Module 5 Quiz
1) Which of the following items would NOT be shown on a statement of cash flows
created using the indirect method?
Net Income
Net income is shown in the cash flow from Operating Activities section under
...
Module 5 Quiz
1) Which of the following items would NOT be shown on a statement of cash flows
created using the indirect method?
Net Income
Net income is shown in the cash flow from Operating Activities section under the indirect
method.
Retained Earnings
This is the correct answer! Retained earnings is never shown on the statement of cash
flows.
Cash, beginning of year
Beginning of year cash balance is shown at the top of a statement of cash flows.
Cash, end of year
End of year cash balance is shown at the bottom of a statement of cash flows.
2) General Dynamics (GD) is a manufacturer of naval equipment. Which of the
following cash flows should be included in the Operating Section of GD's
statement of cash flows under US GAAP? Drag the cash transaction to the
appropriate column.
Cash flow from operating
activities
NOT a cash flow from operating
activities
INTEREST EARNED IN CASH SALE PROCEEDS FROM EQUITY INVESTMENTS
SALE OF INVENTORY CASH PAID TO BUY A NEW FACILITY
CASH PAID FOR INTEREST CASH RECEIVED IN SALE OF EQUIPMENT
PAYMENT TO SUPPLIERS CASH RECEIVED FROM LOAN MADE TO OTHERS
REPURCHASES OF COMMON STOCK
CASH DIVIDENDS PAID TO SHAREHOLDERS
Correct3) Based on this income statement for Company E for the year ending December
31, 2014, what adjustment would need to be made to Net Income to account for
Depreciation and Amortization in calculating cash flow from Operating Activities
using the indirect method?
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