Exam 12: The Statement of Cash Flows

Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method. -Recognized a gain on the sale of the securities above.

Selected data from the financial statements of Ames Corporation for the years ended December 31, 2015 and 2016 are presented below. REQUIRED: What is the amount of cash and cash equivalents at the end of 2016?

Which of the following statements regarding the statement of cash flows is true?

For the statement of cash flows, companies are required to classify their cash activities into three categories: operating, investing, and borrowing.

Below are the transactions for the Louisville Company: Based on these transactions, what is the net cash flow from financing activities?

Assuming the indirect method for preparing the statement of cash flows is used, indicate whether these items should be added to net income A, deducted from net income D, or not be reported in the operating section of the statement under the indirect method NR. -Decrease in accounts payable

The decrease in accounts receivable over a period results in an to net income reported in the operating activities section of the statement of cash flows using the indirect method.

An important activity for many companies is acquiring property.

Use the following selected data and additional information from the records of Utah Corp. to answer the questions that follow. 1 Equipment with a cost of $15,000 and a book value of $3,000 was sold for $5,000 during 2016. 2 Common stock was issued to retire bonds payable during 2016. 3 The only items affecting retained earnings in 2016 were net income and dividends declared and paid. -Review the data for Utah Corp. REQUIRED: A What amount of cash was collected from customers during 2016? B What is the amount paid for purchases of merchandise during 2016? C What is the amount paid for operating expenses during 2016?

The following items were reported on the balance sheets and income statement for Centerton Inc., a service company: What amount would be reported in the operating activities section of the statement of cash flows for payments for operating expenses under the direct method?

Flannery Company uses a worksheet to prepare its statement of cash flows. The company also uses the indirect method for the Operating Activities section of its statement. For each of the following changes in the balance sheet, indicate what activity it affects and whether it is an addition or deduction. -Accounts payable decreased

Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method. -Reissued treasury stock.

Under the , the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments, and all accruals of future operating cash receipts or payments.

The cash flow adequacy ratio can only be calculated if a company uses the direct method to report cash flows from operating activities.

Which of the following is not an investing activity?

Cash flows from acquiring and disposing of long-term assets are classified as

Occasionally, companies engage in important investing and financing activities which do not affect cash. If the amount of the transaction is significant, how should it be disclosed when financial statements are prepared?

Below is information for Toronto Imports Corp. for 2015 and 2016: At the end of 2016, Toronto issued bonds at par value for $800,000 cash. The proceeds from these bonds were used to retire the $500,000 bond issue outstanding at the end of 2015 before their maturity date. All interest expense was paid in cash during 2016. The following statements describe how Toronto reported the cash flow effects of the items described above on its 2016 statement of cash flows. The indirect method is used to prepare the operating activities section. Which of the following has been reported incorrectly by Toronto?

Nordic Exports Inc. reported net income of $150,000 for 2015, but its cash balance decreased $40,000. Which financial statement should Nordic Exports' management refer to for an explanation of this situation?

When using the direct method, how is the issuance of stock for cash shown on the statement of cash flows?