Exam 12: Statement of Cash Flows

Using the indirect method, if equipment is sold at a gain, the

The statement of cash flows should help investors and creditors assess each of the following except the

Hogan Enterprises reported cash flow from operations of $275,000. The company made capital expenditures of $110,000 and paid dividends of $35,000. Instructions Compute free cash flow.

The information in a statement of cash flows will not help investors to assess the entity's ability to

Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

The payment of interest on bonds payable is classified as a cash outflow from operating activities.

You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using GAAP. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you present a schedule of predicted cash sources and cash needs at the end of each week for the following week. Jim Bangon, the company's president, has asked whether a statement of cash flows would also be useful. Required: Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing.

When listing accounts in the statement of cash flows worksheet, the accumulated depreciation account is shown

Lending money and collecting the loans are

Bush Company reported net income of $60,000 for the year. During the year, accounts receivable decreased by $8,000, accounts payable increased by $4,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were

Lager Company has other operating expenses of $260,000. There has been an increase in prepaid expenses of $20,000 during the year, and accrued liabilities are $15,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Lager's cash payments for operating expenses?

The income statement of Frank Company is shown below: Additional information: 1. Accounts receivable increased $400,000 during the year. 2. Inventory increased $250,000 during the year. 3. Prepaid expenses increased $200,000 during the year. 4. Accounts payable to merchandise suppliers increased $100,000 during the year. 5. Accrued expenses payable increased $160,000 during the year. Instructions Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2017, for Frank Company, using the direct method.

The three accounts shown below appear in the general ledger of Larson Corp. during 2017. Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on sale of equipment was $7,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $56,000.)

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.

The statement of cash flows is the only required financial statement that is not prepared from an adjusted trial balance. (a) What are the sources of information for preparing a statement of cash flows? (b) Explain how the accrual basis of accounting affects the statement of cash flows.

During 2017, Blaine Company sold a building with a book value of $145,000 for proceeds of $175,000. The company also sold long-term investments for proceeds of $32,000. The company purchased land and a new building for $320,000 by signing a long-term note payable. No other transactions impacted long-term asset accounts during 2017. Instructions Compute net cash flows from investing activities.

Adama Company reported a net loss of $6,000 for the year ended December 31, 2017. During the year, accounts receivable increased $15,000, inventory decreased $12,000, accounts payable decreased by $20,000, and depreciation expense of $12,000 was recorded. During 2017, operating activities

The cost of goods sold during the year was $183,000. Inventory decreased by $8,000 during the year and accounts payable decreased by $4,000 during the year. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total