Exam 12: Statement of Cash Flows

Assume that the Fitzgerald Corporation uses the indirect method to depict cash flows. Indicate where, if at all, accounts receivable collected would be classified on the statement of cash flows.

Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate where, if at all, dividends received on securities held would be classified on the statement of cash flows.

Using the direct method, major classes of investing and financing activities are listed in the operating activities section.

The current cash debt coverage ratio is computed by dividing net cash provided by operations by average total liabilities.

The sale of equipment at less than its book value is a(an) ______________ of cash that is reported in the ______________ activities section.

A major disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is not emphasized.

All of the following adjustments would be deducted in determining net cash provided by operating activities except a(n)

The statement of cash flows shows the effects on net income of a company's operating, investing, and financing activities for an accounting period.

The cost of goods sold during the year was $275,000. Inventory decreased by $10,000 during the year and accounts payable decreased by $12,000 during the year. Using the direct method of reporting cash flows from operating activities, cash payments for inventory total

Assuming a statement of cash flows is prepared using the indirect method, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows.

All of the following statements about free cash flow are false except

Assume that the E-Zip Corporation uses the indirect method to depict cash flows. Indicate where, if at all, land purchased for cash would be classified on the statement of cash flows.

LKN Company reported net income of $80,000 for the year. During the year, accounts receivable increased by $6,000, accounts payable decreased by $4,000 and depreciation expense of $10,000 was recorded. Net cash provided by operating activities for the year is

In preparing a statement of cash flows, a conversion of bonds into common stock will be reported in

Under IFRS, bank overdrafts are classified as

In computing net cash flow from operating activities using the direct method, each item in the income statement is adjusted from the accrual basis to the cash basis.

Mooresville Hills Trading Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better. Mindy Ross, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part-time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers. William Bowden, financial manager, immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures. Required: 1. Were Mindy Ross's actions ethical? Explain. 2. Were William Bowden's actions ethical? Explain. 3. Were the company president's actions ethical? Explain.

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the statement of cash flows? 1) Declaration and payment of a cash dividend during the period. 2) Net income for the period.

Using the indirect method, calculate the amount of cash flows from operating activities from the following data: Net income \ 199,000 Beginning accounts receivable 22,000 Ending accounts receivable 29,000 Beginning prepaid insurance 5,000 Ending prepaid insurance 2,000 Beginning accounts payable 15,000 Ending accounts payable 14,000 Depreciation expense 50,000 Amortization of intangible asset 6,000 Dividends declared and paid 11,000

Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.