1.

All of the following items must be separately disclosed in the Statement of Cash Flows, except:
a. dividends received.
b. auditors remuneration paid.
c. income taxes paid.
d. dividends paid.
2. In a statement of cash flows, proceeds from the sale of a company's own bonds or mortgages should be
classified as cash inflows from
a. leveraging activities.
b. investing activities.
c. financing activities.
d. operating activities.
3. In a statement of cash flows, proceeds from issuing equity instruments shall be classified as cash inflows from
a. Financing activities
b. Operating activities
c. Investing activities
d. Lending activities
4. If a company issues both a balance sheet and an income statement with comparative figures from last year, a
statement of cash flows:
a. should be issued for the current year only.
b. should be issued for each period for which an income statement is presented.
c. should not be issued.
d. is no longer necessary; but may be used at the company’s option.
5. Making and collecting loans and disposing of property, plant, and equipment are
a. financing activities.
b. operating activities.
c. liquidity activities.
d. investing activities.
6. Cash paid to purchase long-term investments would be reported in the statement of cash flows in
a. a separate schedule
b. the cash flows from financing activities section
c. the cash flows from investing activities section
d. the cash flows from operating activities section
7. Which of the following is not one of the four basic financial statements?
a. statement of changes in financial position
b. income statement
c. balance sheet
d. statement of cash flows
8. Which of the following would be an addition to net income when using the indirect method to derive net cash
flows from operating activities?
a. Loss on sale of machinery and equipment
b. Decrease in accounts payable
c. Payment of cash dividends
d. Increase in merchandise inventory
9. Noncash investing and financing activities, if material, are
a. disclosed in a note or separate schedule accompanying the statement of cash flows.
b. reported in the statement of cash flows only if the indirect method is used.
c. reported in the statement of cash flows under the "all-financial-resources concept."
 d. not reported or disclosed because they have no impact on cash.
10. Preparing the statement of cash flows involves all of the following except determining the
a. cash provided by or used in investing and financing activities.
b. change in cash during the period.
c. cash provided by operations.
d. cash collections from customers during the period.
11. Proceeds from the sale of investments in common stock accounted for by the equity method would be
classified into which of the following sections of the statement of cash flows?
a. Financing
b. Investing
c. Operating
d. Non-cash item
12. The statement of cash flows helps meet one of the objectives of financial reporting, which is to assess all of
the following except the
a. uncertainty of future cash flows.
b. timing of future cash flows.
c. amount of future cash flows.
d. source of future cash flows.
13. A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash
flows as a(n):
a. noncash exchange.
b. investing activity.
c. adjustment to reconcile net income to cash from operating activities.
d. operating activity.
14. A corporation uses the Indirect Statement of Cash Flows. A fixed asset has been sold for P25,000 representing
a gain of P2,750. The value in the Operations section regarding this event would be:
a. Some other value.
b. 27,750
c. 25,000
d. 2,750
15. The statement of cash flows is not used to:
a. check the accuracy of past assessments of future cash flows.
b. help predict future cash flows.
c. assess the ability of an entity to generate cash.
d. indicate significant changes in asset, liability and equity accounts for the year.
16. In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash
outflows for
a. investing activities.
b. operating activities.
c. borrowing activities.
d. financing activities.
17. According to Statement of Cash Flows, which of the following items does not fall within the definition of cash?
a. Deposits on the short-term money market with a term of less than 3 months.
b. Bank notes and coins.
c. Accounts receivable.
d. Non-bank bills that are readily convertible to cash.
18. The statement of cash flows provides answers to all of the following questions except
 a. what was the change in the cash balance during the period?
b. what was the cash used for during the period?
c. where did the cash come from during the period?
d. what is the impact of inflation on the cash balance at the end of the year?
19. Which of the following below increases cash?
a. the declaration of a cash dividend
b. acquisition of treasury stock
c. depreciation expense
d. borrowing money by issuing a six-month note
20. Which of the following could lead to a cash flow problem?
a. Slow-moving inventory, increasing notes payable, easing of credit of suppliers
b. Obsolete inventory, accounts receivable of inferior quality, easing of credit by suppliers
c. Obsolete inventory, increasing notes payable, easing of credit of suppliers
d. Obsolete inventory, improved quality of accounts receivable, easing of credit by suppliers
21. Which of the following items is classified as a financing activity in the Statement of Cash Flows?
a. Cash received from accounts receivable.
b. Impairment losses.
c. Cash payment to purchase debentures of another entity.
d. Cash payment on redemption of the company’s debentures.
22. The amortization of patents should be presented in a statement of cash flows prepared using the indirect
method as a(n)
a. addition to net income in the adjustments to reconcile net income to cash from operating activities.
b. outflow of cash.
c. deduction from net income in the adjustments to reconcile net income to cash from operating
activities.
d. inflow and outflow of cash.
23. Items classified as financing activities on an entity’s Statement of Cash Flows are usually associated with:
a. purchase of shares by the entity.
b. movements in non-current liabilities and equity.
c. sales of goods and services by the entity.
d. disposal of non-current assets.
24. Which of the following need not be disclosed in a statement of cash flows as a noncash exchange?
a. Dividend paid in capital stock of the company (stock dividend).
b. Retirement of a bond issue through the issuance of another bond issue
c. Acquisition of fixed assets in exchange for capital stock
d. Conversion of convertible debt to capital stock