Exam 12: Statement of Cash Flows

The income statement for Jones Company showed cost of goods sold of $80,000 and operating expenses of $65,000. The comparative balance sheets for the year show that inventory decreased $5,000, prepaid expenses increased $7,000, accounts payable increased $3,000, and accrued expenses payable decreased $5,000. Instructions Compute (a) cash payments to suppliers and (b) cash payments for operating expenses using the direct method.

Squeeze Company reports the following: End of Year Beginning of Year Inventory \ 25,000 \ 42,000 Accounts Payable 22,000 12,000 If cost of goods sold for the year is $220,000, the amount of cash paid to suppliers is

Kanet Company issued common stock for proceeds of $386,000 during 2017. The company paid dividends of $80,000 and issued a long-term note payable for $95,000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $15,000. The financing section of the statement of cash flows will report net cash inflows of

Using the indirect approach, noncash charges in the income statement are ______________ to net income and noncash credits are ______________ to compute cash provided by operations.

The information in a statement of cash flows helps investors and creditors assess the company's ability to pay dividends and meet obligations.

Cash provided by operating activities fails to take into account that a company must invest in new fixed assets just to maintain its current level of operations.

Selected transactions of Alton Company are listed below. 1. Common stock is sold for cash above par value. 2. Bonds payable are issued for cash at a discount. 3. Interest receivable on a short-term note receivable is collected. 4. Land is sold for cash at book value. 5. Accounts payable are paid in cash. 6. Equipment is purchased by signing a 3-year, 10% note payable. 7. Cash dividends on common stock are declared and paid. 8. 100 shares of XYZ common stock are purchased for cash. 9. Merchandise is sold to customers for cash. 10. Bonds payable are converted into common stock. Instructions Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a noncash investing and financing activity.

Each of the following is an example of a significant noncash activity except

The following information is available for Young Corporation: Capital expenditures $115,000 Instructions Compute Young Corporation's free cash flow.

Indicate where the payment of income taxes would appear, if at all, on the statement of cash flows.

Plough Company reported net income of $180,000 for the current year. Depreciation recorded on buildings and equipment amounted to $80,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash \ 20,000 \ 15,000 Accounts receivable 24,000 32,000 Inventories 50,000 65,000 Prepaid expenses 9,500 5,000 Accounts payable 12,000 18,000 Income taxes payable 1,600 1,200 Instructions Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Ware Company had purchases of $260,000. The comparative balance sheet analysis revealed a $15,000 decrease in inventory and a $25,000 increase in accounts payable. What were Ware's cash payments to suppliers?

Which of the following items does not appear in the statement of cash flows under the direct method?

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.

Under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash ________________________ and cash _________________________.

Which of the following adjustments to convert net income to net cash provided by operating activities is not added to net income?

The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities.

Wilson Company reported net income of $105,000 for the year ended December 31, 2017. During the year, inventories decreased by $15,000, accounts payable decreased by $20,000, depreciation expense was $18,000 and a gain on disposal of equipment of $9,000 was recorded. Net cash provided by operating activities in 2017 using the indirect method was

The sale of land for cash would be classified as a cash inflow from an investing activity.