Exam 16: The Cash Flow Statement

Cash equivalents are generally debt investments with maturities of

The cash flow statement is the only statement that shows the flow of cash in a company.

Which of the following changes in retained earnings during a period will be reported in the financing activities section of the cash flow statement? 1) Declaration of a cash dividend paid during the period. 2) Profit for the period.

A company who has stable profit would expect to have a positive cash flow from investing activities and a negative cash flow from financing activities.

Use the following information for questions When preparing the financial statements for 2014, John Grinder, CFO for Ocean Technologies Inc., noticed that during the year the company sold equipment with an original cost of $50,000 for cash proceeds of $18,000. At the time of the sale, the equipment had a carrying amount of $20,000. Ocean Technologies uses the direct method to prepare its cash flow statement. -The loss on the sale of equipment will

Which of the following adjustments to convert profit to net cash provided by operating activities is INCORRECT?

In developing the cash flows from operating activities, standard setters prefer to

An increase in depreciation expense from $50,000 to $60,000 will cause cash payments for operating expenses to

Under IFRS, companies must report interest and dividends received as an operating activity.

Which one of the following items is NOT necessary in preparing a cash flow statement?

When accumulated depreciation is increased during the period, the amount of cash flow from investing activities would increase.

Richards Limited had a cost of goods purchased of $250,000. The comparative balance sheet analysis revealed a $10,000 decrease in inventory and a $20,000 increase in accounts payable. What were Richards' cash payments to suppliers?

The information in a cash flow statement will help users assess all of the following EXCEPT

In the direct method, when prepaid expenses decrease from the previous period, then the cash paid for operating activities will be higher than the amount reported on the income statement.

The comparative balance sheets for Kessler Corporation appear below: Additional information: 1. Profit for the year ending December 31, 2014 was $20,000. 2. Cash dividends of $12,000 were declared and paid during the year. 3. Long-term investments in bonds that had an amortized cost of $18,000 were sold for $16,000. Instructions Prepare a cash flow statement for the year ended December 31, 2014, using the indirect method.

Under ASPE, payment of interest to lenders of debt is considered an operating activity because the item is reported on the income statement where the results of operations are shown.

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is

The purchase of a building for cash would be reporting in the financing section of the cash flow statement.

Willets Wholesale Corp.'s 2014 single step income statement and comparative balance sheet are provided below: Additional information: 1. No new long-term debt was taken during the year. 2. New equipment was purchased, and none was sold. 3. Common shares were issued for cash. 4. Cash dividends were paid to common shareholders. 5. All operating expenses were paid in the period incurred. Instructions Prepare the cash flow statement for 2014, using the direct method.

Which of the following would NOT be an adjustment to profit using the indirect method?