Exam 16: Understanding Corporate Annual Reports: Basic Financial Statements

The statement of cash flows classifies changes in cash as operating, investing, and financing activities.

A _____ is not considered a cash equivalent.

The section in the statement of cash flows that lists the cash flow effects of transactions that affect the income statement

Allocating the original cost of plant and equipment

A financial statement that explains changes in the retained earnings for a given period

Which one of the following statements regarding the effect of depreciation when reconciling net income to net cash provided by operating activities is correct?

Net income divided by the average number of common shares outstanding during the year

Treasury stock is_____.

The time span during which a company spends cash to acquire goods and services that it uses to produce the organization's output, which in turn is sold to customers, who in turn pay for their purchases with cash

Short-term debts backed by formal promissory notes held by a bank or business creditors

Treasury stock is a deduction from total stockholders' equity.

Dividends paid are an addition to retained earnings.

An example of a financing activity on the statement of cash flows is payment of cash dividends.

The excess of the cost of an acquired company over the sum of the fair market values of its identifiable assets less its liabilities

Amounts owed to suppliers who extend credit for purchases on open account

Under the indirect method, cash received from customers is determined.

During a period of inflation, the LIFO method provides a larger cost of goods amount than does FIFO.

This reduces gross accounts receivable due to some customers not paying

Nonoperating items on the income statement_____.

Advance payments to suppliers