6. The net cash flow from operations must be reported using the direct method. 7.The direct method is generally favored by analysts and other users of cash flow statements. 8. Noncash items, such as depreciation expense, must be added to net income to arrive at net cash provided by (used in) operating activities when the indirect method is used.

6. The net cash flow from operations must be reported using the direct method. 7.The direct method is generally favored by analysts and other users of cash flow statements. 8. Noncash items, such as depreciation expense, must be added to net income to arrive at net cash provided by (used in) operating activities when the indirect method is used.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter14: Statement Of Cash Flows

Section: Chapter Questions

Problem 14MCQ

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Similar questions

The method of presenting cash flow from operations where net income is adjusted for items without any cash effect is called a. direct method b. indirect method c. allowance method d. reconciliation method
Which of the following should be subtracted from net income in computing net cash flows from operating activities using the indirect method? a.A decrease in accounts receivable b.A loss on a sale of equipment c.An increase in accounts payable d.A gain on a sale of equipment
Which one of the following statements best describes a cash outflow in relation to the statement of cash flows? A: A cash outflow is an expense. B: A cash outflow may have been paid or not. C: A cash outflow is associated to both revenue and capital expenditure. D: None of the above
Indicate whether each item would be added ( 1 ) or subtracted ( 2 ) in the computation of cash flowfrom operating activities using the indirect method.1. Depreciation.2. Inventory decrease.3. Accounts payable decrease.4. Accounts receivable increase.5. Accrued liabilities increase.
Which of the following situations required us to make an downward adjustment to net income (subtracting) when computing operating cash flows? (check all that apply) A. there was a depreciation expense B. some property was sold for a gain on the net book value C. some recognized expenses were for COGS to suppliers paid for on account D. there were some recognized revenues in accounts receivable
An important distinction between the direct method and the indirect method of preparing a statement of cash flows is that: a The format of the section computing net cash flow from operating activities is different under the two methods. b The direct method reconciles accrual-based net income with net cash flow from operations; the indirect method shows the specific cash inflows and outflows constituting the operating activities. c The direct method results in a lower (more conservative) figure for net cash flow from operating activities than does the indirect method. d Only those statements of cash flows prepared using the direct method are in accordance with generally accepted accounting principles as set forth by the FASB.
Which of the following financial statements is generally prepared first? Choose Income statement. Id never be reported in the income Balance sheet. Statement of retained earnings. Statement of cash flows. Cash flows are grouped in the statement of cash flows into the following major
Identify the correct statement regarding preparing cash flow from operations using the indirect method.\\n\\nMultiple choice question.\\n\\nIt adjusts for items included in accrual-basis net income that did not affect operating cash flows.\\n\\n\\nIt must present major classes of gross receipts and disbursements.\\n\\n\\nNoncash expenses such as depreciation and amortization must be subtracted from accrual-basis net income.\\n\\n\\nIt adjusts for items excluded from accrual-basis net income that did not affect operating cash flows such as rent received in advance.
Which of the following statements regarding the statement of cash flows is false?A. The statement of cash flow separates cash inflow and outflows into three major categories: operating, investing and financingB. The ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet at the end of the same periodC. The total increase or decrease in cash shown on the statement of cash flows must agree with the bottom line (net income or net loss) reported on the income statementD. The statement of cash flows covers a period of time
To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.a. Trueb. False
Do not copy from bartleby and chegg Cash-basis accounting produces a measure called net operating cash flow. Describe about the measure.
Do not copy from bartleby Cash-basis accounting produces a measure called net operating cash flow. Describe about the measure.