Exam 13: Statement of Cash Flows

The operating cash flow available for company use after purchasing the fixed assets that are necessary to maintain current productive capacity is called the

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. purchased buildings b. sold patents c. net income d.issued common stock e.paid cash dividends f. depreciation expense

Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

Under the direct method of reporting cash flows from operations, the primary source of cash is cash received from customers.

Firefly Inc. sold land for $225,000 cash. The land had been purchased five years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?

Cash flows from investing activities, as part of the statement of cash flows, would include any payments for the purchase of treasury stock.

On the basis of the following data for Garrett Co. for Years 1 and 2 ended December 31, prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities.  Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were for net income of $56,000 and cash dividends declared of $18,000.

Cash paid to purchase long-term investments would be reported in the statement of cash flows in

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses payable other than depreciation.

On the statement of cash flows, the cash flows from operating activities section would include

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the amortization of bond discount for the period is deducted from the net income for the period.

The statement of cash flows is an optional financial statement.

The cost of merchandise sold during the year was $50,000.  Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively.  Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively.  Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

To determine cash payments for income taxes for the statement of cash flows using the direct method, an increase in income taxes payable is added to the income tax expense.

Indicate whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method: (a) Increase in prepaid expenses (b) Amortization of patents (c) Increase in salaries payable (d) Gain on sale of fixed assets (e) Decrease in accounts receivable (f) Increase in notes receivable due in 60 days (g) Amortization of discount on bonds payable (h) Decrease in merchandise inventory (i) Depreciation of fixed assets (j) Loss on retirement of long-term debt (k) Decrease in accounts payable (l) Increase in notes payable due in 30 days (m) Increase in income taxes payable

Which of the following is not one of the four basic financial statements?

Identify which section the statement of cash flows (using the indirect method) would present information regarding the following activities. (Use O for operating, I for investing, or F for financing). a. Issued common stock b. Redeemed bonds c. Issued preferred stock d. Purchased patents e. Net income f.  Paid cash dividends g. Purchased treasury stock h. Sold long-term investment i.  Sold equipment j.  Purchased buildings k. Issued bonds

Complete each of the columns on the table below, indicating in which section each item would be reported on the statement of cash flows (operating, investing, or financing), the amount that would be reported, and whether the item would create an increase or decrease in cash. For item that affect more than one section of the statement, indicate all affected.  Assume the indirect method of reporting cash flows from operating activities.   The first item has been completed as an example.