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Finance: A Discussion on Cash Flow, Assets and Liabilities, Sale Securities

1. Which statement is true about the cash flow statement?
A. the operations section (using the direct method) starts with net income
B. an increase in accounts receivable adds back cash using the indirect method
C. the financing section is the same under either the direct or indirect method
D. None of the above is a true statement

2. The Fantastic Company purchased 100% of the stock of the Stinky Company. Fantastic Company will record the Stinky assets and liabilities at?
A. The fair value of the consideration given up by Fantastic.
B. The fair value of the shares obtained from the owners of Fantastic.
C. It depends if we use the purchase or acquisition method
D. None of the above is correct

3. Which state is true regarding available for sale securities?
A. If FMV is greater than cost write up to market and recognize gain as part of operations in the income statement
B. Test available for sale securities for impairment
C. Subsequent increases in value (after adjusting down for impairment) are allowed
D. None of the above statements are true.

Solution Preview

1. Which statement is true about the cash flow statement?
A. the operations section (using the direct method) starts with net income
B. an increase in accounts receivable adds back cash using the indirect method
C. the financing section is the same under either the direct or indirect method
D. None of the above is a true ...

Solution Summary

A discussion on cash flow, assets and liabilities for sales securities are examined.

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