Which of the following would be considered a cash-flow item from a financing activity?

To calculate cash flows from operating activities take the $29,000 in net income, add back the $3,000 in depreciation expense, add the $2,000 decrease in current assets, add the $4,000 increase in current liabilities, and add in the loss of $8,000 on the sale of the plant asset. So (29,000 + 3,000 + 2,000 +4,000 + 8,000) = $46,000.

A firm receives cash for 30% of its sales with the remaining 70% being credit sales. Of the credit sales, 20% are collected in the month of sale, 60% in the month following the sale, and 20% in the second month following the sale. Forecasted sales for January through April are $400,000, $500,000, $600,000, and $400,000 respectively. What are total cash receipts in the month of April?

A.) $120,000
B.) $400,000
C.) $498,000
D.) $530,000

A firm makes all purchases on credit. Cash payment on this trade credit is required in the month following purchase on 70% of all purchases. The firm takes a 2% cash discount and makes payment for the remaining 30% of all purchases in the month of purchase. Forecasted purchases for January through April are $300,000, $375,000, $450,000, and $300,000 respectively. In the month of March, what is the total cash disbursement for purchases?

A.) $132,300
B.) $394,800
C.) $403,200
D.) $450,000

Assume that total cash receipts for January through June are $100, $120, $80, $60, $120, and $190 respectively. Also assume that total cash disbursements for January through June are $80, $100, $80, $150, $150, and $70 respectively. Your firm has a beginning cash balance at the beginning of January of $55. At the end of what month is the firm forecasting a negative cash balance?

A.) June.
B.) May.
C.) April.
D.) March.

Assume that total cash receipts for January through June are $100, $120, $80, $60, $120, and $190 respectively. Also assume that total cash disbursements for January through June are $80, $100, $80, $150, $150, and $70 respectively. Your firm has a beginning cash balance at the beginning of January of $20 and requires a minimum cash balance of $30. At the end of what month is the firm forecasting a cash balance below the minimum?

A.) January.
B.) February.
C.) March.
D.) April.

The firm paid $800,000 in dividends over the last period. The beginning and ending retained earnings account balances were $10,100,000 and $12,500,000 respectively. Assuming a 40% average tax rate, what was the firm's net income (net profit after taxes)?

A.) $1,600,000
B.) $2,400,000
C.) $3,200,000
D.) $5,333,333

The firm had a net increase of $800,000 in net fixed assets over the last period. The beginning and ending net fixed asset account balances were $9,100,000 and $9,900,000 respectively. If the firm purchased $2,000,000 in additional fixed assets and sold $100,000 of fixed assets at book value, what was the firm's depreciation expense over the period?

A.) $800,000
B.) $1,100,000
C.) $1,900,000
D.) $2,700,000

According to the accounting profession, which of the following would be considered a cash-flow item from an "investing" activity in the company involved in trading of securities? 

1. Cash inflow from interest income
2. Cash inflow from dividend income
3. Cash outflow to acquire fixed assets
4. All of the above

Answer (Detailed Solution Below)

Option 3 : Cash outflow to acquire fixed assets

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Teaching Aptitude Mock Test

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Cash flows from Investing Activities:

• It is the section of the company's cash flow statement that displays how much money has been generated from or used in making investments during a specific period of time.
• Investing activities include the purchase of long-term fixed assets like plant, property, equipment, etc., acquisition of other businesses, and investments in marketable securities like stocks and bonds.

​Cash flows included and not included from Investing activities are listed below:

• There are more items that can be included in this list; the only sure way to know what's included is to look at the balance sheet and analyze any difference between non-current assets over the two periods.
• Any changes in the value of these long-term assets (other than depreciation) mean there will be investing items to display on the cash flow statement. 

Therefore, according to the accounting profession, Cash outflow to acquire fixed assets would be considered a cash-flow item from an "investing" activity.

Last updated on Nov 25, 2022

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