Exam 11: The Cash Flow Statement

The Supplies balance has decreased during the year. How would this affect the cash flow statement operations section under the indirect method?

In order to be successful over the long run, the main source of a company's cash must come from __________.

Changes in long-term liabilities belong in the __________ section of a cash flow statement using the indirect method.

Operating activities reflect such things as purchasing fixed assets.

Amanda Industries reported net income of $52,000; depreciation expenses of $13,000; a gain on a land sale of $3,000; and a decrease in accounts receivable of $1,500. Under the indirect method, net cash flows from operations is __________.

What does the cash flow statement help investors and creditors do?

Cost of goods sold for the year was $850,000. Inventory was $60,000 at the beginning of the year and $90,000 at the end of the year. There were no changes in the amount in account payable for the year. Cash payment for merchandise to be reported under the direct method is:

Fine Furniture Company had net income of $50,000. Accounts receivable increased by $30,000; inventory decreased by $20,000; amounts payable increased by $4,000; and salaries payable decreased by $1,000. The amount of cash flow from continuing operating activities under the indirect method is __________.

Under the indirect method of cash flow, which of the following adjustments would NOT be made to net income when computing cash from operating activities?

Big Toy's records show net income of $30,000; depreciation expense of $10,000; and cash dividends paid of $5,000. The cash flow from operating activities on the cash flow statement using the indirect method is __________.

Operating cash flows under the indirect method starts with the net income for the period from the income statement.

Which method of preparing a cash flow statement is preferred according to IFRS and Canadian ASPE?

Current assets on the balance sheet would be affected by and be part of operating activities.

When a corporation receives dividends, they are shown as a(n) __________ activity.

How would depreciation of factory equipment be reported under the direct method?

Even though depreciation, depletion, and amortization are expenses, they are considered non-cash transactions and must be subtracted from net income in the operating activities section of an indirect method cash flow statement.

A decrease in prepaid insurance would be __________ to net income in the operating section of a cash flow statement using the indirect method.

Gains and losses on the sale of plant, property, and equipment are ignored in the direct method of preparing a cash flow statement.

Payments to suppliers include items such as employee compensation, interest, and income taxes.

Identify the three business activities on the cash flow statement and which type of accounts are affected by the cash flows of each.