1.When borrowing money to purchase an asset for your company this…

Question Answered step-by-step 1.When borrowing money to purchase an asset for your company this… 1.When borrowing money to purchase an asset for your company this purchase will show on: a. Both the financing and investing activities sections of your cash flow statement.b. Both the operating and financing sections of the cash flow statement.c. Just the financing section of the cash flow statement. 2.  The most liquid asset is:a. Investments in stockb. Cash in a money market accountc. Cash in a checking account 3. In the direct method of cash flow statement preparation we start:a. Your net income, then add or subtracts based on balance changes.b. The cash based income statement.c. The accrual based income statement and add back to get to the cash basis. 4.Paying our bills and taxes are considered outflows and will be reflected on our cash flow statement by:a. They will not affect cash.b. Subtracting from cashc. Adding to cash. 5. When purchasing a new vehicle and selling an old one, if using the gross cash flow method, we would need to:a. Prepare  separate statement in addition to the regular cash flow statement.b. Record the difference between the cost of the new and the proceeds of the old as either an increase or decrease to investing activities.c. Record the entire purchase price of the vehicle as an outflow and the sale of the old one as an inflow in the investing activities section of the cash flow statement. 6. You loaned money to another company. When they make payments to you, the receipt of the principal will show on:a. Both the investing and operating sections of your cash flow statement.b. The investing activities section of your cash flow statement.c .Both the investing and financing sections of your cash flow statement. 7. When preparing our statement of cash flows using the indirect method we would first add back:a. The net taxes payable.b. All non-cash expenditures, such as depreciation.c. The difference in accounts receivable, inventory and payables 8. In a review of your income statement you are amazed to see a 50% increase over last month’s sales! Your supervisor though, is concerned about the lack of cash in your checking account. How would you explain this situation using the direct method? a. Even though our sales was up by 50%, since the customers are delinquent on their payments we are going to have cash flow problems. It is the accounts receivable department not doing their job. b. Even though our sales was up by 50%, that is on the accrual basis. Since those customers have net 30 terms, so we only collected based on the previous month’s sales. By next month, our cash flow should be back on track. c. We had lots of expenses this month with the higher sales, so we had to borrow money. I will have accounts payable hold some payments until we receive more cash. 9. Your company is dealing with cash flow issues but has stellar sales. What might be causing this problem? a. Invoicing errors by your accounting department. b. An inability to collect on your accounts receivable balances from customers due to poor customer acquisition issues or poor collection processes. c. The accounts aren’t being recorded on the cash basis as they should. Business Accounting ACCT 310 Share QuestionEmailCopy link Comments (0)