount of cash paid for dividends will appear in the cash flow from financing activities section of the statement of cash flows? a. $30,000 b. $38,000 c. $40,000 d. $42,000 5. Under the direct method, which of the following items must be added to operating expenses reported on the income statement to determine cash payments for operating expenses? a. increase in accrued expenses b. decrease in prepaid expenses increase in income taxes payable d. increase in prepaid expenses c.

Explanation / Answer

1 Cash fows from selling expenses is not a section of statement of cash flows 2 Non cash investing and financing activities is reported in a separate schedule to accompany the statement of cash flows 3 Decrease in current liabilities must be deducted 4 Cash paid for dividends=40000+12000-10000 = $42000 5 Increase in prepaid expenses must be added

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