Exam 12: The Statement of Cash Flows

If the balance of accounts receivable decreases during the year, then cash collections will ____________________________ sales on account for the period.

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). -Depreciation expense

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. -Declared cash dividends.

Which of the following is not a current reporting requirement for a statement that reports changes in cash over a period of time?

Upon review of Jerry's Canoe Gallery statement of cash flows, the following was noted: Cash flows from operating activities $\quad \$ 75,000$ Cash flows from investing activities $\quad ( 135,000 )$ Cash flows from financing activities $\quad 125,000$ From this information, the most likely explanation is that Jerry is

Below is information for Dakota Corp.for 2016 and 2017: Bonds payable, December 31,2016 \ 500,000 Bonds payable, December 31,2017 800,000 Loss on bond retirement-2017 15,000 Interest expense on bonds -2017 45,000 At the end of 2017, Dakota 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 2017 (before their maturity date).All interest expense was paid in cash during 2017. The following statements describe how Dakota reported the cash flow effects of the items described above on its 2017 statement of cash flows.The indirect method is used to prepare the operating activities section.Which of the following has been reported incorrectly by Dakota?

Which method of preparing the operating activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?

When using the indirect method, how is the issuance of stock to retire a long-term debt shown on a statement of cash flows?

___________________________ is a noncash expense related to plant assets.

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. -Paid employee salaries and wages.

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?

Use the information below for Flora Inc.for 2016 and 2017 to answer the following question. Equipment, December 31,2016 \ 65,000 Equipment, December 31,2017 72,000 Accumulated depreciation, December 31,2016 39,000 Accumulated depreciation, December 31,2017 30,000 During 2017, Flora 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 was depreciation expense for 2017?

The objective of the indirect method is to reconcile net income to net cash flow from _______________________________.

Presented below is the operating activities section of the statement of cash flows for Golden Consulting for 2016: $\begin{array}{lr}\text { Operating activities: }\\\text { Net income } & \$ 92,000 \\\text { Add: Depreciation } & 20,000 \\\text { Decrease in accounts receivable } & 8,000 \\& \$ 120,000 \\\text { Deduct: Decrease in accounts payable } & \$(6,000) \\\text { Net cash inflow from operating activities } & \$ 114,000\end{array}$ Which method of preparing the operating activities section has Golden Consulting used?

Goldman Corp.reported the following information for 2016 and 2017. ? Accounts payable, December 31,2016 \ 51,000 Accounts payable, December 31,2017 46,000 Purchases-2017 467,000 How much cash was paid for merchandise purchases during 2017?

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

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. -Issued preferred stock.

Zack Co.reported a net loss of $50,000 for 2016, yet its cash balance increased during the year.Which financial statement should Zack's management refer to for an explanation of this situation?

When using the direct method, how is the retirement of bonds payable at their maturity date shown on the statement of cash flows?

Below are the transactions for the Louisville Company: Proceeds from issuance of bonds payable \ 635,000 Payment to purchase equipment \ 275,000 Payment of wages \ 115,000 Payment of dividends \ 155,000 Payment to pay off notes payable \ 195,000 Based on these transactions, what is the net cash flow from financing activities?