81
The issuance of common stock for cash is classified under:
A.
B.
C.
D.
Answer & Solution
Issuing stock generates cash inflows under Financing Activities, as it affects the company’s capital structure.
82
The purchase of a new building for cash will be reported under:
A.
B.
C.
D.
Answer & Solution
Buying or selling fixed assets (like a building) is recorded under Investing Activities.
83
Under the indirect method, net income is adjusted for:
A.
B.
C.
D.
Answer & Solution
In the Indirect Method, net income is adjusted for non-cash expenses (like depreciation) and changes in working capital.
84
Depreciation expense is added back to net income in the Cash Flow Statement because:
A.
B.
C.
D.
Answer & Solution
Depreciation is a non-cash expense, so it is added back to net income in the Indirect Method.
85
If a company reports a net income of $50,000 and depreciation expense of $5,000, what is the cash flow from operations (irrespective of other adjustments)?
A.
B.
C.
D.
Answer & Solution
Since depreciation is non-cash, it is added back to
net income:
$50,000 + $5,000 = $55,000
86
An increase in accounts receivable will:
A.
B.
C.
D.
Answer & Solution
An increase in accounts receivable means the company has made more credit sales, reducing available cash.
87
A positive cash flow from operating activities indicates:
A.
B.
C.
D.
Answer & Solution
A positive cash flow from operations shows that a company is generating sufficient cash from its core business.
88
The closing cash balance reported in the Cash Flow Statement should match the:
A.
B.
C.
D.
Answer & Solution
The closing cash balance in the Cash Flow Statement should equal the cash balance reported in the Balance Sheet.
89
A Bank Reconciliation Statement is prepared to:
A.
B.
C.
D.
Answer & Solution
A Bank Reconciliation Statement is prepared to reconcile the cash book balance with the bank statement balance, ensuring both are aligned.
90
What would cause a difference between the cash book and the bank statement?
A.
B.
C.
D.
Answer & Solution
All of the above
