Chapter 5

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CHAPTER 5

BALANCE SHEET AND STATEMENT OF CASH FLOWS

IFRS questions are available at the end of this chapter.

TRUe-FALSE—Conceptual

AnswerNo.Description

F1.Liquidity and solvency.
T2.Limitations of the balance sheet.
T3.Definition of financial flexibility.
T4.Long-term liability disclosures.
F5.Definitions of the balance sheet.
F6. Land held for speculation.
T7.Balance sheet format.
F8.Purpose of statement of cash flows.
F9.Statement of cash flows reporting.
T10.Financial flexibility.
T11.Collection of a loan.
T12.Determining cash provided by operating activities.
F13.Reporting significant financing and investing activities.
T14.Current cash debt coverage ratio.
F15.Reporting other comprehensive income.
F16.Disclosure of fair values.
F17.Disclosure of company operations and estimates.
T18.Disclosure of pertinent information.
F19.Use of the term reserve.
F20.Adjunct account.

Multiple Choice—Conceptual

AnswerNo.Description

d21.Limitation of the balance sheet.
c22.Uses of the balance sheet.
b23.Use of balance sheet information.
d24.Use of balance sheet information.
d25.Limitation of the balance sheet.
cS26.Uses of the balance sheet.
bS27.Criticisms of the balance sheet.
cP28.Definition of liquidity.
d29.Definition of net assets.
b30.Current assets presentation.
b31.Operating cycle.
d32.Operating cycle.
d33.Identification of current asset.
d34.Identification of current asset.
d35.Identification of current asset.
d36.Classification of short-term investments.
c37.Classification of inventory pledged as security.
Multiple Choice—Conceptual (cont.)

AnswerNo.Description

b38.Identification of long-term investments.
d39.Identification of valuation methods.
b40.Identification of current liabilities.
d41.Definition of working capital.
b42.Identification of working capital items.
d43.Identification of long-term liabilities.
d44.Identification of long-term liabilities.
d45.Classification of treasury stock.
d46.Disclosures for common stock.
d47.Classification of investment in affiliate.
c48.Classification of owners' equity.
d49.Classification of assets.
dP50.Identification of contra account.
dS51.Balance sheet supplementary disclosure.
d52.Long-term liabilities' disclosure.
b53.Balance sheet supplementary disclosure.
c54.Disclosure of contractual situations.
d55.Disclosure of accounting policies.
d56.Contingency reported in financial statement notes.
d57.Methods of disclosure.
d58.Disclosure of significant accounting policies.
d59.Disclosure of depreciation methods used.
d60.Required notes to the financial statements.
b61.Identification of generally accepted account titles.
c62.Purpose of the statement of cash flows.
cS63.Statement of cash flows answers.
c64.Statement of cash flows reporting.
b65.Statement of cash flows objective.
d66.Reporting issuance of stock for machine.
d67.Identify a financing activity.
b68.Classification of cash receipts.
b69.Identify a financing activity.
c70.Cash flow from operating activities.
a71.Identify an investing activity.
d72.Preparing the statement of cash flows.
b73.Cash debt coverage ratio.
b74.Current cash debt coverage ratio.
d75.Financial flexibility measure.
c76.Calculation of free cash flow.
bS77.Description of financial flexibility.
bP78.Cash debt coverage ratio.

P Note: these questions also appear in the Problem-Solving Survival Guide. S Note: these questions also appear in the Study Guide.

Multiple Choice—Computational

AnswerNo.Description

c79.Classifying investments.
a80.Identifying intangible assets
b81.Calculate total stockholders’ equity.
d82.Classifying investments.
a83.Identifying intangible assets.
b84.Calculate...
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