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1.Which of the following activities will not impact the operating section of the Statement of...

Question:

1.Which of the following activities will not impact the operating section of the Statement of Cash Flows?

a.Receipt of cash from a customer paying a bill

b. Payment of interest expense on outstanding bonds

c. Payment of cash to a vendor

d.Payment of dividends to stockholders

e. Neither "Payment of interest expense on outstanding bonds" or "Payment of dividends to stockholders" will impact the operating section.

2. Changes to net working capital are categorized as:

a. cash flow from financing activities.

b. cash flow from operating activities.

c. cash flow from investment activities.

d. None of these choices are correct.

3. Dividend payments are categorized as:

a.cash flow from operating activities.

b. cash flow from investment activities.

c. cash flow from financing activities.

d. All of these choices are correct.

4. The statement of cash flow is divided into the following sections:

a. operating activities, financing activities, and equity activities.

b. operating activities, financing activities; and investing activities.

c. operating activities and investing activities.

d. operating activities; investing activities, and equity activities.

5. A use of cash would be generated by which of the following?

a. An increase in accounts receivable

b. An increase in accrued expenses

c. A decrease in inventory

d. An increase in accounts payable

Working Capital:

Working capital is the difference between current assets and current liabilities, both of which can be found on the balance sheet. A positive working capital balance implies the company has more current assets than liabilities, so it can fund itself adequately without the need for outside funding. A negative working capital implies the company has more current liabilities than current assets, so it may need help funding itself externally. That said, accounts payable and accounts receivable represent non-cash accounts. So an increase in these accounts represents an extension or contraction of cash flow, respectively.

Answer and Explanation:

1.Which of the following activities will not impact the operating section of the Statement of Cash Flows?

a.Receipt of cash from a customer paying a bill

b. Payment of interest expense on outstanding bonds

c. Payment of cash to a vendor

d.Payment of dividends to stockholders. The payment of dividends is considered a financing activity.

e. Neither "Payment of interest expense on outstanding bonds" or "Payment of dividends to stockholders" will impact the operating section.

2. Changes to net working capital are categorized as:

a. cash flow from financing activities.

b. cash flow from operating activities. Changes to working capital are included in the operating section of the cash flow statement.

c. cash flow from investment activities.

d. None of these choices are correct.

3. Dividend payments are categorized as:

a.cash flow from operating activities.

b. cash flow from investment activities.

c. cash flow from financing activities. Dividend payments are made to the shareholders that helped to finance the organization.

d. All of these choices are correct.

4. The statement of cash flow is divided into the following sections:

a. operating activities, financing activities, and equity activities.

b. operating activities, financing activities; and investing activities. The statement of cash flow is divided into operating activities, financing activities and investing activities.

c. operating activities and investing activities.

d. operating activities; investing activities, and equity activities.

5. A use of cash would be generated by which of the following?

a. An increase in accounts receivable Accounts receivable are sales made on credit. So when they go up, it represents a use of cash.

b. An increase in accrued expenses

c. A decrease in inventory

d. An increase in accounts payable


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Using the Statement of Cash Flows for Decision Making

from Accounting 101: Financial Accounting

Chapter 12 / Lesson 5
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