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Return to Accounting: A Smart Approach 4e Student Resources
Chapter 7 Multiple-choice questions
The Statement of Cash Flows
*
not completed
.
Which one of the following is
not
a category of cash flows required to be shown on the statement of cash flows?
Cash flows from operating activities.
correct
incorrect
Cash flows from financing activities.
correct
incorrect
Cash flows from taxation.
correct
incorrect
Cash flows from investing activities.
correct
incorrect
*
not completed
.
If a company changes from offering 30 days' credit to customers to offering 50 days credit, which of the following statements is correct?
Cash generated from operations will increase.
correct
incorrect
Cash generated from financing activities will decrease.
correct
incorrect
Cash generated from operations will decrease.
correct
incorrect
There will be no effect on the statement of cash flows.
correct
incorrect
*
not completed
.
If a company issues 1 million £1 shares at £1.30 per share, what will be the effect on the statement of cash flows?
Cash flows from financing activities will increase by £1.3 million.
correct
incorrect
Cash flows from investing activities will increase by £1.3 million.
correct
incorrect
Cash flows from investing activities will increase by £1.0 million.
correct
incorrect
Cash flows from financing activities will increase by £1.0 million.
correct
incorrect
*
not completed
.
Which
one
of the following courses of action will increase the bank balance of a company?
Paying suppliers more promptly.
correct
incorrect
Repaying a loan.
correct
incorrect
Taking longer to pay suppliers.
correct
incorrect
Increasing the inventory levels held.
correct
incorrect
*
not completed
.
Dessy plc made an operating profit of £185,500 after charging depreciation of £31,200. During that year, trade payables increased by £26,600 and inventory increased by £40,300. There was no change to trade receivables. Assuming that no other factors affected it, the cash generated from operations would have been:
£203,000.
correct
incorrect
£230,400.
correct
incorrect
£283,600.
correct
incorrect
£149,800.
correct
incorrect
*
not completed
.
Which one of the following would be categorized as a cash flow from investing activities?
Increase in inventory held.
correct
incorrect
Proceeds of a loan issue.
correct
incorrect
Proceeds from sale of equipment.
correct
incorrect
Dividends paid.
correct
incorrect
*
not completed
.
Which of the following would
not
be revealed by a company's statement of cash flows?
Whether the company has paid a dividend during the year.
correct
incorrect
How the company has managed its working capital over the last financial year.
correct
incorrect
Whether the company has exceeded its overdraft limit during the year.
correct
incorrect
Whether the company has raised extra long-term funding during the year.
correct
incorrect
*
not completed
.
Lydia buys and sells ladies' handbags for cash. She buys them for £20 each and sells them for £35 each. During March, her first month of trading, she bought 50 handbags and had 10 handbags remaining in inventory at the month end. Ignoring any other expenses or payments, which of the following statements is true for March?
The business made a gross profit for the month of £600 and its bank balance increased by £600 as a result of trading.
correct
incorrect
The business made a gross profit for the month of £400 and its bank balance increased by £400 as a result of trading.
correct
incorrect
The business made a gross profit for the month of £400 and its bank balance increased by £600 as a result of trading.
correct
incorrect
The business made a gross profit for the month of £600 and its bank balance increased by £400 as a result of trading.
correct
incorrect
*
not completed
.
Lydia buys and sells ladies' handbags. She buys for cash and sells on one month's credit. She pays £20 for each bag and sells them for £35 each. During March, her first month of trading, she bought 50 handbags and had 10 handbags remaining in inventory at the month end. Ignoring any other expenses or payments, which of the following statements is true for March?
The business made a gross profit for the month of £600 and its bank balance decreased by £1,000 as a result of trading.
correct
incorrect
The business made a gross profit for the month of £600 and its bank balance decreased by £1,400 as a result of trading.
correct
incorrect
The business made a gross profit for the month of £600 and its bank balance increased by £1,400 as a result of trading.
correct
incorrect
The business made a gross profit for the month of £400 and its bank balance increased by £400 as a result of trading.
correct
incorrect
*
not completed
.
Which
one
of the following would reduce the cash balances of a business and
not
reduce the profit for the year?
Interest paid.
correct
incorrect
Distribution costs.
correct
incorrect
Wages paid.
correct
incorrect
Dividends paid.
correct
incorrect
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