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Background Information Review Questions

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  1. Cash flows statements are prepared for what type of funds?
    1. General
    2. Proprietary
    3. Permanent
    4. Special Revenue
  2. What is the primary purpose of the statement of cash flows?
    1. to replicate, on a cash basis, the operating statement
    2. to distinguish between the primary government and it's discretely presented component units
    3. to provide relevant information about the cash receipts and cash payments of an entity
    4. to track cash transactions of an entity
  3. Cash equivalents are defined as:
    1. Cash on hand
    2. Demand deposits with banks or other financial institutions
    3. Short term, highly liquid investments
    4. Restricted securities held as collateral for securities lending
  4. Under the direct method of reporting net cash flow from operating activities,
    1. the reconciliation of operating income (or net income, if operating income is not separately identified on the operating statement) to net cash flow from operating activities is presented on the face of the statement of cash flow in a separate schedule
    2. the reconciliation is presented in the notes to the financial statements
    3. all adjustments to operating income should be clearly identified as reconciling
  5. If the agency has cash transactions that are accounted for as restricted cash or restricted investments, these transactions are:
    1. not included in the cash flows statement
    2. included in the cash flows statement
    3. separately disclosed as a restricted activity
    4. separately disclosed as a noncash activity until the restrictions are removed
  6. How many cash flows categories are part of the cash flows statement?
    1. 1
    2. 2
    3. 3
    4. 4
  7. The reconciliation section of the direct method cash flows statement is shown:
    1. at the top of the statement
    2. included within each cash flow category
    3. as a separate schedule
    4. in the notes of the financial statements
  8. Cash equivalents are considered to have:
    1. investments with a maturity of one month or less when purchased
    2. investments with a maturity of three months or less when purchased
    3. investments with a maturity of six months or less when purchased
    4. investments with a maturity of twelve months or less when purchased

Next: Structure of the Cash Flow Statement