Question 1

Which phrase below best describes the direct method for reporting operating cash flows?

Accepted Answer

A)  A method that incorporates financing and investing activities into cash flows from operations.
B)  A method employing accrual-based accounting to convert cash flows to GAAP Net Income.
C)  A summary of operating transactions resulting in either a debit or credit to cash.
D)  A series of adjustments to Net Income to arrive at operating cash flows.E) None of the above
F) B) and D)

Question 2

The approach to preparing the cash flow statement relies on the following rearrangement of the balance sheet equation:
Change in cash = Change in (Liabilities + Stockholders' Equity + Noncash Assets).

Accepted Answer

A) True 
 B)False

Question 3

When the indirect method is used,if a prepaid expense account increases during the accounting period,the change in the prepaid expense account is:

Accepted Answer

A)  added to the change in the cash account.
B)  added to net income.
C)  subtracted from net income.
D)  subtracted from the change in the cash account.E) None of the above
F) A) and D)

Exam 12: Statement of Cash Flows

Which phrase below best describes the direct method for reporting operating cash flows?

Correct Answer
verified

The approach to preparing the cash flow statement relies on the following rearrangement of the balance sheet equation: Change in cash = Change in (Liabilities + Stockholders' Equity + Noncash Assets).

Correct Answer
verified

When the indirect method is used,if a prepaid expense account increases during the accounting period,the change in the prepaid expense account is:

Correct Answer
verified

Exam 12: Statement of Cash Flows

Which phrase below best describes the direct method for reporting operating cash flows?

Correct AnswerverifiedShow Answer

The approach to preparing the cash flow statement relies on the following rearrangement of the balance sheet equation: Change in cash = Change in (Liabilities + Stockholders' Equity + Noncash Assets).

Correct AnswerverifiedShow Answer

When the indirect method is used,if a prepaid expense account increases during the accounting period,the change in the prepaid expense account is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified