1. Under the indirect method of constructing a statement of cash flows, data fro
ID: 2734156 • Letter: 1
Question
1. Under the indirect method of constructing a statement of cash flows, data from two accounts in the income statement or, alternatively, the statement of retained earnings are use. These two accounts are the firm's ??????? and the dividends distributed during the accounting period.
a) earnings before interest and taxes
b) total sales
c) Net income.
2. Aslo, in applying this technique, two balance sheet account are never used. These two accounts are the cash (and cash equivalent) account and the ????? account.
a) retained earning
b) dividends
c) common stock
d) account receivable
3. Yorkshire Pudding Inc. borrowed $115000 in notes that are payable in the next 90 days. This transaction is classified as:
a) a financing cash flow
b) an oprerating cash flow
c) an investing cash flow
4. Detroit Diesel Services Inc. spent $930000 to purchase the controlling interest (200000 shares) in a competitor. This transaction is classified as:
a) a financing cash flow
b) an operating cash flow
c) an investing cash flow
5. Last month, Radiant Energy Technologies relaxed its credit standards for customers who could qualify for credit. Accounts receivable increased by 257,982$.
a) sourse
b) use
6. This month, Greener Industries collected 87,458$ in accounts receivable.
a) sourse
b) use
Explanation / Answer
Answer:1 c) Net income
Because Both the statement contain net income.
Answer:2 a) retained earning
Answer:3 a) a financing cash flow
Answer:4 c) an investing cash flow
The cash purchase of a controlling interest in a company is considered an investing activity .
Answer:5 b) use
Answer:6 a) source
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