Cash Flow Statement Quiz
20 multiple-choice questions with answers and explanations · 7 easy, 10 medium, 3 hard
Operating, investing and financing activities: classifying cash flows, non-cash transactions, free cash flow, and why profit is not the same as cash.
- 1Statement of Cash Flows: The Three ActivitiesThe statement of cash flows groups cash receipts and payments into three sections. They are:easy
- 2Cash Flow Statement: What Is Its Purpose?The main purpose of the statement of cash flows is:easy
- 3Cash Flow Statement: Reconciling Opening and Closing CashOpening cash is $14,000. Net cash from operating activities is $22,000, net cash used in investing activities is $30,000 and net cash from financing activities is $9,000. What is closing cash?easy
- 4Why Is Depreciation Added Back in the Cash Flow Statement?Under the indirect method, depreciation is added back to profit because:medium
- 5Profit vs Cash: Why a Profitable Business Can Run Out of CashA business reports a healthy profit but its bank balance has fallen sharply. The most likely explanation is that:medium
- 6Cash Flow from Investing Activities: Computing the Net FigureIn the year a company bought equipment for $50,000, sold old equipment for $12,000, bought a long-term investment for $8,000 and borrowed $20,000 from a bank. What is net cash from investing activities?medium
- 7Cash Flow from Financing Activities: Computing the Net FigureIn the year a company issued shares for $30,000, repaid $18,000 of a loan, paid dividends of $5,000 (classified as financing) and bought machinery for $10,000. What is net cash from financing activities?medium
- 8Direct vs Indirect Method of Cash Flow: What Actually Differs?The direct and indirect methods of preparing a statement of cash flows differ in:medium
- 9Free Cash Flow: The Basic CalculationA company has net cash from operating activities of $80,000 and capital expenditure of $35,000. Using the basic definition, what is its free cash flow?medium
- 10Cash Paid for Equipment: Reconstructing It from the Asset AccountProperty, plant and equipment at cost was $200,000 at the start of the year and $260,000 at the end. During the year an asset that had cost $30,000 was sold. How much was paid for additions?hard
- 11Proceeds from a Disposal: Working Back from the Gain on SaleA machine that cost $40,000 and had accumulated depreciation of $28,000 was sold at a gain of $3,000. What cash proceeds are reported under investing activities?hard
- 12Identifying a Non-Cash Investing or Financing ActivityWhich of the following is a NON-CASH investing or financing activity, disclosed separately rather than within the body of the statement of cash flows?easy
- 13Cash Flow Classification: Cash Received from CustomersCash received from customers for goods sold is classified in the statement of cash flows as:easy
- 14Cash Flow Classification: Issuing Shares for CashA company issues new ordinary shares for cash. In the statement of cash flows this is:easy
- 15Cash Flow Classification: Repaying a Bank LoanThe repayment of the principal of a long-term bank loan is classified as:easy
- 16IAS 7 — Non-Cash Investing and FinancingA company acquires a building by issuing shares to the seller. In the statement of cash flows this transaction is:medium
- 17Cash Flow Classification: Proceeds from Selling EquipmentCash received from selling a used machine is reported in the statement of cash flows as:medium
- 18Cash Flow Classification: Which Is an Operating Cash Flow?Which of the following is an OPERATING cash flow?medium
- 19Cash Flow Classification: Income Taxes PaidIncome taxes paid are normally classified in the statement of cash flows as:medium
- 20Converting Bonds Into SharesA company converts $80,000 of bonds payable directly into ordinary shares (no cash changes hands). In the statement of cash flows, this transaction is:hard