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Multiple Choice Identify the choice that best completes the statement or answers the question. 

1. Which of the following categories is not  used to classify cash flows in the cash flowstatement?a. Managing activities

 b. Operating activitiesc. Investing activitiesd. Financing activities

ANSWER: A

EasyPOINTS: 0 / 1REF:  page 490 

2. Activities that involve providing and collecting cash as a lender or as an owner of sharesand acquiring and disposing of fixed assets are included in which section of the cashflow statement?a. Operating activities

 b. Investing activitiesc. Financing activitiesd. Managing activities

ANSWER: BEasy

POINTS: 0 / 1REF:  page 493 

3. Which of the following items will not appear in the cash flow from operating activitiessection when using the direct method?a. Payments to employees

 b. Payments to suppliers

c. Net incomed. Collections from customers

ANSWER: CModerate

POINTS: 0 / 1REF:  page 494 

4. Which of the following items is not  considered as cash or cash equivalent?a. Cash on hand

 b. Demand deposits

c. Bank borrowingsd. Investments with a maturity of two months from the date of acquisition.

ANSWER: CModerate

Name: Score: 0 / 10 points (0%)

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POINTS: 0 / 1REF:  page 495 

5. All of the following would be included in a company’s operating activities except:a. Income tax payments

 b. Collections from customersc. Cash payments to suppliersd. Dividend payments

ANSWER: DModerate

POINTS: 0 / 1REF:  page 493 

6. Which of the following items is not  a non-cash item?a. Depreciation expense

 b. Amortization expensec. Reversal of provisiond. Income tax payment

ANSWER: DModerate

POINTS: 0 / 1REF:  page 499 

7. Given the following data:o 135 was raised from the issue of shares in cash (66 of share capital

and 69 of share premium);o Bonds were converted into capital for 30 (share capital of 16 plus

share premium of 14);o Bonds were repaid at face value at maturity for 60;

o Dividends were paid in cash for 8;

What is the amount of the cash flow from financing activities?a. 135

 b. -60c. 67d. -8

ANSWER: CModerate

POINTS: 0 / 1REF:  pages 509, 510 

8. Which of the following transactions does not  decrease cash?a. Purchasing inventory for cash.

 b. Accruing operating expenses.c. Paying trade accounts payable.d. Purchasing securities that are not cash equivalents.

ANSWER: B

EasyPOINTS: 0 / 1REF:  pages 498 - 510 

9. How is free cash flow calculated?

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a. Free cash flow = Cash flow from operating activities + Cash flow from investingactivities

 b. Free cash flow = Available cash flow – Dividends paidc. Free cash flow = Available cash flow + Cash flow from financing activitiesd. Free cash flow = Available cash flow – Cash flow from financing activities

ANSWER: BModerate

POINTS: 0 / 1REF:  page 516 

10. Which of the following ratios is the cash liquidity ratio?a. Operating cash flow/Average current assets

 b. Financing cash flow/Average current liabilitiesc. Financing cash flow/Average current assetsd. Operating cash flow/Average current liabilities

ANSWER: D

ModeratePOINTS: 0 / 1REF:  page 518 

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