Financial Accounting 4th Edition By David Spiceland – Test Bank

Chapter 11 Statement of Cash Flows Answer Key

True / False Questions

1. A statement of cash flows provides a summary of cash inflows and cash outflows during the reporting period.

TRUE

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

2. The three primary categories of cash flows are cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

TRUE

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

3. Financing activities include cash receipts and cash payments for transactions relating to revenue and expense activities.

FALSE
Operating activities include cash receipts and cash payments for transactions relating to revenue and expense activities.

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

4. Investing activities include cash transactions involving the purchase and sale of long-term assets and current investments.

TRUE

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

5. Operating activities are both inflows and outflows of cash resulting from the external financing of a business.

FALSE
Financing activities are both inflows and outflows of cash resulting from the external financing of a business.

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

6. We report interest and dividends received from investments with investing activities.

FALSE
We report interest and dividends received from investments with operating activities.

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

7. We report interest paid on bonds or notes payable with operating activities rather than financing activities.

TRUE

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

8. We record dividends received as a financing activity.

FALSE
We record dividends received as an operating activity.

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

9. We record dividends paid as a financing activity.

TRUE

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions

10. Transactions that do not increase or decrease cash, but that result in significant investing and financing activities, are reported either directly after the cash flow statement or in a separate note to the financial statements as noncash activities.

TRUE

AACSB: Reflective Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Topic: Classification of Transactions