1. Does Jones Soda Co. have to account for the changes in its cash every year? 1.Yes 2.No

2. Do you think that investors and creditors pay close attention to the reporting of the changes in cash for Jones Soda Co.? 1.Yes 2.No

3. Does the management of Jones Soda Co. rely heavily on the information from the statement of cash flows for company decision-making? 1.Yes 2.No

4. Does the preparation of the statement of cash flows follow all of the accounting concepts and principles discussed in previous chapters? 1.Yes 2.No

5. Is the statement of cash flows a required financial statement such as the income statement, balance sheet and retained earnings statement? 1.Yes 2.No

6. The statement of cash flows is one of the basic financial statements that must be prepared with the income statement, balance sheet, and retained earnings statement. 1.True 2.False

7. The order of presentation of the types of activities for the statement of cash flows does not matter. 1.True 2.False

8. A source of cash causes the cash flow to increase. 1.True 2.False

9. The ending cash balance on the statement of cash flows equals the cash account balance reported on the balance sheet. 1.True 2.False

10. Over 99% of all firms use the direct method to report their cash flows and to prepare their statement of cash flows. 1.True 2.False

11. Noncash investing and financing activities will be reported in a separate section, usually appearing at the bottom of the statement of cash flows. 1.True 2.False

12. Using the indirect method, an increase in accounts payable during a period is deducted from net income in computing cash from operating activities. 1.True 2.False

13. The order of presentation of cash flow activities on the statement of cash flows is 1.operating, financing, and investing 2.operating, investing, and financing 3.financing, investing, and operating 4.investing, operating, and financing

14. The most important cash flows of a business often relate to 1.operating activities 2.investing activities 3.financing activities 4.noncash investing and financing activities

15. The method that begins with net income and adjusts for items that affected reported net income but which did not affect cash is called the 1.direct method 2.indirect method 3.lower of cost or market method 4.straight-line method

16. Using the indirect method, if land is sold at a gain, the proper reporting of this transaction in the statement of cash flows is that the 1.proceeds from the sale and the gain are deducted in the operating activities section 2.proceeds from the sale and the gain are added in the operating activities section 3.proceeds from the sale are added in the investing activities section and the amount of the gain is added in the operating activities section 4.proceeds from the sale are added in the investing activities section and the amount of the gain is subtracted in the operating activities section

17. When dividends are paid in cash, the amount paid is shown as a cash 1.inflow in the operating activities section 2.outflow in the operating activities section 3.outflow in the financing activities section 4.outflow in the investing activities section

18. Which of the following would not appear in the operating activities section of the statement of cash flows prepared using the direct method? 1.Cash received from customers 2.Cash payments for merchandise 3.Depreciation expense 4.Cash payments for operating expenses

19. Investing activities include 1.cash received for the sale of equipment 2.cash paid for dividends 3.cash paid to retire bonds payable 4.depreciation expense

20. The indirect and direct methods of preparing the statement of cash flows are identical in the activities sections except for the 1.noncash investing and financing activities 2.operating activities 3.investing activities 4.financing activities

21. In using the indirect method for preparation of the statement of cash flows, which of the following adjustments is not added to net income to convert net income to net cash from operating activities? 1.Depreciation Expense 2.Gain on Sale of Equipment 3.Loss on Sale of Equipment 4.Amortization of Intangible Assets

22. Land acquired by the issuance of common stock is reported as 1.an operating activity 2.an investing activity 3.a financing activity 4.a noncash investing and financing activity