Exam 3: Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

In 2010,Lamar Industries reported the following: Sales $700,000 ;Accounts receivable beginning of 2010 $450,000;Accounts receivable end of 2010 $369,200;Depreciation expense $55,400;Rent Expense $30,000.What is the net cash provided (used)by operating activities

Listed below is a list of cash inflows and cash outflows for Toggle Inc. 1.Cash received from issuing debt 2.Cash received from interest earned on a bond investment 3.Cash used to purchase property 4.Cash used to repay debt 5.Cash received from collections of loans 6.Cash paid for retiring common stock 7.Cash paid to employees for salaries 8.Cash from the sale of marketable securities 9.Cash used to pay dividends 10.Cash from the sale of services to customers 11.Cash paid to government agencies for taxes 12.Cash received from the sale of equipment For each item indicate where it should appear on Toggle's statement of cash flows.Select from: a.Cash inflows from operating activities b.Cash outflows from operating activities c.Cash inflows from investing activities d.Cash outflows from investing activities e.Cash inflows from financing activities f.Cash outflows from financing activities

Luke Corporation is a manufacturer of home furnishings.Selected financial information about Luke is listed below: •Borrowed $850,000 from a bank. Purchased equipment for $210,000 in cash. •Purchase investments for $285,000. •Received dividends of $51,000 from an investment in Davis Corp. •Paid dividends of $55,000. •Issued shares of preferred stock for $500,000. Repurchased outstanding common shares using $100,000 in cash. •Purchased land for $100,000 cash. •Paid $36,000 interest expense on a bank loan. •Increased Inventories by $320,000 •Increased accounts receivable by $217,000. •Increased accounts payable $85,000. Use the above information to calculate Luke's:a.cash used or provided by investing activities b.cash used or provided by financing activities

When preparing the statement of cash flows using the indirect method,the sale of marketable securities would appear as

Which of the following statements is true?

EBITDA not only ignores four expenses but also ignores changes in __________________________________________________ accounts.

Clarion Industries manufactures computer equipment and provides financing for purchases by its customers.Clarion reported sales and interest revenues of $79,500 million for 2010.The balance sheet showed current and noncurrent receivables of $ 30,750 million at the beginning of 2010 and $ 26,900 million at the end of 2010.Compute the amount of cash collected from customers during 2010.

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

Under the indirect method of preparing the statement of cash flows,add backs to net income include all of the following except:

Tinker Company reported sales revenue of $500,000 and total expenses of $450,000 (including depreciation)for the year ended December 31,2010.During 2010,accounts receivable decreased by $5,000,merchandise inventory increased by $4,000,accounts payable increased by $6,000,and depreciation expense of $10,000 was recorded.Assuming no other data is needed and using the indirect method,the net cash inflow from operating activities for 2010 was 

An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is

J.Jill is a women's clothing retailer.The company started as a mail order company and has expanded into mall department stores.The company now receives approximately half of its revenues from mail order and half from retail outlets.Over the time period 2010 to 2012,sales increased approximately 25%. Discuss the relationship between net income,working capital from operations,and cash flow from operations,and between cash flows from operating,investing,and financing activities over the three-year period.

Free cash flows to all debt and common equity shareholders represents the excess of cash flows from

Which of the following statements is false?

A firm's cash flows will differ from net income each period for all of the following reasons except:

The receipt of cash when employees exercise stock options is a (an)____________________ activity.

Fizzzle Inc.sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale.How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

Olive Corporation manufactures food processing equipment.Use Olive Corporation's two most recent balance sheets and most recent income statement to prepare a statement of cash flows for 2010.The company paid dividends of $6,250 during 2010.

Which of the following statements about the statement of cash flows is correct? 

Which of the following is not an expense excluded when calculating EBITDA?