Exam 12: Statement of Cash Flows

The three accounts shown below appear in the general ledger of Hale Corp. during 2014 Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on sale equipment was $7,000.

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

The financial statements of Appalachian Mountain Company appear below: The following additional data were provided: 1. Dividends declared and paid were $16,000. 2. During the year equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a book value of $12,000 at the time of sale. 3. All depreciation expense is in the selling expense category. 4. All sales and purchases are on account. 5. Accounts payable pertain to merchandise suppliers. 6. All operating expenses except for depreciation were paid in cash. Instructions Prepare a statement of cash flows for Appalachian Mountain Company using the direct method.

A loss on sale of equipment is added to net income in determining cash provided by operations under the indirect method.

The current cash debt coverage ratio is considered a better representative of liquidity than the current ratio because it involves the entire year rather than a balance at one point in time.

Which of the following would be subtracted from net income using the indirect method?

As an adjustment to operating expenses per the income statement, an increase in accrued liabilities would be added to operating expenses to determine cash payments for operating expenses.

During 2014, Lowes Company sold equipment with a book value of $90,000 for proceeds of $109,000. The company purchased new equipment for $240,000 by signing a long-term note payable. No other transactions impacted long-term asset accounts during 2014. The investing section of the statement of cash flows will report

Colie Company had an increase in inventory of $120,000. The cost of goods sold was $490,000. There was a $30,000 decrease in accounts payable from the prior period. Using the direct method of reporting cash flows from operating activities, what were Colie's cash payments to suppliers?

If $2,500,000 of bonds are issued during the year but $4,000,000 of old bonds are retired during the year, the statement of cash flows will show a(n)

Which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle?

The current cash debt coverage is computed by dividing net cash provided by operating activities by _________________ liabilities.

Under IFRS, some companies present which section of the cash flow statement as a single line item?

In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

Annapolis Company reported net income of $365,000 for the current year. Depreciation recorded on buildings and equipment amounted to $73,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash \ 22,000 \ 15,000 Accounts receivable 17,000 32,000 Inventory 55,000 65,000 Prepaid insurance 7,500 5,000 Accounts payable 11,000 18,000 Income taxes pavable 600 1,200 Instructions Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Under the indirect method, gains and losses from the sale of equipment used in operations would be included in the cash flows from operating activities section on the statement of cash flows.

What are the phases of the corporate life cycle? (b) What effect does each phase have on the numbers reported in a statement of cash flows?

Which of the following items does not appear in the statement of cash flows under the direct method?

Each of the following items may be classified as operating or financing activities under IFRS except

Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.