chapter 4 CFA questions with correct answers
Which of the following components of the cash flow statement may be prepared under the indirect method under both IFRS and U.S. GAAP? A. Operating. B. Investing. C. Financing. CORRECT ANSWER A. operating
Which components of the CF statement MUST be prepared under direct method? operating, investing, financing CORRECT ANSWER investing and financing
T or F regarding operating cash flows: The amount of operating cash flow is identical under both methods; only the presentation format of the operating cash flow section differs. CORRECT ANSWER true
The indirect format of the cash flow statement demonstrates that changes in _____________ accounts are an important factor in determining cash flows. CORRECT ANSWER balance sheet
Which of the following is an example of a financing activity on the cash flow statement under U.S. GAAP? A. Payment of dividends.
B. Receipt of dividends. C. Payment of interest CORRECT ANSWER A. payment of dividends
A conversion of a face value $1,000,000 convertible bond for $1,000,000 of common stock would most likely be: A. reported as a $1,000,000 financing cash outflow and inflow. B. reported as supplementary information to the cash flow statement. C. reported as a $1,000,000 financing cash outflow and a $1,000,000 investing cash inflow. CORRECT ANSWER B, non cash, if significant, are reported as supplementary info
Which of the following is most likely to appear in the operating section of a cash flow statement under the indirect method under U.S. GAAP? A. Net income. B. Cash paid for interest. C. Cash paid to suppliers. CORRECT ANSWER A. indirect method begins with NI and adjusts to arrive at operating CF
Red Road Company, a consulting company, reported total revenues of $100 million, total expenses of $80 million, and net income of $20 million in the most recent year. If accounts receivable increased by $10 million, how much cash did the company receive from customers? A. $110 million. B. $90 million. C. $30 million. CORRECT ANSWER B
Green Glory Corp., a garden supply wholesaler, reported cost of goods sold for the year of $80 million. Total assets increased by $55 million, including an increase of $5 million in inventory. Total liabilities increased by $45 million, including an increase of $2 million in accounts payable. How much cash did the company pay to its suppliers during the year? A. $90 million. B. $83 million. C. $77 million. CORRECT ANSWER B. 80 + 5 - 2
Which of the following components of the cash flow statement may be prepared under the indirect method under both IFRS and U.S. GAAP? A. Operating. B. Investing. C. Financing. CORRECT ANSWER A. operating
Which components of the CF statement MUST be prepared under direct method? operating, investing, financing CORRECT ANSWER investing and financing
T or F regarding operating cash flows: The amount of operating cash flow is identical under both methods; only the presentation format of the operating cash flow section differs. CORRECT ANSWER true
The indirect format of the cash flow statement demonstrates that changes in _____________ accounts are an important factor in determining cash flows. CORRECT ANSWER balance sheet
Which of the following is an example of a financing activity on the cash flow statement under U.S. GAAP? A. Payment of dividends.
B. Receipt of dividends. C. Payment of interest CORRECT ANSWER A. payment of dividends
A conversion of a face value $1,000,000 convertible bond for $1,000,000 of common stock would most likely be: A. reported as a $1,000,000 financing cash outflow and inflow. B. reported as supplementary information to the cash flow statement. C. reported as a $1,000,000 financing cash outflow and a $1,000,000 investing cash inflow. CORRECT ANSWER B, non cash, if significant, are reported as supplementary info
Which of the following is most likely to appear in the operating section of a cash flow statement under the indirect method under U.S. GAAP? A. Net income. B. Cash paid for interest. C. Cash paid to suppliers. CORRECT ANSWER A. indirect method begins with NI and adjusts to arrive at operating CF
Red Road Company, a consulting company, reported total revenues of $100 million, total expenses of $80 million, and net income of $20 million in the most recent year. If accounts receivable increased by $10 million, how much cash did the company receive from customers? A. $110 million. B. $90 million. C. $30 million. CORRECT ANSWER B
Green Glory Corp., a garden supply wholesaler, reported cost of goods sold for the year of $80 million. Total assets increased by $55 million, including an increase of $5 million in inventory. Total liabilities increased by $45 million, including an increase of $2 million in accounts payable. How much cash did the company pay to its suppliers during the year? A. $90 million. B. $83 million. C. $77 million. CORRECT ANSWER B. 80 + 5 - 2
