Question 1

Which of the following is shown in the "adjustments in non-cash working capital accounts"?

Accepted Answer

Adjustments in non-cash working capital accounts typically involve changes in current assets and current liabilities, such as trade and other payables, but not depreciation, long-term debt, or retained earnings, which are related to non-current items or income statement activities.

Question 2

Which accounts show the cash flow changes in the "adjustments in non-cash working capital accounts"?

Accepted Answer

Adjustments in non-cash working capital accounts refer to changes in current assets and liabilities other than cash, such as accounts receivable, inventory, and accounts payable, which affect a company's cash flow but do not involve actual cash transactions.

Question 3

What does cash from investing activities include?

Accepted Answer

Cash from investing activities includes cash flows related to the acquisition and disposal of long-term assets and other investments, not included in cash equivalents. This typically involves capital assets items, such as property, plant, and equipment, making option D correct.

Question 4

Which of the following is shown as a financing activity in the statement of cash flows?

Accepted Answer

The answer of Which of the following is shown as...

Question 5

Profit before taxes $46,000
Net profit for the year 34,000
Depreciation 40,000
Adjustments in non-cash working capital 17,000 outflow
Accounts
Using the information above, what was the change in cash flow under operating activities?

Accepted Answer

The change in cash flow under operating activities can be calculated by starting with the net profit for the year and then adding back non-cash expenses (depreciation) and adjusting for changes in working capital. Here, it's $34,000 (net profit) + $40,000 (depreciation) - $17,000 (outflow from working capital adjustments) = $57,000 increase.

Question 6

Which of the following is shown as an investing activity in the statement of cash flows?

Accepted Answer

The answer of Which of the following is shown as...

Question 7

Which of the following is shown in the statement of cash flows?

Accepted Answer

Dividends paid are typically classified under financing activities, not operating activities. Prepaid expenses are related to operating activities, not financing activities. The purchase of non-current assets is classified under investing activities, not operating activities. Share capital transactions, such as issuing new shares or repurchasing existing ones, are indeed part of the financing activities in the statement of cash flows.

Question 8

Which of the following is shown as an operating activity in the statement of cash flows?

Accepted Answer

Depreciation is considered an operating activity because it is a non-cash expense related to the operations of the business. It is added back to net income in the cash flow from operating activities section of the statement of cash flows.

Question 9

Which of the following situations affects the statement of cash flows?

Accepted Answer

Decreases in long-term borrowings represent a repayment of debt, which is an outflow of cash and is reported in the financing activities section of the statement of cash flows.

Question 10

Which of the following is a non-cash working capital account?

Accepted Answer

Trade and other payables are a non-cash working capital account because they represent amounts that a company owes to its suppliers or creditors, which do not require an immediate cash outlay until the payment is due.

Question 11

Which of the following is an operating activity?

Accepted Answer

Short-term borrowings are considered an operating activity as they are typically used to meet the day-to-day operational needs of a business.

Question 12

Which of the following scenarios represents a cash inflow?

Accepted Answer

The answer of Which of the following scenarios represents a...

Question 13

Which of the following is a cash inflow?

Accepted Answer

A decrease in a non-cash asset account (like inventory or accounts receivable) typically indicates that assets are being converted into cash, thus representing a cash inflow.

Question 14

Which of the following scenarios represents a cash outflow?

Accepted Answer

When the mortgage payable account decreases by $30,000, it indicates that a payment has been made towards the mortgage, which is a cash outflow.

Question 15

How is the purchase of a new machine treated?

Accepted Answer

The answer of How is the purchase of a new...

Question 16

Which of the following is one step in calculating cash provided from operations?

Accepted Answer

Adding depreciation to net profit for the year is a step in calculating cash provided from operations because depreciation is a non-cash expense that reduces net profit but does not affect cash flow, so it is added back to net profit in the cash flow statement.

Question 17

If depreciation expense is $38,000, how will it be shown on the statement of cash flows?

Accepted Answer

Depreciation expense is a non-cash charge that reduces net income. On the statement of cash flows, it is added back to net income in the operating activities section because it does not involve an actual outflow of cash, effectively increasing cash flow by the amount of the depreciation expense.

Question 18

Which of the following is considered a cash outflow?

Accepted Answer

An increase in inventory is considered a cash outflow because it represents money spent by the company to purchase more goods or materials, thus reducing the company's cash balance.

Question 19

Which of the following is shown on the statement of cash flows?

Accepted Answer

Investing activities are shown on the statement of cash flows, as they detail the cash inflows and outflows related to investments in assets and securities, which is a key component of understanding a company's cash position.

Question 20

Which of the following is included in non-cash working capital accounts?

Accepted Answer

Non-cash working capital accounts include current assets and liabilities involved in the day-to-day operations of a business, such as inventories, accounts receivable, and accounts payable. Inventories are a key component of non-cash working capital as they represent goods that are held for sale in the ordinary course of business.

Quiz 3: Statement of Cash Flows