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Accounting
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11 Nov 2019

3. Which of the following statements are incorrect?

A) A balance sheet reports on investing and financing activities.

B) An income statement reports on financing activities.

C) The statement of equity reports on changes in the accounts that make up equity.

D) The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.

E) All of the statements are correct.

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Irving Heathcote
Irving HeathcoteLv2
21 Jan 2019
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Related questions

Non-cash investing and financing activities may be disclosed in:

a. A note in the financial statements or a schedule attached to the statement of cash flows.

b. The operating activities section of the statement of cash flows.

c. The investing activities section of the statement of cash flows.

d. The financing activities section of the statement of cash flows.

e. The reconciliation of cash balance section.

a) A cash purchase of land would appear in which of thefollowing sections of the statement of cash flows?

Cash outflow from investing activities.

Cash inflow and cash outflow in a separate schedule of noncashinvesting and financing activities.

Cash outflow from financing activities.

Cash inflow from operating activities.

b)

On January 1, 2016, the Chisolm Company purchased equipment for$36,000 cash. On December 31, 2016, depreciation of $9,000 wasrecorded. Which of the following correctly shows the combinedeffect of these two events on the income statement and statement ofcash flows? Chisolm uses the direct method.

Net
Income		 Cash Flows
Operating Investing Financing
A. (45,000) (45,000) NA NA
B. (9,000) NA (36,000) NA
C. (9,000) (9,000) (27,000) NA
D. (9,000) 9,000 (27,000) NA

Option C

Option D

Option B

Option A

b)

Warren Corporation's balance sheet reports equipment thatoriginally cost $67,000. The accumulated depreciation for theequipment is $25,200. Warren sells the equipment for $37,200. Whatwould the effect be on its income statement and statement of cashflows?

IncomeStatement CashFlows
A. Gain:$37,200 Investing +$37,200
B. Gain: $4,600 Operating – $4,600
C. Loss: $4,600 Investing +$37,200
D. Loss:$41,800 Operating +$37,200

Option A

Option B

Option C

Option D

Cash flows resulting from a company's normal earnings processare reported on the statement of cash flows in the:

A) financing activities section

B) investing activities section

C) operating activities section

D) noncash investing and financing activities section

AND

Which of the following activities is not correctly associatedwith its cash flow classification?

A) Operating – Sale of merchandise for cash

B) Financing - Sale of company’s Preferred Stock

C) Investing – Purchase of Treasury Stock

D) Operating – Purchase of advertising for the year

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