Exam 22: The Statement of Cash Flows

What types of accounts are typically affected by investing cash flows in the statement of cash flows?

On the statement of cash flows, the three classifications of cash flows are reporting, investing, and financing.

Comparative financial statements for Tomtric Company follow: Tomtric Company Income Statement For the year ended December 31, 2019 Sales \ 70,000 Cost of goods sold Gross margin 30,000 Depreciation expense 5,000 Other operating expenses Operating income 10,000 Loss on sale of equipment Income before taxes 6,000 Income tax expense Net income Additional data on activities during 2019 are as follows: • During 2019, Tomtric Company sold used equipment for $3,000 that had cost $15,000 with accumulated depreciation of $8,000. • New equipment was purchased for $12,000 cash. • Cash dividends totaling $8,000 were paid. • Long-term investments that had cost $18,000 when purchased were sold for $18,000. • Common stock was issued for $10,000. Prepare the operating activities section of the statement of cash flows using the indirect method.

Tandoor Inc. financial statements included the following amounts for the current year: Retired bonds \ 73,000 Proceeds from collection of note receivable 31,000 Dividends received 45,000 Acquired production machinery with cash 59,000 Sold treasury stock 39,000 Based on this information, what is the amount of net cash provided (used) by investing activities?

Which of the following questions would not be answered by the annual cash flow statement?

The "bottom line" of the cash flow statement is Net Increase (Decrease) in Cash and Cash Equivalents.

Explain how the treatment of deferred tax assets and liabilities differ between the indirect and direct methods when preparing the statement of cash flows.

Cash collected from customers is calculated as net sales revenue minus increases in accounts receivable.

Which of the following equations represent the relationship between the change in Cash and cash equivalents (Cash) and the changes in Other Current Assets (OCA), Current Liabilities (CL), Noncurrent Assets (NCA), Noncurrent Liabilities (NCL), Capital Stock (CS) and Retained Earnings (RE)?

Both U.S. GAAP and IFRS require that an entity disclose its policy regarding cash equivalents.

Changes in retained earnings are always reflected in the operating activities section of the statement of cash flows.

Which of the following is a cash outflow from investing activities?

On the statement of cash flows, operating cash flows include cash flows that relate to the production and delivery of goods and services.

What are the cash flow effects of unrealized gains or losses from available-for-sale securities reported through other comprehensive income? Explain.

In 2019, Quintin Corp. reported net income of $254,000. Other transactions included: Depreciation expense \ 50,000 Amortization of a bond premium 9,500 Income from an equity-method investment 36,000 Dividends received from equity-method investment 0 Purchase of treasury shares 125,000 Paid a dividend on preferred stock 60,000 What is the amount of net cash flows from operations?

Cash paid for merchandise is calculated as purchases plus increases in inventory minus decreases in accounts payable for inventory.

The statement of cash flows assists financial statement users in all of the following ways except ________.

Which of the following items would be reported in the financing activities section of the statement of cash flows?

Which of the following is not a cash inflow from financing activities?

An increase in a deferred tax liability is deducted from the accrual-basis tax expense to arrive at cash paid for income taxes.