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Cash Flow Multiple choice

Answer the following multiple-choice questions:
a) Which of the following could lead to cash flow problems?
1. Tightening of credit by suppliers
2. Easing of credit by suppliers
3. Reduction of inventory
4. Improved quality of accounts receivable
5. Selling of bonds
b) Which of the following would not contribute to bankruptcy of a profitable firm?
1. Substantial increase in inventory
2. Substantial increase in receivables
3. Substantial decrease in accounts payable
4. Substantial decrease in notes payable
5. Substantial decrease in receivables
c) Which of the following current asset or current liability accounts is not included in the computations of cash flows from operating activities?
1. Change in accounts receivable
2. Change in inventory
3. Change in accounts payable
4. Change in accrued wages
5. Change in notes payable to banks
d) Which of the following items is not included in the adjustment of net income to cash flows from operating activities?
1. Increase in deferred taxes
2. Amortization of goodwill
3. Depreciation expense for the period
4. Amortization of premium on bonds payable
5. Proceeds from selling land
e) Which of the following represents an internal source of cash?
1. Cash inflows from financing activities
2. Cash inflows from investing activities
3. Cash inflows from selling land
4. Cash inflows from operating activities
5. Cash inflows from issuing stock
f) How would revenue from services be classified?
1. Investing inflow
2. Investing outflow
3. Operating inflow
4. Operating outflow
5. Financing outflow
g) What type of account is inventory?
1. Investing
2. Financing
3. Operating
4. Noncash
5. Sometimes operating and sometimes investing
h) How would short-term investments in marketable securities be classified?

1. Operating activities
2. Financing activities
3. Investing activities
4. Noncash activities
5. Cash and cash equivalents

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Answer the following multiple-choice questions:
a) Which of the following could lead to cash flow problems?
1. Tightening of credit by suppliers
2. Easing of credit by suppliers
3. Reduction of inventory
4. Improved quality of accounts receivable
5. Selling of bonds
Answer: 1
Tightening of credit by suppliers will cause faster cash outflow.

b) Which of the following would not contribute to bankruptcy of a profitable firm?
1. Substantial increase in inventory
2. Substantial increase in receivables
3. Substantial decrease in accounts payable
4. Substantial decrease in notes payable
5. Substantial decrease in ...

Solution Summary

This solution is comprised of a detailed explanation to answer cash flow multiple choices.

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