Exam 21: The Statement of Cash Flows

Receipts of dividends from investments in equity securities would be reported in the financing activities section of the cash flow statement.

GAAP allows the use of either the direct or indirect method but prefers the direct method. Companies who use the indirect method must also include a separate schedule reconciling net income to net cash flow provided by operating activities.

Current GAAP permits two methods of calculating and reporting a company's net cash flow from operating activities on its statement of cash flows. Required: Identify the two methods. Which method does the FASB prefer? Which method do most companies use and why?

When reading the Cash Outflows from Operating Activities portion of the statement of cash flows, you would expect to find which of the following? I. Payments to suppliers II. Payments to customers III. Payments to employees IV. Payments of interest V. Payments for income taxes VI. Other operating payments

The Percy's Landing Co. reported the following condensed income statement for 2016: Also during 2016, the company's current assets and current liabilities changed as follows: Required: Prepare the Net Cash Flow from Operating Activities section of the statement of cash flows for 2016, using the direct method.

What working paper information does a company need for its statement of cash flows under the direct method?

Why do companies use the spreadsheet method to prepare the statements of cash flows?

On the statement of cash flows prepared using the direct method, cash paid for income taxes would be income tax expense minus

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

Jamison Company is preparing its statement of cash flows for the current year. During the year, the company retired two issuances of debt and properly recorded the transactions. These transactions were as follows: 1) Paid cash of $115,000 to retire bonds payable with a face value of $120,000 and a book value of $116,000. 2) Paid cash of $48,000 to retire bonds payable with a face value of $45,000 and a book value of $46,000. Required: Record, in journal entry form, the entries that Jamison would make for the bond transactions on its spreadsheet to prepare its statement of cash flows.

A cash flow statement is one of the basic financial statements that is required under

In a statement of cash flows using the indirect method, which of the following events would not be classified as an operating activity?

The following information relates to the Stork Company: What is the net cash provided by financing activities?

Which of the following is true concerning the direct method of calculating operating cash flows?

What is the primary purpose of the statement of cash flows? If the information provided in the statement of cash flows is used together with the information in the other financial statements, what assistance does that information provide to external users?

The statement of cash flows would not report which one of the following items?

For reporting operating cash flows under the indirect method, a company adds an unrealized holding loss on trading securities to net income to help adjust net income from an accrual basis to a cash basis.

Bernard, Inc. prepares a statement of cash flows using the visual inspection method. In 2016, Bernard had net income of $54,000. In addition, the following information is available: What net cash provided by operating activities should Bernard report in 2016?

When preparing a statement of cash flows under the indirect method, an increase in ending accounts receivable over beginning accounts receivable will result in an adjustment to net income in the operating activities section because

Accounting information from the records of the Sarah Jane's Clothing Corporation at the end of 2016 is shown below: Required: Prepare Sarah Jane's Clothing 's 2016 Net Cash Flow from Operating Activities section of a statement of cash flows, using the indirect method.