Reference no: EM132531049

Problem 1: DB 2 Corp, issued debt of $500,000 during the current year. Which section of the cash flow statement would this impact ?

a)It would not impact the cash flow statement

b)Financing

c)Investing

d)Operating

Problem 2: DB 2 corp also had depreciation expense of $1,200,000 this period. Which section of the indirect cash flow statement would this impact?

a) Investing

b) It would not impact the cash flow statement.

c) Operating

d) Financing

Problem 3: DB 2 corp. purchased a large machine for $80,000. Which section of the cash flow would this impact?

a) Financing

b) It would not impact the cash flow statement.

c) Operating

d) Investing

Problem 4: DB 2 corp had $40,000 in credit sales during the year that were not paid by the end of the period. How would this impact cash from operations?

Problem 5: Shailly is reviewing a cash flow statement to determine whether a company appears to be able to fund itself in the long run. Which category is more important to her?

a) Financing

b) Investing

c) Operations

Problem 6: Olga's boss is really excited. His company is doing an acquisition and the new company will add $2,000,000 in depreciation. He is looking at this year's cash flow statement and trying to figure out how much more cash they would have had if they already had the $2,000,000 in depreciation. He has asked Olga to calculate how much cash from operations would have increased.

Problem 7: Which type of cash flow statement is normally provided by public companies?

a) Indirect

b) They are about equal in use.

c) Direct

Problem 8: Spencer is reviewing his company's accounts so he can prepare their indirect cash flow statement. They use the changes in working capital approach. He noticed that accounts receivable increased during the period. All transactions involved working capital items. This would be listed as:

a) It would not impact the cash flow statement

b) A positive reconciling item

c) A negative reconciling item

Problem 9: Spencer also noticed an increase in accounts payable. That account also only had transactions that involved working capital items. It would be listed as,

a) It would not impact the cash flow statement

b) A positive reconciling item

c) A negative reconciling item

Problem 10: Francesco was given a cash flow statement to analyze, but some of the accounts were smudged and could not be read. He could see that total change in cash was $12,000, cash from operations was positive $450,000 and cash from investing was negative $490,000. How much was cash from financing?

Problem 11: Angela was given a direct cash flow statement prepared by a small company that her boss was considering acquiring. The cash from operations was $470,000, cash used in investing was $330,000 and cash from financing showed a use of $100,000. In addition, the balance sheet showed the accounts receivable had increased by $70,000, the accounts payable had decreased by $10,000 and inventory had increased by $15,000. Net income was $510,000. Her company uses the indirect method of cash flow statements, so her boss wanted to know how much cash from operations would be using that format.