AC13 Pre-Class Quiz

Which of the following transactions are non-cash in nature (i.e. the transactions do not involve any cash flow)? You may choose more than one option.

• Depreciation expense

• Cash sales

• Credit sales

• Credit purchase

Cash collection from customers results in ______

• Cash inflow

• Cash outflow

• No cashflow

Payment of rental expense results in _____

• Cash inflow

• Cash outflow

• No cashflow

The purpose of the Statement of Cash Flows is to provide information on _____. You may choose more than one option.

• how a company obtains its cash

• where a company spends its cash

• which commercial bank does the company obtain its loan from

• why there is a change in the cash balance from the previous year end to the current year end

Cash paid to suppliers for the purchase of inventory is classified under______

• Operating Activity

• Investing Activity

• Financing Activity

Purchase of new machinery is classified under ______

• Operating Activity

• Investing Activity

• Financing Activity

Obtaining a bank loan is classified under _____

• Operating Activity

• Investing Activity

• Financing Activity

Which of the following statements is true regarding the use of the Direct method and indirect method when preparing the Statement of Cash Flows? You may choose more than one option.

• The section of 'Cash flows from operating activities' has a different format between the 2 methods.

• The section of 'Cash flows from investing activities' has a different format between the 2 methods.

• The section of 'Cash flows from financing activities' has the same format between the 2 methods.

• The 'Net cash increase (decrease) in cash' is the same between the 2 methods.

The Indirect method of preparing the Statement of Cash Flows adjusts the profit by adding/removing the ______ transactions that has affected the net profit.