Question

Question 1 1 pts There are three basic groups of activities on the Statement of Cash Flows. They are operating activities, investing activities, financing activities. direct activities, indirect activities, immaterial activities. asset activities, liability activities, stockholders' equity activities. income statement activities, balance sheet activities, contingent activities. Flag this Question

Question 2 1 pts The indirect method reports cash flows in the first basic group of activities by starting with total assets. total comprehensive income. net income. net sales. Flag this Question

Question 3 1 pts The ending cash on the Statement of Cash Flows equals the ending cash balance reported on the company income statement. the ending cash balance reported on the company balance sheet. the beginning cash balance reported on the company income statement. the beginning cash balance reported on the company balance sheet. Flag this Question

Question 4 1 pts When using the indirect method, any gain on the sale of a fixed asset (such as land) must be added back to the starting number in the first basic activity group. subtracted from the starting number in the first basic activity group. either added back to or subtracted from the starting number of the first basic activity group, depending on the circumstances surrounding the sale of the fixed asset. gain on the sale of a fixed asset is not considered when using the indirect method of calculating cash flows. Flag this Question

Question 5 1 pts The total cash flows for a company using the indirect method of calculating cash flows will be more than the cash flows calculated by using the direct method. will be less than the cash flows calculated by using the direct method. will be the same as the cash flows calculated by using the direct method. It is not possible to use both methods to calculate cash flows. That is, one method precludes use of the other.

Answer 1

1. The answer is - operating activities, investing activities, financing activities. Operating activities include cash activities related to net income. Investing activities include cash activities related to non-current assets and financing activities include cash activities related to noncurrent liabilities and owners’ equity.

2. The answer is net income. Net income is the starting point and non cash expenses are added back to net income.

3. The answer is the ending cash balance reported on the company balance sheet.

4. The answer is subtracted from the starting number in the first basic activity group. This is because such gains are deducted from net income in the operating activities section.

5. The answer is will be the same as the cash flows calculated by using the direct method. Both direct and indirect methods yield the same result regarding change in cash balance and ending cash balance.