1. Which of the following statements concerning the statement of cash flows is true?A)The statement of cash flows is usually more accurate when using the indirect method.
B)The statement of cash flows is an optional financial statement for external reporting purposes.
C)The statement of cash flows reflects both earnings per share and cash per share.
D)If the direct method is used, a supplementary schedule reconciling the net income to a net cash from operating activities must still be provided.
2.Which of the following transactions would not be classified as a financing activity?A)Issuance of bonds at a discount
B)Payment of dividends
C)Purchase of treasury stock
D)Purchase of a long-term investment in bonds
3.In the Green Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $45,000 was sold for $45,000 cash, and land costing $87,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:A)net debit to Land $42,000 and a credit to Purchase of Land $42,000 under investing activities.
B)credit to Land $45,000 and a debit to Sale of Land $45,000 under investing activities.
C)credit to Land $45,000 and a debit to Sale of Land $45,000 under financing activities.
D)debit to Land $87,000 and a credit to Purchase of Land $87,000 under financing activities.
4.During 2011, Klugman Industries reported cash provided by operations of $690,000, cash used in investing of $1,029,000, and cash used in financing of $135,000. In addition, cash spent for fixed assets during the period was $414,000. No dividends were paid. Based on this information, what was Klugman's free cash flow?A)($888,000)
B)($339,000)
C)$1,440,000
D)$276,000
5.The information in a statement of cash flows will not help investors to assess the entity's ability toA)pay dividends.
B)pay its obligations when they become due.
C)obtain favorable borrowing terms at a bank.
D)generate future cash flows.