FAR — Financial Accounting & Reporting — Quiz 72

Questions in this quiz (10)

1. Which item appears at the end of the statement of cash flows?

   • Net income
   • Ending cash balance
   • Total liabilities
   • Retained earnings

2. Which relationship must be true for cash balances?

   • Ending cash equals net income
   • Ending cash on cash flow statement equals balance sheet cash
   • Cash equals liabilities
   • Cash equals equity

3. Which of the following best defines liquidity?

   • Ability to generate profits
   • Ability to meet short-term obligations
   • Ability to repay long-term debt
   • Ability to expand operations

4. Why is the statement of cash flows important?

   • Determines inventory values
   • Shows how cash is generated and used
   • Calculates net income
   • Eliminates liabilities

5. Which of the following best describes cash equivalents?

   • Long-term investments
   • Short-term highly liquid investments
   • Inventory items
   • Accounts receivable

6. Which of the following is considered a cash equivalent?

   • Short-term Treasury bills
   • Long-term bonds
   • Equipment
   • Inventory

7. What is the main purpose of the statement of cash flows?

   • Report assets
   • Explain cash changes during a period
   • Report liabilities
   • Report equity

8. Which of the following is an operating cash outflow?

   • Paying suppliers
   • Purchasing equipment
   • Issuing stock
   • Selling equipment

9. Which of the following is an investing cash outflow?

   • Paying salaries
   • Purchasing equipment
   • Paying dividends
   • Paying rent

10. Which of the following is a financing cash inflow?

    • Cash from customers
    • Cash from issuing stock
    • Cash from selling inventory
    • Cash from interest income