FPT University SSN 301Multiple Choice Questions 7 -8 -9 Multiple Choice Questions 7 -8 -9 .

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Multiple Choice Questions 1. Under the accrual basis of accounting, which of the following statements is true? I. Reported net income provides a measure of operating performance II. Revenue is reco... gnized when cash is received, and expenses are recognized when payment is made III. Cash inflows are recognized when they are received, and cash outflows are recognized when they are made A. I only B. III only C. I and III D. I, II and III 2. Which of the following would require an adjustment in the computation of cash flow from operations using the indirect method? I. Sale of machinery for $50,000 with a net book value of $35,000 II. Purchase of supplies for cash III. Remittance by customer in payment of goods purchased this accounting period IV. Acquisition of land with simultaneous issuance of long-term note A. I B. I and II C. I and III D. IV 3. Which of the following would require an adjustment in the computation of cash flow from operations using the indirect method? I. Depreciation expense II. Loss on sale of asset III. Sale of services to costumers for cash IV. Utility bill received and paid in cash A. I B. I and II C. I and III D. IV 7. Which of the following represents an investing activity in the statement of cash flows A. depreciation of plant assets B. sale of plant assets at a loss C. stock dividend D. purchase of inventory 8. Which of the following is not a financing activity in the statement of cash flows? A. cash dividend B. repurchase of common stock C. payment of interest on debt D. issuance of new debt 13. On a statement of cash flows that uses the indirect approach, calculation of cash flow from operations treats depreciation as an adjustment to reported net income because: A. depreciation is a direct source of cash B. depreciation is an outflow of cash to a reserve account for the replacement of assets C. depreciation reduces net income and involves an outflow of cash D. depreciation reduces net income but does not involve an outflow of cash [Show More]

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