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Accounting Skills Test (Cash Flow) Answers - updated

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In this post you will have all most recent Upwork test answers for Accounting Skills Test (Cash Flow) of Finance and Accounting category, press Ctrl + F to find your desired answers of the test questions.



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1. In 2007, XYZ Company had a net loss of $160,000 and reported the following:

 Dividends paid: $40,000
 Depreciation expense: $30,000
 Increase in accounts payable: $15,000
 Issuance of stock: $100,000
 Retirement of debt: $50,000

 Given this data, the amount of cash flow from operations was ______________.
 Answers: • ($115,000)

 2. Equity in the undistributed earnings of a recognized affiliate would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 3. Dividends paid for the year would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 4. Equity income from an affiliate would be shown _____________________.
 Answers: • as a deduction from net income in the operations section

 5. Issuing ten-year bonds will cause cash to ______________ .
 Answers: • increase

 6. A cash flow statement is typically prepared _____________________.
 Answers: • after both the balance sheet and the income statement are prepared

 7. Which of the following would be shown in the investing section of a cash flow statement?
 Answers: • None of the above

 8. The sale of equipment for cash with a recognized loss would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 9. An increase in the accounts payable balance would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 10. Pre-paying a one-year insurance policy will cause cash to ______________ .
 Answers: • decrease


 11. Warranties payable that increased during the year would appear in which of the following sections of the cash flow statement?
 Answers: • It would not appear on the statement.

 12. The acquisition of a building and/or land by entering into a lease that meets the capital lease criteria would appear in which of the following sections of the cash flow statement?
 Answers: • Investing section

 13. Depreciation recorded on equipment would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 14. Which of the following would be shown in the investing section of a cash flow statement?
 Answers: • Acquisition of equipment through a capital lease

 15. Cash borrowed from a bank by issuing a short-term note payable would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 16. Collecting receivables will cause cash to ______________ .
 Answers: • increase

 17. In 2007, XYZ Company had a net income of $150,000 and reported the following:

 Depreciation expense: $21,000
 Issuance of debt: $120,000
 Loss on sale of equipment: $23,000
 Purchase of building: $110,000
 Increase in inventory: $12,000

 Given this data, the amount of cash flow from operations was ______________.
 Answers: • $182,000

 18. Preferred stock issued for cash would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 19. The most popular method of presenting cash from operations in a cash flow statement is the _________________.
 Answers: • indirect method

 20. The amortization of a recorded patent would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 21. Preferred stock converted into common stock would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 22. An amortization of a bond discount would be shown __________________.
 Answers: • as an add-back to net income when determining cash flow from operations

 23. When determining cash flow from operations, which of the following would NOT be deducted from net income?
 Answers: • Loss on sale of equipment

 24. Which of the following statements about depreciation expense is true?
 Answers: • All of the above statements are true.

 25. Which of the following transactions would be shown on a cash flow statement, but does not affect cash?
 Answers: • Exchange of land for stock

 26. When determining cash flow from operations, which of the following would NOT be deducted from net income?
 Answers: • Gain on sale of marketable securities

 27. An investment in the stock of another company would appear in which of the following sections of the cash flow statement?
 Answers: • Investing section

 28. Which of the following typically happens during the maturation phase of a product's life cycle?
 Answers: • Cash outflow exceeds cash inflow from investing activities.

 29. Paying previously declared dividends will cause cash to ______________ .
 Answers: • decrease

 30. Treasury stock purchased for cash would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 31. The use of a bond sinking fund to retire a long-term debt at maturity would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 32. When determining cash flow from operations, which of the following would be added back to net income?
 Answers: • All of the above

 33. XYZ reported balances in the Accumulated Depreciation account of $130,000 on 01/01/07 and $120,000 on 12/31/07. During 2007, an asset costing $100,000 (with an accumulated depreciation of $80,000) was sold for $20,000.

 Given this data, the depreciation expense for 2007 was _____________.
 Answers: • $90,000

 34. A payment made from accounts payable will cause cash to ______________ .
 Answers: • decrease

 35. Cash paid for land would be shown as ________________.
 Answers: • cash flow from investing

 36. Declaring dividends will cause cash to ______________ .
 Answers: • show no change

 37. Amortized discount on bonds payable would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 38. In 2007, XYZ Company had a net income of $100,000 and reported the following account changes on its balance sheet:

 Accounts Receivable: $6,000 increase
 Accounts Payable: $2,000 increase
 Building: $8,000 decrease
 Accumulated Depreciation: $3,000 increase
 Bonds Payable: $16,000 increase

 Given this data, the amount of cash flow from operations was ______________.
 Answers: • $99,000

 39. At the beginning and end of 2007, XYZ Company reported the following balances for Bonds Payable:

 Jan 1: $100,000
 Dec 31: $140,000
 In addition, $60,000 In bonds was retired In 2007.

