Exam 12: The Statement of Cash Flows

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA Where: CL = Current liabilities LTL = Long-term liabilities CS = Common stock RE = Retained earnings NCCA = Noncash current assets LTA = Long-term assets Which of the following activities results in a cash outflow?

The Financial Accounting Standards Board FASB) has expressed a strong preference for the indirect method, but allows companies to use the direct method in calculating the cash flow from operating activities.

Washington Corp.reported the following information for 2015 and 2016. If Washington uses the indirect method to prepare the operating activities section of the statement of cash flows, what amount will be reported as net cash inflow from operating activities for 2016?

Which of the following is an addition to net income when the indirect method is used?

When using the direct method, how are salaries paid to employees reported on the statement of cash flows?

When using the direct method, how is depreciation expense recorded on the statement of cash flows?

Below is information for Toronto Imports Corp.for 2015 and 2016: At the end of 2016, Toronto issued bonds at par value for $800,000 cash.The proceeds from these bonds were used to retire the $500,000 bond issue outstanding at the end of 2015 before their maturity date).All interest expense was paid in cash during 2016. The following statements describe how Toronto reported the cash flow effects of the items described above on its 2016 statement of cash flows.The indirect method is used to prepare the operating activities section.Which of the following has been reported incorrectly by Toronto?

If the balance of prepaid insurance was the same on January 1, 2016, and December 31, 2016, then the insurance expense would the cash payments made for insurance during the year.

Which of the following is not a financing activity?

Planet & Co.reported net income for the current year.Which of the following business transactions would cause cash from operating activities to be higher than the amount of net income?

When using the indirect method, how is the purchase of equipment for cash shown on the statement of cash flows?

A decrease in retained earnings indicates that a cash dividend has been paid.

Depreciation is a noncash expense that is added back to net income in determining cash provided from operating activities under the indirect method.

Turtle Island Music Store reported net income of $200,000.Cash from operations

The decrease in accounts receivable over a period results in an) to net income reported in the operating activities section of the statement of cash flows using the indirect method.

Under the , the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments, and all accruals of future operating cash receipts or payments.

The financial statement that summarizes the operating, investing, and financing activities of a business over a period of time is the ___________________________________.

Which balance sheet accounts are most affected by operating activities?