CHAPTER16STATEMENTOFCASHFLOWSChapter16—StatementofCashFlowsTRUE/FALSE1.Thestatementofcashflowsisnotoneofthebasicfinancialstatements.ANS:FDIF:1OBJ:012.Cash,asthetermisusedforthestatementofcashflows,couldindicateeithercashorcashequivalents.ANS:TDIF:1OBJ:013.Thestatementofcashflowsisanoptionalfinancialstatement.ANS:FDIF:1OBJ:014.Thestatementofcashflowsshowstheeffectsoncashofacompany'soperating,investing,andfinancingactivities.ANS:TDIF:1OBJ:015.Thestatementofcashflowsreportsafirm'smajorsourcesofcashreceiptsandmajorusesofcashpaymentsforaperiod.ANS:TDIF:1OBJ:016.Cashflowsfromoperatingactivities,aspartofthestatementofcashflows,includecashtransactionsthatenterintothedeterminationofnetincome.ANS:TDIF:1OBJ:017.Toarriveatcashflowsfromoperations,itisnecessarytoconverttheincomestatementfromanaccrualbasistothecashbasisofaccounting.ANS:TDIF:2OBJ:018.Cashflowsfrominvestingactivities,aspartofthestatementofcashflows,includereceiptsfromthesaleofland.ANS:TDIF:2OBJ:019.Cashflowsfromfinancingactivities,aspartofthestatementofcashflows,includepaymentsfordividends.ANS:TDIF:2OBJ:0110.Cashflowsfrominvestingactivities,aspartofthestatementofcashflows,includepaymentsforthepurchaseoftreasurystock.ANS:FDIF:2OBJ:0111.Cashflowsfrominvestingactivities,aspartofthestatementofcashflows,includereceiptsfromtheissuanceofbondspayable.ANS:FDIF:2OBJ:0112.Therearetwoalternativestoreportingcashflowsfromoperatingactivitiesinthestatementofcashflows:(1)thedirectmethodand(2)theindirectmethod.ANS:TDIF:1OBJ:0113.Thedirectmethodofpreparingtheoperatingactivitiessectionofthestatementofcashflowsreportsmajorclassesofgrosscashreceiptsandgrosscashpayments.ANS:TDIF:1OBJ:0114.Underthedirectmethodofreportingcashflowsfromoperations,themajorsourceofcashiscashreceivedfromcustomers.ANS:TDIF:1OBJ:0115.Themaindisadvantageofthedirectmethodofreportingcashflowsfromoperatingactivitiesisthatthenecessarydataareoftencostlytoaccumulate.ANS:TDIF:2OBJ:0116.Amajordisadvantageoftheindirectmethodofreportingcashflowsfromoperatingactivitiesisthatthedifferencebetweenthenetamountofcashflowsfromoperatingactivitiesandnetincomeisnotemphasized.ANS:FDIF:2OBJ:0117.Cashoutflowsfromfinancingactivitiesincludethepaymentofcashdividends,theacquisitionoftreasurystock,andtherepaymentofamountsborrowed.ANS:TDIF:2OBJ:0118.Cashflowsfrominvestingactivities,aspartofthestatementofcashflows,includepaymentsfortheacquisitionoffixedassets.ANS:TDIF:2OBJ:0119.Theacquisitionoflandinexchangeforcommonstockisanexampleofnoncashinvestingandfinancingactivity.ANS:TDIF:2OBJ:0120.Ifabusinessissuedbondspayableinexchangeforland,thetransactionwouldbereportedinaseparatescheduleonthestatementofcashflows.ANS:TDIF:2OBJ:0121.Acashflowpershareamountshouldbereportedonthestatementofcashflows.ANS:FDIF:1OBJ:0122.Althoughthereisnoorderinwhichthenoncashbalancesheetaccountsmustbeanalyzedindeterminingdataforpreparingthestatementofcashflowsbytheindirectmethod,timecanbesavedandgreateraccuracycanbeachievedbyselectingtheaccountsinthereverseorderinwhichtheyappearonthebalancesheet.ANS:TDIF:1OBJ:0223.The2002editionofAccountingTrendsandTechniquesreportedthat90%ofthecompaniessurveyedusedtheindirectmethodtoreportchangesincashflowsfromoperations.ANS:FDIF:2OBJ:0224.Rarelywouldthecashflowsfromoperatingactivities,asreportedonthestatementofcashflows,bethesameasthenetincomereportedontheincomestatement.ANS:TDIF:2OBJ:0225....
