Exam 12: Statement of Cash Flows

In general,the cash flow from operating activities is considered by many to be the most important component of the statement of cash flows.

The management team of Wickersham Brothers Inc.is preparing its annual financial statements.The statements are complete except for the statement of cash flows.The completed comparative balance sheets and income statements are summarized. Other information from the company's records includes the following: • Bought equipment for cash,$50,000. • Paid $10,000 on long-term note payable. • Issued new shares of common stock for $20,000 cash. • Cash dividends of $16,000 were declared and paid to stockholders. • Accounts Payable arose from inventory purchases on credit. • Income Tax Expense ($4,000)and Interest Expense ($3,000)were paid in full at the end of both years and are included in Other Expenses. Required: Part a.Prepare the statement of cash flows using the indirect method.Include any supplemental disclosures. Part b.Interpret the statement of cash flows by explaining the main sources and uses of cash during the year.

Which of the following is included in the financing activities on a statement of cash flows?

Using the T-account approach:

Using the T-account approach to preparing the statement of cash flows,an increase in Accounts Payable would appear on the debit side of the Cash account.

The Retained Earnings account has a beginning balance of $321,975 and an ending balance of $356,413.Net income is $40,251.Which of the following statements is correct?

All of the following might be used to evaluate cash flow performance,except:

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.Which of the following statements is correct concerning a decrease in Accounts Payable?

Which of the following would not be included in the cash and cash equivalents amount reported on the balance sheet?

In determining cash flows related to investing activities,which accounts are analyzed?

During the current year,Kelso Construction had $976,000 in cash sales and $3,552,000 in credit sales.The Accounts Receivable balance was $848,000 at the beginning of the year and $680,000 at the end of the year.What was the total cash collected from customers during the year?

Cash flows from financing activities can include:

Harlow Industries reported net income of $56,000 for the current year.During the year,Inventory decreased by $19,600,Accounts Payable decreased by $22,400,Depreciation Expense was $28,000,and Accounts Receivable increased by $18,200.If the indirect method is used,what is the net cash provided by operating activities?

Company X paid Company Y $1.35 million for a new plant.During the same accounting period,Company X experienced the following changes in its balance sheet: Cash decreased by $350,000,Accounts Receivable increased by $321,300,Inventory increased by $275,800,Property,Plant,and Equipment increased by $752,900,and Bonds Payable increased by $1 million.The net cash flow provided by financing activities is:

When preparing the operating activities section of the statement of cash flows using the direct method,a gain or loss from selling equipment is reported in the operating activities section of the statement of cash flows.

Which of the following would be included in cash flows from investing activities?

Which of the following classifications is not used on the statement of cash flows?

Bailey Hill Co.uses the indirect method to determine its net cash flows from operating activities.During the course of the year,the company's Accounts Receivable increased by $28,000 and its Accounts Payable decreased by $14,000.If these are the only two adjustments required to convert net income to net cash provided by operating activities,the combined effect will be a(n):

Which of the following would be reported on the statement of cash flows,using the direct method,as a cash flow from operating activities?

When using the T-account approach to preparing the indirect method of the statement of cash flows,which of the following would be associated with amounts entered on the credit side of the Cash T-account?