Exam 13: Statement of Cash Flows

The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the net decrease in inventories from the beginning to the end of the period is added to net income for the period.

On the basis of the details of the common stock account presented below, calculate the total amount to be recorded in financing section of the statement of cash flows. Assume any stock issues were at par. Indicate whether the amount results in an increase or decrease in cash.

Cash paid to acquire treasury stock should be shown on the statement of cash flows under investing activities.

Each of the events below may have an effect on the statement of cash flows. Designate how the event should be reported within the statement of cash flows using the codes provided below. Codes may be used more than once, or not at all. Codes: I + investing activity; cash inflow I - investing activity; cash outflow F + financing activity; cash inflow F - financing activity; cash outflow O + operating activity; cash inflow O - operating activity; cash outflow NC noncash investing and financing activity Events: 1. Paid the weekly payroll 2.Paid an account payable 3.Issued bonds payable for cash 4.Declared and paid a cash dividend 5. Paid cash for a new piece of equipment 6. Purchased treasury stock for cash 7. Paid cash for stock in another company 8.Received interest on a long-term bond investment 9. Received cash for sales 10. Sold a long-term stock investment for cash at book value

The statement of cash flows is not useful for

A building with a cost of $153,000 and accumulated depreciation of $42,000 was sold for an $11,000 gain.  When using the indirect method, the cash generated from this investing activity was $121,000.

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

When using the spreadsheet (work sheet) for the statement of cash flows, indirect method, entries made on the spreadsheet are

A company purchases equipment for $32,000 cash.  This transaction should be shown on the statement of cash flows under

Based on the following, what is free cash flow? Cash flows from operations include $2,000 for depreciation.  Cash flows from investing include the purchase of a replacement asset for $100,000 and the sale of the one used in production, which is now obsolete, for $70,000.  Cash flows from financing include $70,000 of borrowing.