 Given the above data, the amount of Bonds Payable issued during the year was ______________.
 Answers: • $100,000

 40. Deferred income tax payable that increased during the year would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 41. Recording a depreciation expense will cause cash to ______________ .
 Answers: • decrease

 42. A cash payment for land acquisition would appear in which of the following sections of the cash flow statement?
 Answers: • Investing section

 43. Which of the following typically happens during the growth phase of a product's life cycle?
 Answers: • Cash outflow exceeds cash inflow from investing activities.

 44. When determining cash flow from operations, which of the following would be a deduction from net income?
 Answers: • Increased accounts receivable

 45. Which of the following would be shown in the financing section of a cash flow statement?
 Answers: • Long-term bonds payable issued

 46. Salaries paid during the year would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 47. Long-term investments sold for cash with a recognized gain would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 48. Which of the following would be included in the investing section of a cash flow statement?
 Answers: • All of the above would be included in the investing section.

 49. In most countries, the preparation of a __________________ is a common practice.
 Answers: • cash flow statement

 50. On their income statement, XYZ Company reported $600,000 in sales, $320,000 in depreciation expense, $60,000 in income taxes, and $100,000 in other expenses. In addition, $80,000 of common stock was issued for cash during the year. Assuming that the company's non-cash working capital balances did not change during the year, the total amount of cash from operations was ____________.
 Answers: • $440,000

 51. Accounts receivable that increased during the year would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 52. Unearned revenue that had been reduced during the year would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 53. In determining cash flow from operations, which of the following would be an add-back to net income?
 Answers: • Loss on sale of building

 54. Accruing an income tax liability will cause cash to ______________ .
 Answers: • show no change

 55. Prepaid rent that increased during the year would appear in which of the following sections of the cash flow statement?
 Answers: • Operating section

 56. Cash received from sale of investment would be shown on a cash flow statement as ___________.
 Answers: • cash flow from investing

 57. During 2007, XYZ Company experienced the following changes:

 Current liabilities: $75,000 increase
 Non-current liabilities: $45,000 decrease
 Owners' equity: $51,000 decrease
 Non-current assets: $42,000 increase
 Current assets (other than Cash): $18,000 increase

 Given the above data, the change in cash for 2007 was ____________.
 Answers: • ($81,000)

 58. The acquisition of a patent would be shown __________________.
 Answers: • in the investing section

 59. Land acquired by issuing preferred stock would appear in which of the following sections of the cash flow statement?
 Answers: • It would not appear on the statement.

 60. When determining cash flow from operations, which of the following would NOT be added back to net income?
 Answers: • Amortization of bond premium

 61. Which of the following is NOT a characteristic of growing firms?
 Answers: • All of the above

 62. Which of the following typically happens during the introduction phase of a product's life cycle?
 Answers: • Cash outflow exceeds cash inflow from investing activities.

 63. On a cash flow statement, depreciation expense ________________.
 Answers: • should be added to net income when determining cash provided by operations

 64. The major components of a cash flow statement are ________________________.
 Answers: • cash flow from operations, cash flow from investing, and cash flow from financing

 65. Which of the following statements does NOT illustrate a proper interpretation of information in a cash flow statement?
 Answers: • All of the above

 66. Paying cash to retire preferred stock will cause cash to ______________ .
 Answers: • decrease

 67. When preparing cash flow statements, the practice of presenting cash from operations by listing all cash-generating revenues followed by all cash expenses is called the ______________.
 Answers: • direct method

 68. In determining cash flow from operations, which of the following would be added to net income?
 Answers: • Increased accounts payable

 69. In 2007, XYZ Company had a net loss of $160,000 and reported the following:

 Dividends paid: $40,000
 Depreciation expense: $30,000
 Increase in accounts payable: $15,000
 Issuance of stock: $100,000
 Retirement of debt: $50,000

 Given this data, the net change in cash for 2007 was ______________.
 Answers: • ($105,000)

 70. Which of the following would NOT be shown in the investing section of a cash flow statement?
 Answers: • All of the above are shown in the investing section of a cash flow statement

 71. Treasury stock sold for an amount greater than its repurchase price would appear in which of the following sections of the cash flow statement?
 Answers: • Financing section

 72. Which of the following transactions would be shown as a cash flow from financing?
 Answers: • Cash paid for dividends

 73. Acquisition of treasury stock would be shown _____________________.
 Answers: • in the financing section

 74. Which of the following statements expresses the objective of a cash flow statement?
 Answers: • All of the above

 75. New equipment purchased by issuing a long-term note payable would appear in which of the following sections of the cash flow statement?
 Answers: • Investing section

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