FINANCE 104Financial Reporting and

Analysis

1. The primary purpose of the statement of cash flows isA. To provide relevant information about

cash receipts and cash payments of an entity during the period

B. To help investors, creditors and other users to assess the entity’s ability to generate positive future net cash flows.

C. To disclose separately non-cash investing and financing transactions

D. To assess the ability of the company to pay dividends to shareholders

2. An entity shall prepare a statement of cash flows asA. Supplementary financial statementsB. Notes to financial statementC. Supporting schedule for the amount appearing as cash and cash

equivalentD. Integral part of the entity’s basic

financial statement.

3. Cash receipts from fees, royalties, commissions and other revenues areA. Cash outflows from operating activitiesB. Cash inflows from operating activitiesC. Cash inflows from investing activitiesD. Cash outflows from financing activities

4. In a statement of cash flows, dividend payments to owners shall be classified as A. Cash outflow from investing activitiesB. Cash inflow from investing activitiesC. Cash inflow from financing activitiesD. Cash outflow from financing activities

5. An entity shall report cash flows from operating activities usingA. Direct methodB. Indirect methodC. Either A or BD. Neither A nor B

6. An entity shall report separately cash flows arising from investing and financing activities usingA. Direct methodB. Indirect methodC. Either A or BD. Neither A nor B

7. An entity acquired a building , paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance. In a statement of cash flows, what amount is included in investing activities for the transaction? A. Cash payment. B. Acquisition price C. Zero D. Mortgage amount

8. Which of the following is required to be disclosed only in the notes when preparing cash flow statement?

I. Conversion of long-term debt to ordinary shares

II. Conversion of preference share to ordinary sharesA. I onlyB. II onlyC. Both I and IID. Neither 1 nor II

9. In a statement of cash flows using indirect method approach for operating activities, an increase in inventory is presented asA. Outflow of cashB. Inflow and outflow of cashC. Addition to net incomeD. Deduction from net income

10. Which of the following is not added to net income as an adjustment to reconcile net income to cash flow from operating activities in the statement of cash flows?A. Increase in an accrued liabilityB. Amortization of discount on bonds

payableC. Loss on sale of non-operating assetD. Increase in deferred tax asset

11. Oakwood Company provided the following data for the current yearCash balance, Jan 1 1,300,000Cash flow from financing activities 1,000,000Total equity, Dec 31 2,300,000Cash flow from operating activities 400,000Cash flow from investing activities (1,500,000)total equity, Jan 1 2,000,000

What is the cash balance as at the end of the current year?A. 1,200,000 C. 1,400,000B. 1,600,000 D. 1,700,000

12. The following information is available for Santana Company for the current year

Dec 31 Jan 1Cash 1,500,000 1,000,000Retained earnings 7,000,000 5,400,000Cash flows from operating activities ?Cash flows from investing activities (4,800,000)Cash flows from financing activities 1,800,000Dividends declared and paid 2,000,000Net income 3,600,000

How much was the cash flow from operating activities?A. 3,500,000B. 2,500,000C. 4,500,000D. 3,600,000

13. The net income for the current year for Roger Company was P3,520,000. Additional data are as follows:Purchase of plant asset 2,800,000Depreciation of plant asset 1,480,000Dividends declared 970,000Net decrease in noncash current asset 290,000Loss on sale of equipment 130,000What is the net cash provided by operating activities in the statement of cash flows for the current year using the indirect methodA. 5,420,000B. 5,130,000C. 7,250,000D. 5,290,000

14. Bumper Company’s statement of cash flows for the current year shows cash flow from operating activities of P1,840,000. The following items also appear on the statement of financial position and income statement:Depreciation expense 400,000Account receivable increase 120,000Inventory increase 280,000Accounts receivable decrease 80,000What is the net income for the current year?A. 1,360,000B. 2,320,000C. 1,440,000D. 1,840,000

15. Star company provided the following data for the preparation of the statement for cash flows for the current year using direct method:Cash balance-beginning 1,500,000Cash paid to purchase inventory 7,800,000Cash received from sale ofbuilding 5,600,000Cash paid for interest 450,000Cash paid to repay a loan 1,000,000Cash collected from customers 10,000,000Cash received from issuance of ordinary shares 1,200,000Cash paid for dividends 780,000Cash paid for income taxes 1,320,000Cash paid to purchase machinery 1,950,000What is the net cash flow from operating activities?A. 1,750,000 C. 880,000B. 970,000 D. 430,000

16. Kings Company provided the following account balances for the preparation of statement of cash flows for the current year:

Jan 1 Dec 31Accounts receivable 115,000 145,000Allowance for bad debts 4,000 5,000Prepaid rent expense 62,000 41,000Accounts payable 97,000 112,000Kings’ net income for the year was 750,000. What is the net cash provided by operating activities for the current year?A. 727,000 C. 755,000B. 743,000 D. 757,000

17. Bumper Company’s statement of cash flows for the current year shows cash flow from operations of P1,840,000. The following items also appear on the statement of financial position and income statement:Depreciation expense 400,000Accounts receivable increase 120,000Inventory decrease 280,000Accounts payable decrease 80,000What is the net income for the current year?A. 1,360,000B. 2,320,000C. 1,440,000D. 1,840,000

18. The transactions of Koll Company for the current year included the following:Cash borrowed from the bank 5,500,000Sale of investment securities 5,000,000Dividends paid 6,000,000Issuance of ordinary shares for cash 2,500,000Purchase of patent for cash1,250,000Payment of bank loan 1,500,000Customers deposits 200,000Issuance of bonds payable for cash 3,000,000What is the net cash flow from financing activities? A. 5,000,000 B. 3,500,000 C. 4,500,000 D. 5,500,000What is the net cash flow from investing activities? A. 3,750,000 B. 6,750,000 C. 1,750,000 D. 500,000