Financial Accounting 5th Edition By David Spiceland – Test Bank

Financial Accounting, 5e (Spiceland)
Chapter 11 Statement of Cash Flows

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

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

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.

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

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

Answer: FALSE
Explanation: Operating activities include cash receipts and cash payments for transactions relating to revenue and expense activities.
Difficulty: 1 Easy
Topic: Classification of Transactions
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: FN Reporting/Keyboard Navigation

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

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

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

Answer: FALSE
Explanation: Financing activities are both inflows and outflows of cash resulting from the external financing of a business.
Difficulty: 1 Easy
Topic: Classification of Transactions
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Bloom’s: Remember
AACSB: Reflective Thinking
AICPA/Accessibility: FN Reporting/Keyboard Navigation

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

Answer: FALSE
Explanation: We report interest and dividends received from investments with operating activities.
Difficulty: 2 Medium
Topic: Classification of Transactions
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Bloom’s: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: FN Reporting/Keyboard Navigation

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

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

8) We record dividends received as a financing activity.

Answer: FALSE
Explanation: We record dividends received as an operating activity.
Difficulty: 2 Medium
Topic: Classification of Transactions
Learning Objective: 11-01 Classify cash transactions as operating, investing, or financing activities.
Bloom’s: Understand
AACSB: Reflective Thinking
AICPA/Accessibility: FN Reporting/Keyboard Navigation

9) We record dividends paid as a financing activity.

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

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.

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