Exam 12: Statement of Cash Flows

Assume a company uses the indirect method to prepare its statement of cash flows.If the Supplies account decreases and Salaries and Wages Payable increases during an accounting period,what does the company do with the changes in these accounts to calculate cash flows from operating activities?

Investing activities include receiving cash from the sale of land and also the resulting gain or loss on the sale.

When the direct method is used to determine the cash flows from operating activities,other operating expenses are converted into cash outflows by:

Bailey Hill Co.uses the indirect method to determine its net cash flows from operating activities.During the course of the year,the company's Accounts Receivable increased by $28,000 and its Accounts Payable decreased by $14,000.If these are the only two adjustments required to convert net income to net cash provided by operating activities,the combined effect will be a(n):

Marion Manufacturing had the following cash flows for the current year.The company uses the direct method in preparing the statement of cash flows. Cash receipts from issuance of stock 60,000 Bonds payable issued at face value 250,000 Cash dividends received from long-term investments 4,500 Cash paid for wages 20,000 Cash paid for dividends 5,000 Cash received from customers 42,500 Cash paid for other operating expenses 19,500 Cash paid to purchase equipment 100,000 What is the net cash provided by (used in)investing activities?

Which of the following would be reported as a cash outflow from investing activities?

Maya Company's purchase of 100 shares of Labrador Inc.common stock would be reported as a financing activity on its statement of cash flows.

Ashley Co.uses the direct method in calculating its cash flow from operations.Which of the following items will not have an effect on cash flow from operating activities?

Match each term with the appropriate definition.Not all definitions will be used. -Indirect Method

When preparing the operating activities section of the statement of cash flows using the indirect method,accumulated depreciation is added to net income in the operating section.

Cash provided by issuing stock to owners should be reported as cash:

Equipment with a cost of $20,000 and a book value of $6,000 was sold during the year for cash of $18,000.Additional equipment was purchased during the year for cash. The company uses the indirect method in preparing the statement of cash flows.What is the amount of depreciation expense that will be reported in the operating activities section of the statement?

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.Which of the following statements is correct concerning a decrease in Accounts Payable?

When the indirect method is used,details from which of the following balance sheet accounts are used in calculating both operating and financing cash flows?

The reporting of financing activities is identical under the indirect and direct methods for the statement of cash flows on the statement of cash flows.

Cash flows from financing activities can include:

Assume that a company chooses the indirect method to determine net cash flows from operating activities. Required: Part a.Explain why net income is the starting point when the indirect method is used to determine cash flows from operating activities. Part b.Briefly explain why a company's net income is most likely different in amount than its cash flows from operating activities.

The direct exchange of debt for equipment would be shown:

Almost all U.S.companies have used the indirect method of preparing the statement of cash flows:

Mill Garden Company's income statement for the year shows a net loss of $135,000.Additional information for the year follows: Depreciation Expense \ 60,000 Increase in Accounts Receivable 108,000 Decrease in Inventory 37,500 Decrease in Prepaid Rent 13,500 Decrease in Accounts Payable 16,500 What is the net cash provided by (used in)operating activities?