1.

) Operating activities are the cash flows derived primarily from the principal revenue
producing activities of an entity. TRUE

2.) A BSP treasury bill that was purchased three years ago can qualify as cash equivalent if the
remaining maturity is 3 months or less. FALSE

3.) Investing & financing transactions that do not require use of cash or cash equivalents shall
be included in the cash flow statement. FALSE

4.) Cash receipts and payments for securities held for dealing or trading purposes are part of
investing activities. FALSE

5.) Cash flow statement provides information about the cash receipts and cash payments of an
enterprise during a period. TRUE

6.) Acquisition of asset by issuing share capital or bonds payable is a noncash transaction. TRUE

7.) Cash receipts from sales of equity or debt instruments of other entities are part of financing
activity. FALSE

8.) Depreciation and amortization are deducted from accrual basis net income in the
computation of net operating cash flows under the indirect method. FALSE

9.) Debbie Company provided the following data:

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable
are recorded net and always paid to take all of the discounts allowed. The allowance for
doubtful accounts at the end of 2019 was the same as at the end of 2018. No receivables were
charged against the allowance during 2019. The proceeds from the note payable were used to
finance a new store building. Share capital was sold to provide additional working capital. How
much is net cash provided by operating activities? 110,000

10.) Users of an entity's financial statements are not interested at all in how the entity
generates & uses cash. FALSE

11.) Debbie Company provided the following data:

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable
are recorded net and always paid to take all of the discounts allowed. The allowance for
doubtful accounts at the end of 2019 was the same as at the end of 2018. No receivables were
charged against the allowance during 2019. The proceeds from the note payable were used to
finance a new store building. Share capital was sold to provide additional working capital. How
much is net cash provided by investing activities? 610,000

12.) It is not necessary for the company to disclose the accounting policy used in deciding which
items are included in determining cash and cash equivalents. FALSE

13.) Debbie Company provided the following data:

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable
are recorded net and always paid to take all of the discounts allowed. The allowance for
doubtful accounts at the end of 2019 was the same as at the end of 2018. No receivables were
charged against the allowance during 2019. The proceeds from the note payable were used to
finance a new store building. Share capital was sold to provide additional working capital. How
much is net cash provided by financing activities? 800,000

14.) Investing activities include cash flows from transactions involving nonoperating assets.
TRUE

15.) A 180-day time deposit can qualify as cash equivalent. FALSE

16.) Cash payments of amounts borrowed are outflows from financing activity. TRUE

17.) Cash flow statement provides information that enables users to evaluate the changes in
net assets of an entity, its financial structure, liquidity and solvency. TRUE

18.) Debbie Company provided the following data:

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable
are recorded net and always paid to take all of the discounts allowed. The allowance for
doubtful accounts at the end of 2019 was the same as at the end of 2018. No receivables were
charged against the allowance during 2019. The proceeds from the note payable were used to
finance a new store building. Share capital was sold to provide additional working capital. How
much is cash collections from customers in 2019? 6,140,000

19.) Financing activities include the cash flows from transactions involving nontrade liabilities
and equity of an entity. TRUE

20.) Debbie Company provided the following data:

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable
are recorded net and always paid to take all of the discounts allowed. The allowance for
doubtful accounts at the end of 2019 was the same as at the end of 2018. No receivables were
charged against the allowance during 2019. The proceeds from the note payable were used to
finance a new store building. Share capital was sold to provide additional working capital. How
much is cash payments to merchandise creditors in 2019? 5,150,000

21.) The following information was obtained from analysis of selected accounts of Capiz
Company for the current year:
How much is net cash provided by operating activities? 10,000,000

22.) Equity securities cannot qualify as cash equivalent because shares of capital do not have a
maturity date. TRUE

23.) Bank borrowings are generally considered as part of financing activities in the cash flow
statement. TRUE

24.) Preference shares without specified redemption date can qualify as cash equivalent. FALSE

25.) Loans granted by banks are usually classified as investing activity. FALSE

26.) The following information was obtained from analysis of selected accounts of Capiz
Company for the current year:
How much is net cash provided by financing activities? 5,500,000

27.) Dividend payment made by the company to its shareholders are part of cash outflow from
investing activity. FALSE

28.) Tax cash flows are often difficult to match to the originating underlying transaction, so
most of the time all tax cash flows are classified as arising from operating activities. TRUE

29.) Cash flow statement is designed to provide information about the change in an enterprise's
cash and cash equivalents. TRUE

30.) The following information was obtained from analysis of selected accounts of Capiz
Company for the current year:
How much is net cash used in investing activities? 5,000,000