Exam 12: The Statement of Cash Flows

On its most recent statement of cash flows, a company reported net cash provided by operating activities of $29,000,000. Its capital expenditures for the same year were $5,000,000. A note to the financial statements indicated that the total amount of debt that would mature over the next eight years was $96,000,000. REQUIRED: 1. Compute the company's cash flow adequacy ratio. 2. If you were a banker considering loaning money to this company, why would you be interested in knowing its cash flow adequacy ratio? Would you feel comfortable making a loan based on the ratio you computed in part 1? Explain your answer.

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. -Income taxes payable increased

Upon review of Jan's Lakeside Resort statement of cash flows, the following was noted: From this information, the most likely explanation is that Jan is

Issuance of stock results in cash inflows that appear in the financing section of the statement of cash flows.

The term cash on the statement of cash flows includes .

Because the cash received from the sale of long-term assets is reported in the investing activities section of the statement of cash flows, any gain or loss is built into the cash received under the direct method.

To be classified as a cash equivalent, an item must be readily convertible to a known amount of cash and have an original maturity to the investor of three months or more.

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. -Inventory decreased

Singer Corp. began the year with a balance in its Income Taxes Payable account of $10,000. The year-end balance in the account was $15,000. The company uses the indirect method in the Operating Activities section of the statement of cash flows. Therefore, it presents the amount of income taxes paid at the bottom of the statement as a supplemental disclosure. The amount of taxes paid during the year was $12,000. What amount of income tax expense will appear on Singer's income statement?

Operating activities involve the acquiring and selling of goods and services for cash or on account.

Cash flows from borrowing and paying off a 90-day bank loan are classified as

Why do accounting standards require a company to separately disclose income taxes paid and interest paid if it uses the indirect method?

The repurchase of a company's own stock should be reported on the statement of cash flows as an investing activity.

The primary purpose of the statement of cash flows is to provide information about

Use the selected information from the statement of cash flows for three actual companies for the last three years to answer the questions that follow. REQUIRED: Ignoring the differences in magnitude, comment on the similarities and differences in the cash flows of the three companies.

Which of the following items is treated as a cash equivalent?

When using the direct method, how is the payment of a cash dividend shown on the statement of cash flows?

Bradenton Corp. reported accounts receivable of $38,000 on its December 31, 2015, balance sheet. On December 31, 2016, accounts receivable had decreased to $29,000. Sales for the year amounted to $57,000. What is the amount of cash collections that Bradenton will report in the Operating Activities section of its 2016 statement of cash flows assuming that the direct method is used?

In place of _____________, a worksheet is a useful device to help in the preparation of a statement of cash flows.

If the December 31, 2016, balance of accounts payable is higher than the January 1, 2016, balance, then the amount of cash payments will exceed the purchases on account for the year.