UpWork (oDesk) & Accounting Skills Test (Cash Flow) Question & Answers

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Ques : In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000
Depreciation expense: $30,000
Increase in accounts payable: $15,000
Issuance of stock: $100,000
Retirement of debt: $50,000

Given this data, the amount of cash flow from operations was ______________.
Ans  : ($115,000)

Ques : Equity in the undistributed earnings of a recognized affiliate would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : Equity income from an affiliate would be shown _____________________.
Ans  : as a deduction from net income in the operations section

Ques : Issuing ten-year bonds will cause cash to ______________ .
Ans  : increase

Ques :  A cash flow statement is typically prepared _____________________.
Ans  : after both the balance sheet and the income statement are prepared

Ques :Which of the following would be shown in the investing section of a cash flow statement?
Ans  : None of the above

Ques : An increase in the accounts payable balance would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : Pre-paying a one-year insurance policy will cause cash to ______________ .
Ans  : decrease

Ques : Warranties payable that increased during the year would appear in which of the following sections of the cash flow statement?
Ans  : It would not appear on the statement.

Ques : The acquisition of a building and/or land by entering into a lease that meets the capital lease criteria would appear in which of the following sections of the cash flow statement?
Ans  : Investing section

Ques : Which of the following would be shown in the investing section of a cash flow statement?
Ans  :  Acquisition of equipment through a capital lease

Ques : Cash borrowed from a bank by issuing a short-term note payable would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : Collecting receivables will cause cash to ______________ .
Ans  : increase

Ques : In 2007, XYZ Company had a net income of $150,000 and reported the following:

Depreciation expense: $21,000
Issuance of debt: $120,000
Loss on sale of equipment: $23,000
Purchase of building: $110,000
Increase in inventory: $12,000

Given this data, the amount of cash flow from operations was ______________.
Ans  : $182,000

Ques : The most popular method of presenting cash from operations in a cash flow statement is the _________________.
Ans  :  indirect method

Ques : Preferred stock converted into common stock would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : An amortization of a bond discount would be shown __________________.
Ans  :  as an add-back to net income when determining cash flow from operations

Ques : Which of the following transactions would be shown on a cash flow statement, but does not affect cash?
Ans  : Exchange of land for stock

Ques : An investment in the stock of another company would appear in which of the following sections of the cash flow statement?
Ans  : Investing section

Ques : Paying previously declared dividends will cause cash to ______________ .
Ans  : decrease

Ques : A payment made from accounts payable will cause cash to ______________ .
Ans  : decrease

Ques : Cash paid for land would be shown as ________________.
Ans  :  cash flow from investing

Ques : Declaring dividends will cause cash to ______________ .
Ans  : show no change

Ques : Amortized discount on bonds payable would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : In 2007, XYZ Company had a net income of $100,000 and reported the following account changes on its balance sheet:

Accounts Receivable: $6,000 increase
Accounts Payable: $2,000 increase
Building: $8,000 decrease
Accumulated Depreciation: $3,000 increase
Bonds Payable: $16,000 increase

Given this data, the amount of cash flow from operations was ______________.
Ans  :  $99,000

Ques : At the beginning and end of 2007, XYZ Company reported the following balances for Bonds Payable:

Jan 1: $100,000
Dec 31: $140,000
In addition, $60,000 In bonds was retired In 2007.

Given the above data, the amount of Bonds Payable issued during the year was ______________.
Ans  : $100,000

Ques :  Deferred income tax payable that increased during the year would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : A cash payment for land acquisition would appear in which of the following sections of the cash flow statement?
Ans  : Investing section

Ques : Which of the following typically happens during the growth phase of a product's life cycle?
Ans  :  Cash outflow exceeds cash inflow from investing activities.

Ques : When determining cash flow from operations, which of the following would be a deduction from net income?
Ans  : Increased accounts receivable

Ques : Which of the following would be shown in the financing section of a cash flow statement?
Ans  :  Long-term bonds payable issued

Ques : Salaries paid during the year would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : Long-term investments sold for cash with a recognized gain would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : In most countries, the preparation of a __________________ is a common practice.
Ans  : cash flow statement

Ques : On their income statement, XYZ Company reported $600,000 in sales, $320,000 in depreciation expense, $60,000 in income taxes, and $100,000 in other expenses. In addition, $80,000 of common stock was issued for cash during the year. Assuming that the company's non-cash working capital balances did not change during the year, the total amount of cash from operations was ____________.
Ans  : $440,000

Ques : Accounts receivable that increased during the year would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : Unearned revenue that had been reduced during the year would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : In determining cash flow from operations, which of the following would be an add-back to net income?
Ans  :  Loss on sale of building

Ques : Accruing an income tax liability will cause cash to ______________ .
Ans  : show no change

Ques : Prepaid rent that increased during the year would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : Cash received from sale of investment would be shown on a cash flow statement as ___________.
Ans  :  cash flow from investing

Ques : Land acquired by issuing preferred stock would appear in which of the following sections of the cash flow statement?
Ans  :  It would not appear on the statement.

