Chapter 7: Funds Analysis, Cash Flow Analysis, and Financial Planning MCQs

Multiple-Choice Quiz

Chapter 7:   Funds Analysis, Cash Flow Analysis, and Financial Planning

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1. According to the accounting profession, which of the following would be considered a cash-flow item from an "investing" activity?

cash inflow from interest income.

cash inflow from dividend income.

cash outflow to acquire fixed assets.

all of the above.

2. According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity?

cash outflow to the government for taxes.

cash outflow to shareholders as dividends.

cash outflow to lenders as interest.

cash outflow to purchase bonds issued by another company.

3. If the following are balance sheet changes:
         $5,005 decrease in accounts receivable
         $7,000 decrease in cash
        $12,012 decrease in notes payable
        $10,001 increase in accounts payable
a "use" of funds would be the:

$7,000 decrease in cash.

$5,005 decrease in accounts receivable.

$10,001 increase in accounts payable.

$12,012 decrease in notes payable.

4. On an accounting statement of cash flows an "increase(decrease) in cash and cash equivalents" appears as

a cash flow from operating activities.

a cash flow from investing activities.

a cash flow from financing activities.

none of the above.           Correct!

It is the net result of all the operating, investing, and financing cash inflows and outflows.

5. Uses of funds include a (an):

decrease in cash.

increase in any liability.

increase in fixed assets.

tax refund.

6. Which of the following would be included in a cash budget?

depreciation charges.

dividends.

goodwill.

patent amortization.

7. An examination of the sources and uses of funds statement is part of:

a forecasting technique.

a funds flow analysis.

a ratio analysis.

calculations for preparing the balance sheet.

8. Which of the following is NOT a cash outflow for the firm?

depreciation.

dividends.

interest payments.

taxes.

9. Which of the following would be considered a use of funds?

a decrease in accounts receivable.

a decrease in cash.

an increase in account payable.

an increase in cash.

10. The cash flow statement in the United States is most likely to appear using

a "supplementary method."

a "direct method."

an "indirect method."

a "flow of funds method."

11. For a profitable firm, total sources of funds will always          total uses of funds.

be equal to           CORRECT!

Total sources must ALWAYS equal total uses. And, it makes no difference whether the firm is profitable or not

be greater than

be less than

have no consistent relationship to