Exam 21: The Statement of Cash Flows

The spreadsheet method is designed to determine changes in each income statement account and then reconstruct the implied effects of those changes on cash.

When preparing a statement of cash flows using a spreadsheet, it is best to begin the spreadsheet with

Your friend is in business and wants your advice on preparing and interpreting the statement of cash flows for 2016. Information regarding the business is as follows: Required: a. Based upon the above information, prepare the statement of cash flows using the direct method. b. Explain what has happened during the year.

Under the spreadsheet method of preparing the cash flow statement, a company uses a spreadsheet to determine and reconstruct the changes in cash for each asset, liability, and shareholder's equity.

Under the direct method, which one of the following would represent cash paid?

Which statement best defines a company's operating cash inflows?

Provide three examples of noncash investing and financing activities.

Exhibit 21-3 The Travis Company uses the spreadsheet method for completing the statement of cash flows. The balance sheet accounts and other information related to those accounts are presented below for Travis Company: Additional information related to 2017 activities: Additional information related to 2017 activities: 1. Net loss for 2017 was $40,000. 2. Cash dividends of $12,000 were declared and paid in 2017. 3. 4,000 shares of common stock were issued to bondholders converting bonds payable into common stock. 4. A long-term investment was sold for $100,000 cash. 5. Equipment costing $100,000 and having accumulated depreciation of $30,000 was sold for $50,000 cash. -Refer to Exhibit 21-3. Net cash provided used) in the investing activities section of Travis's 2017 statement of cash flows was

Melissa, Inc. reported the following income statement, prepared on the accrual basis: Required: For Melissa, Inc., compute the cash flow pertaining to: a. Cash collections from customers. b. Cash paid for operating expenses. c. Cash paid for suppliers.

The Roberts Company reported net income of $190,000 in 2016. Additional information follows: Given just this information, what was the Roberts Company's net cash provided by operating activities in 2016?

Exhibit 21-2 In preparation for completing the statement of cash flows using the spreadsheet method, Williams Company provided the following information relating to patents for 2016: -Refer to Exhibit 21-2. The Cash Flows from Operating Activities section prepared using the indirect method would include which of the following deductions or add-back amounts related to patents?

The following are totals from selected financial statements of Macy May Company for the years ended December 31, 2015, 2016 and 2017: Required: 1) Compute the operating cash flow ratios for the years ended December 31, 2016 and 2017. 2) Compute the operating cash flow to total liabilities ratios for the years ended December 31, 2016, and 2017.

On September 4, 2016, Chester Fish Company purchased 1,000 shares of Christopher Company common stock for $76 per share as a short-term investment in securities classified as available-for-sale. On December 31, 2016, the stock had a fair value of $72 per share, and on March 10, 2017, Chester sold the stock for $80 per share. Required: In journal entry form, prepare the spreadsheet entries to record these transactions for Chester Fish Company's 2016 and 2017 statement of cash flows.

Which statement is false? Current GAAP

Which of the following events would be classified as an operating activity in a statement of cash flows?

In a statement of cash flows prepared by the indirect method, which of the following events would be deducted from net income?

A statement of cash flows contains the following sections: a. net cash flow from operating activities b. cash flows from investing activities c. cash flows from financing activities d. investing and financing activities not affecting cash A list of items that appear on the statement is provided below: ____ 1. Depreciation expense ____ 2. Proceeds from sale of land at a gain ____ 3. Decrease in accounts payable ____ 4. Conversion of bonds to common stock ____ 5. Payment of dividends, declared last fiscal year ____ 6. Proceeds from issuance of short-term note payable, not relating to operating activities ____ 7. Loss on cash sale of equipment ____ 8. Payment for purchase of a building ____ 9. Bond premium amortization using the effective interest method ____ 10. Issuance of common stock to convert bonds payable Required: In the space provided, using the letters a-d), indicate in which sections) of the statement of cash flows or accompanying schedule) the preceding items would most likely be classified. After each item affecting cash, indicate with a plus sign +) or a minus sign −) whether the item would be reported as an increase inflow) or a decrease outflow).

Mayberry's statement of cash flow is completed using the visual inspection method. Information regarding the Mayberry Company in 2016 appears below: What was Mayberry's net increase in cash?

Which of the following would be added to net income in computing cash flows from operating activities?

The Fancy Company's comparative balance sheets for 2016 and 2017, and additional information, are presented below. Fancy Company Comparative Balance Sheets Required: Prepare Fancy Company's 2017 statement of cash flows using the indirect method.