Exam 12: Statement of Cash Flows

Wish Corporation acquired a computer for $15,000 and paid for it in full by issuing 1,000 shares of its own common stock,par $10 (current market price $15 share).This transaction should not be reported within the statement of cash flows because cash was neither received nor disbursed.

The difference between the direct and indirect methods of cash flow statement preparation only affects the determination of cash flows from investing activities.

The following information was reported from the statement of cash flows for Landlover's Restaurants for the years 2017 through 2019 (in millions of dollars): A.Calculate the quality of income ratio for the years 2017 through 2019.Round your answers to two decimals places. B.Interpret the quality of income ratio for Landlover's for the three-year period.

Most companies use the direct method for disclosing their cash flows from operating activities rather than the indirect method.

The capital acquisitions ratio represents the portion of property,plant,and equipment purchases which could have been financed with cash flow from operating activities.

Below is the 2019 income statement for the Critters Corporation. Accounts receivable increased by $8,000. Merchandise inventory increased by $4,000. Accounts payable increased by $6,000. Prepaid expenses decreased by $2,000. Accrued liabilities decreased by $5,000. Interest payable increased by $1,000. Prepare the operating activities section of the statement of cash flows using the indirect method for the year ended December 31,2019.

Lab Industries,Inc. ,issued $50,000 of bonds,paid cash dividends of $8,000,sold long-term investments for $12,000,received $5,000 of dividend revenue,purchased treasury stock for $15,000,and purchased new equipment for $19,000.What is the net cash flow from financing activities?

During 2019,Tommy's Toys reported the following: long-term debt repayments,$503 million;interest paid,$143 million;proceeds from exercise of stock options,$27 million,and issue of common stock in exchange for land costing $10 million.What is the 2019 net cash flow from financing activities?

Allen Company's 2019 income statement reported total revenues,$850,000 and total expenses (including $40,000 depreciation)of $720,000.The company's accounting records showed the following: accounts receivable-beginning balance,$50,000 and ending balance,$40,000;accounts payable-beginning balance,$22,000 and ending balance,$28,000.Therefore,based only on this information,how much was the 2019 net cash provided by operating activities?

Hill Company reported net income of $10,000 for the year ended December 31,2019.Additional 2019 information is as follows: Prepare the operating activities section of the statement of cash flows using the indirect method for the year ended December 31,2019.

Burich Co.reported short-term borrowings of $2.5 million,long-term borrowings of $6.8 million,repayments of long-term borrowings of $3.5 million,interest payments of $780,000,purchase of common stock shares for treasury of $.5 million,and cash dividends declared of $1.1 million.What is the cash flow from financing activities?

During 2019,Tommy's Toys reported the following: short-term borrowings of $419 million;long-term borrowings of $147 million;long-term debt repayments of $45 million;interest paid,$128 million;treasury shares purchased $632 million;and exercise of stock options by employees,$2 million. A.Calculate the net cash flow from financing activities during 2019.Show your work and details of whether an item is added or subtracted to arrive at your answer. B.Is the net cash flow provided by,or used in,the financing activities? Briefly describe the reason for your answer.

Darwin Company,a manufacturer,has provided the following information pertaining to its recent year of operation: • Net income,$200,000 • Accounts receivable increased $18,000 • Prepaid insurance increased $7,000 • Depreciation expense was $25,000 • Loss on sale of a building was $22,000 • Wages payable increased $14,000 • Unearned revenue decreased $21,000 Using the indirect method,how much was Darwin's net cash provided by operating activities?

Aaron Inc.reported operating expenses during 2019 of $765,000 (including $80,000 of depreciation expense).Prepaid expenses increased $25,000 while accrued liabilities increased $43,000.How much cash was paid for operating expenses during 2019?

Which of the following statements does not correctly describe an adjustment to net income when determining cash flows from operating activities using the indirect method?

The following information was available from the financial statements of Collateral,Inc.for the years 2019 and 2018 (in millions of dollars): A.Calculate the capita acquisitions ratio for each of the two years.Round your answers to two decimals places. B.Calculate the free cash flow for each of the two years. C.Comment on the sufficiency of the capita acquisitions ratio and free cash flow for the two years and implications for future corporate strategy.

Which of the following would not be a cash flow from investing activities?

Cash collected from customers is a cash flow from operating activities and is calculated when using the indirect method for preparing the statement of cash flows.

Only highly liquid investments with original maturities of less than six months at the date of purchase qualify as cash equivalents.

KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable. -How would this transaction be reported within the cash flow from investing activities section of the cash flow statement?