Question

1) On an indirect method statement of cash​ flows, a decrease in inventory would​ be:
A.reflected in the investing activities section
B.deducted from net income
C.netted against any decreases in accounts payable
D.added to net income

2) Sometimes income and cash flow follow different patterns.
True
False

3)Cash means more than just cash on hand and cash in the bank. Highly​ liquid, shortminus−term investments that are easily convertible into cash are​ called:

A.cash equivalents

B.accounts receivable

C.promissory notes

D.common shares

4) On an indirect method statement of cash​ flows, the purchase of machinery in exchange for common shares​ is:

A.reflected in the investing activities section

B.shown in the schedule of noncash investing and financing activities which accompanies the statement of cash flows

C.reflected in the operating activities section

D.ignored

5) Which of the following activities increase and decrease the nonminus−current assets available to a​ company?

A.financing activities

B.warehousing activities

C.operating activities

D.investing activities

Answer 1

1. D. Added to Net income.

If the inventory decreases that means inventory has been liquidated and received more cash than the purchased.

2. True

Its True that Sometimes Income and cash flow Follow Different patterns because there is some non cash expenses which will be considered in income statement but will not be considered in Cash flow.

3.A. Cash Equivalents.

4.B.shown in the schedule of noncash investing and financing activities which accompanies the statement of cash flows

5.C.operating activities.