Exam 12: The Statement of Cash Flows

Which of the following statements is true?

Use the information below for Alpha Inc. for 2015 and 2016 to answer the following question. During 2016, Alpha Inc. sold equipment with a cost of $30,000 and accumulated depreciation of $25,000. A gain of $3,000 was recognized on the sale of the equipment This was the only equipment sale during the year. What amount would be reported as the cash proceeds from the sale of equipment?

Ultra-lite Corp. began operations on January 1, 2015. The statement of cash flows for the first year reported dividends paid of $180,000. The balance sheet at the end of the first year reported $60,000 in dividends payable and $600,000 in ending retained earnings. Determine Ultra­lite's net income for its first year of operations.

Which of the following statements is false?

When using the indirect method, how is an increase in accounts receivable during the year shown on the statement of cash flows?

Use the information below for Fargo Corp. for 2015 and 2016 to answer the following question. At the end of 2016, Fargo 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. How much did Fargo pay to retire the $500,000 bond issue during 2016?

Tulsa Corp. reported the following information for 2015 and 2016. Interest payable, December 31, 2015 $5,700 Interest payable, December 31, 2016 6,200 Interest expense--2016 12,250 How much cash was paid for interest during 2016?

Use the selected data from the consolidated statements of cash flows for College Corporation for the years ended December 31, 2016 and 2015, to answer the questions that follow. REQUIRED: A What is the significance of the positive amounts shown above, for both years, for accounts payable and accrued liabilities? B At the end of each year, College's cash balance was approximately $5 to $7 million. What does this indicate about College's cash management techniques?

During 2015, the accounts receivable balance of Dickerson Corp. increased. Which of the following statements is true?

Cash flows from operating activities usually relate to an increase or decrease in either a current asset or a current liability.

The financial statement that primarily reflects events related to the operating activities of a business, or the selling of products or providing services is the .

___________________________ is a noncash expense related to plant assets.

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 was paid to acquire equipment during 2016? B What amount was recorded as depreciation expense during 2016? C What amount was declared and paid for dividends during 2016?

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 and assumptions for Iowa Industries Inc. REQUIRED: A What was the cost of the investments purchased during 2016? B What was the amount paid to retire long-term debt during 2016?

The following account balances are taken from the records of Morgantown Corp. for the past two years. Credit balances are shown in parentheses. Other information available for 2016 is as follows: December 31, c. Plant and equipment with an original cost of $210,000 were sold for $84,000. You will need to determine the book value of the assets sold. d. Amortization expense on patents was $11,000. e. Both new plant and equipment and patents were purchased for cash during the year. REQUIRED: Indicate, with amounts, how all items related to these long-term assets would be reported in the 2016 statement of cash flows, including any adjustments in the Operating Activities section of the statement. Assume that Morgantown uses the indirect method.

A mortgage incurred in exchange for an office building would be reported in the statement of cash flows in

The cash flow adequacy ratio is defined as:

The work sheet used to prepare a statement of cash flows indirect method to determine cash flows from operating activities should have a total in the Changes column equal to total assets.

A building with a cost of $163,000 and accumulated depreciation of $32,000 was sold for a $11,000 gain. When using the indirect method, the cash generated from this investing activity was $131,000.

Which balance sheet accounts are most affected by financing activities?