Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Which of the following categories is not
used to classify cash flows in the cash flow statement?
a. | Managing activities | b. | Operating activities | c. | Investing
activities | d. | Financing
activities |
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2.
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Activities that involve providing and collecting
cash as a lender or as an owner of shares and acquiring and disposing of fixed assets are included in
which section of the cash flow statement?
a. | Operating activities | b. | Investing activities | c. | Financing
activities | d. | Managing
activities |
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3.
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Which of the following items will not appear in the
cash flow from operating activities section when using the direct method?
a. | Payments to employees | b. | Payments to suppliers | c. | Net
income | d. | Collections from customers
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4.
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Which of the following items is not
considered as cash or cash equivalent?
a. | Cash on hand | b. | Demand deposits | c. | Bank
borrowings | d. | Investments with a
maturity of two months from the date of acquisition.
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5.
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All of the following would be included in a
company’s operating activities except:
a. | Income tax payments | b. | Collections from customers | c. | Cash payments to suppliers | d. | Dividend payments
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6.
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Which of the following items is not a
non-cash item?
a. | Depreciation expense | b. | Amortization expense | c. | Reversal of
provision | d. | Income tax payment
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7.
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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?
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8.
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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. |
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9.
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How is free cash flow calculated?
a. | Free cash flow = Cash flow from operating activities +
Cash flow from investing activities | b. | Free cash flow =
Available cash flow – Dividends paid | c. | Free cash flow =
Available cash flow + Cash flow from financing activities | d. | Free cash flow = Available cash flow – Cash flow from financing
activities |
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10.
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Which of the following ratios is the cash liquidity
ratio?
a. | Operating cash flow/Average current
assets | b. | Financing cash flow/Average current
liabilities | c. | Financing cash
flow/Average current assets | d. | Operating cash
flow/Average current liabilities
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