Ques : When determining cash flow from operations, which of the following would NOT be added back to net income?
Ans  : Amortization of bond premium

Ques : On a cash flow statement, depreciation expense ________________.
Ans  : should be added to net income when determining cash provided by operations

Ques : The major components of a cash flow statement are _____________________
Ans  : cash flow from operations, cash flow from investing, and cash flow from financing

Ques : Which of the following statements does NOT illustrate a proper interpretation of information in a cash flow statement?
Ans  : All of the above

Ques :  When preparing cash flow statements, the practice of presenting cash from operations by listing all cash-generating revenues followed by all cash expenses is called the ______________.
Ans  : direct method

Ques : In determining cash flow from operations, which of the following would be added to net income?
Ans  :  Increased accounts payable

Ques : In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000
Depreciation expense: $30,000
Increase in accounts payable: $15,000
Issuance of stock: $100,000
Retirement of debt: $50,000

Given this data, the net change in cash for 2007 was ______________.
Ans  : ($105,000)

Ques : Which of the following would NOT be shown in the investing section of a cash flow statement?
Ans  : All of the above are shown in the investing section of a cash flow statement

Ques : Acquisition of treasury stock would be shown _____________________.
Ans  : in the financing section

Ques : Which of the following statements expresses the objective of a cash flow statement?
Ans  :  All of the above

Ques :  New equipment purchased by issuing a long-term note payable would appear in which of the following sections of the cash flow statement?
Ans  : Investing section

Ques : Dividends paid for the year would appear in which of the following sections of the cash flow statement?
Ans  :  Financing section

Ques : The sale of equipment for cash with a recognized loss would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : Depreciation recorded on equipment would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : Preferred stock issued for cash would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : The amortization of a recorded patent would appear in which of the following sections of the cash flow statement?
Ans  : Operating section

Ques : When determining cash flow from operations, which of the following would NOT be deducted from net income?
Ans  : Loss on sale of equipment

Ques :  Which of the following statements about depreciation expense is true?
Ans  : All of the above statements are true.

Ques : When determining cash flow from operations, which of the following would NOT be deducted from net income?
Ans  :  Gain on sale of marketable securities

Ques : Which of the following typically happens during the maturation phase of a product's life cycle?
Ans  : Cash outflow exceeds cash inflow from investing activities.

Ques : Treasury stock purchased for cash would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : The use of a bond sinking fund to retire a long-term debt at maturity would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : When determining cash flow from operations, which of the following would be added back to net income?
Ans  : All of the above

Ques :  XYZ reported balances in the Accumulated Depreciation account of $130,000 on 01/01/07 and $120,000 on 12/31/07. During 2007, an asset costing $100,000 (with an accumulated depreciation of $80,000) was sold for $20,000.

Given this data, the depreciation expense for 2007 was _____________.
Ans  :  $90,000

Ques : Recording a depreciation expense will cause cash to ______________ .
Ans  : decrease

Ques : Which of the following would be included in the investing section of a cash flow statement?
Ans  : All of the above would be included in the investing section.

Ques :  During 2007, XYZ Company experienced the following changes:

Current liabilities: $75,000 increase
Non-current liabilities: $45,000 decrease
Owners' equity: $51,000 decrease
Non-current assets: $42,000 increase
Current assets (other than Cash): $18,000 increase

Given the above data, the change in cash for 2007 was ____________.
Ans  :  ($81,000)

Ques : The acquisition of a patent would be shown __________________.
Ans  :  in the investing section

Ques : Which of the following is NOT a characteristic of growing firms?
Ans  : All of the above

Ques : Which of the following typically happens during the introduction phase of a product's life cycle?
Ans  :  Cash outflow exceeds cash inflow from investing activities.

Ques : Paying cash to retire preferred stock will cause cash to ______________ .
Ans  : decrease

Ques : Treasury stock sold for an amount greater than its repurchase price would appear in which of the following sections of the cash flow statement?
Ans  : Financing section

Ques : Which of the following transactions would be shown as a cash flow from financing?
Ans  : Cash paid for dividends

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