from operating activities.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-08 Prepare a statement of cash flows.
Chow Company earned $1,500 of cash revenue, paid $1,200 for cash expenses, and paid a $200 cash dividend to its stockholders. Which of the following
statements is true?
The net cash inflow from operating activities was $100.
The net cash outflow for investing activities was $200.
The net cash inflow from operating activities was $300.
The net cash outflow for investing activities was $100.
Cash revenue and cash expenses are operating activities. Paying dividends is a financing activity. $1,500 revenue − $1,200 expense = $300 cash inflow from
operating activities.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-08 Prepare a statement of cash flows.
68.
Award: 1.00 point
69.
Award: 1.00 point
Yi Company provided services to a customer for $5,500 cash. As a result of this event:
total assets increased and total stockholders' equity decreased.
total assets were unchanged and cash flows from operating activities increased.
liabilities decreased and net income increased.
total assets increased and net income increased.
Providing services to a customer for cash increases assets and stockholders’ equity on the balance sheet. It also increases revenue, and therefore, net income
on the income statement, and increases cash from operating activities on the statement of cash flows.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-04 Show how business events affect the
accounting equation.
During Year 2, Chico Company earned $2,600 of cash revenue, paid $1,150 of cash expenses, and paid a $650 cash dividend to its stockholders. Based on this
information alone, which of the following statements is not true?
Net income amounted to $1,450.
Total assets increased by $800.
Cash inflow from operating activities was $1,450.
Cash outflow from financing activities was $800.
Cash from operating activities increased by $1,450 (or ($2,600 − $1,150). Revenue of $2,600 minus Expenses of $1,150 = Net income of = $1,450). Total assets
increased by $800 (or $2,600 − $1,150 − $650). Cash from financing activities decreased by $650.
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Learning Objective: 01-08 Prepare a statement of cash flows.
Difficulty: 3 Hard Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
70.
Award: 1.00 point
71.
Award: 1.00 point
72.
Award: 1.00 point
During Year 2, Chico Company earned $1,950 of cash revenue, paid $1,600 of cash expenses, and paid a $150 cash dividend to its stockholders. Based on this
information alone, which of the following statements is not true?
Net income amounted to $350.
Total assets increased by $200.
Cash inflow from operating activities was $350.
Cash outflow from financing activities was $200.
Cash from operating activities increased by $350 (or $1,950 − $1,600). Revenue of $1,950 minus Expenses of $1,600 = Net income of = $350. Total assets
increased by $200 (or $1,950 − $1,600 − $150). Cash from financing activities decreased by $150.
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Learning Objective: 01-08 Prepare a statement of cash flows.
Difficulty: 3 Hard Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
Which of the following items would appear in the financing activities section of the statement of cash flows?
Cash outflow for the purchase of land.
Cash inflow from sales revenue
Cash inflow from issuance of common stock
Cash outflow for the payment of accounts payable
Financing activities include obtaining cash (inflow) from owners or paying cash (outflow) to owners (dividends). A cash inflow from issuing common stock is
classified as a financing activity.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-08 Prepare a statement of cash flows.
Glavine Company repaid a bank loan with cash. How should the cash flow from this event be shown on the horizontal financial statements model?
As an operating activity that decreases cash, decreases stockholders' equity, and decreases net income.