Exam 12: The Statement of Cash Flows

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. -Purchase of new factory equipment

The following items were reported on the balance sheets and income statement for Bezos Corp.: How would the change in accounts payable be reported in the operating activities section of the statement of cash flows under the indirect method?

When using the indirect method, how is depreciation expense recorded on the statement of cash flows?

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 Prepare the investing activities section of a statement of cash flows for 2016 for Utah Corp. B Prepare the financing activities section of a statement of cash flows for 2016 for Utah Corp.

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. -Cash sales

When using the direct method, how is depreciation expense recorded on the statement of cash flows?

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. -Capital stock increased

Pilot Company reported the following information for 2015 and 2016. Prepaid insurance, December 31, 2015 $2,400 Prepaid insurance, December 31, 2016 1,500 Insurance expense--2016 14,200 How much cash was paid for insurance during 2016?

On its most recent statement of cash flows, a company reported net cash provided by operating activities of $16,000,000. Its capital expenditures for the same year were $6,000,000. A note to the financial statements indicated that the total amount of debt that would mature over the next five years was $24,000,000. 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 1? Explain your answer.

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. -Paid the cash dividends declared above.

Companies can use two different methods to report the amount of cash flow from their investing and financing activities.

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. -Increased the accounts payable balance.

Is it logical that interest paid is classified as a cash outflow in the Operating Activities section of the statement of cash flows but that dividends paid are included in the Financing Activities section? Explain.

Explain where to find the information needed to determine a company's cash flow adequacy.

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA Where: CL = Current liabilities LTL = Long-term liabilities CS = Common stock RE = Retained earnings NCCA = Noncash current assets LTA = Long-term assets Which of the following activities results in a cash inflow?

Washington Corp. reported the following information for 2015 and 2016. If Washington uses the indirect method to prepare the operating activities section of the statement of cash flows, what amount will be reported as net cash inflow from operating activities for 2016?

Where would you tell someone to find the information needed to compute the cash flow adequacy ratio?

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. -Depreciation expense

Significant noncash transactions are not reported on the statement of cash flows, but either in a separate schedule or in a note to the financial statements.

The accrual-based income statement is considered to be a good indicator of current cash inflows and outflows.