Exam 12: The Statement of Cash Flows

When using the indirect method, how is the receipt of cash from the sale of long-term investments treated on the statement of cash flows?

If the balance of prepaid insurance was the same on January 1, 2016, and December 31, 2016, then the insurance expense would the cash payments made for insurance during the year.

The statement of cash flows emphasizes explanations for the change in net income.

Which of the following should be classified as an investing activity on the statement of cash flows?

Which of the following measures can be used to evaluate a company's ability to meet future debt obligations after paying income taxes and interest and making capital expenditures?

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 Receivable increased

Use the information below for Shorter Inc. for 2015 and 2016 to answer the following question. During 2016, Shorter 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. Assume that all purchases of equipment were paid with cash. How much cash was paid by Shorter for the purchase of equipment 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 for Utah Corp. REQUIRED: A What amount was paid to retire bonds payable during 2016? B How would the transaction to retire bonds by issuing common stock be reported on the statement of cash flows for 2016 for Utah Corp.?

Use the information below for Barton Shipping Corp. for 2015 and 2016 to answer the following question. How much cash did Barton Shipping pay for dividends during 2016?

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. -Received payments from credit sales.

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 prepaid insurance

When using the direct method, how are salaries paid to employees reported on the statement of cash flows?

Which of the following operating activities results in a cash outflow?

Springfield Company's comparative balance sheets included inventory of $89,700 at December 31, 2015, and $73,300 at December 31, 2016 Springfield's comparative balance sheets also included accounts payable of $54,400 at December 31, 2015, and $38,100 at December 31, 2016. Springfield's accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory on account. Cost of goods sold, as reported by Springfield on its 2016 income statement, amounted to $750,800. What is the amount of cash payments for inventory that Springfield will report in the Operating Activities section of its 2016 statement of cash flows assuming that the direct method is used?

Which of the following statements is false regarding how the cash flow effects of the changes in the equipment and accumulated depreciation accounts would be reported on a statement of cash flows if the indirect method is used to prepare the operating activities section?

A friend of yours says: "It's easy to look at the statement of cash flows and see that a company has been profitable, because positive cash flows are equal to profitability." Is your friend right? Explain.

It is not possible for Cash to decrease from Yr. 1 to Yr. 2 if income rises over this period.

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

Which of the following items would be considered a cash equivalent if it was held at the balance sheet date?

For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the Direct method a or the Indirect method b. -Collections on accounts receivable