1. Which of the following would be considered a \"use\" of cash for purpose of c
ID: 2435742 • Letter: 1
Question
1.
Which of the following would be considered a "use" of cash for purpose of constructing a statement of cash flows?
A) selling the company's own common stock to investors.
B) issuing long-term debt.
C) purchasing equipment.
D) amortizing a patent.
2.
An increase in the accumulated depreciation account of $50,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:
A) an addition to net income of $50,000 in order to arrive at net cash provided by operating activities.
B) a deduction from net income of $50,000 in order to arrive at net cash provided by operating activities.
C) an addition of $50,000 under investing activities.
D) a deduction of $50,000 under investing activities.
3.
In a statement of cash flows, a change in prepaid expenses would be classified as:
A) an operating activity.
B) a financing activity.
C) an investing activity.
D) a noncash item that need not appear on the statement of cash flows.
4.
Grading Company's cash and cash equivalents consist of cash and marketable securities. Last year the company's cash account decreased by $14,000 and its marketable securities account increased by $18,000. Cash provided by operating activities was $21,000. Net cash used for financing activities was $22,000. Based on this information, the net cash flow from investing activities on the statement of cash flows was:
A) a net $13,000 decrease.
B) a net $1,000 increase.
C) a net $3,000 decrease.
D) a net $5,000 increase.
5.
In a statement of cash flows, a change in the inventories account would be classified as:
A) an operating activity.
B) a financing activity.
C) an investing activity.
D) a noncash item that need not appear on the statement of cash flows.
Explanation / Answer
1. Which of the following would be considered a "use" of cash for purpose of constructing a statement of cash flows? C) purchasing equipment. 2. An increase in the accumulated depreciation account of $50,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as: A) an addition to net income of $50,000 in order to arrive at net cash provided by operating activities. 3. In a statement of cash flows, a change in prepaid expenses would be classified as: A) an operating activity. 4. Grading Company's cash and cash equivalents consist of cash and marketable securities. Last year the company's cash account decreased by $14,000 and its marketable securities account increased by $18,000. Cash provided by operating activities was $21,000. Net cash used for financing activities was $22,000. Based on this information, the net cash flow from investing activities on the statement of cash flows was: A) a net $13,000 decrease. 5. In a statement of cash flows, a change in the inventories account would be classified as: A) an operating activity.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.