Exam 17: Statement of Cash Flows

GAAP mandates that firms provide a

Which one of the following items is the most common adjustment to the cash flow from operating activities under the indirect method because cash does not increase or decrease?

The following Income Statement and Operating Cash Flow information pertain to Receivership Inc.'s operations for the year ended December 31,2014. Required: 1.Prepare the net cash flow from operating activities section of the cash flow statement using the direct method.

An increase in cash flows from financing activities will occur when a company distributes a stock dividend.

The following data is for the Kris Company for 2015 ; Gain on sale of equipment \8 ,000 Purchase of First Corp. bonds (face value \ 250,000 ) 275,000 Proceeds from sale of machinery 300,000 Dividends paid 50,000 Proceeds from sale of treasury stock 200,000 -The amount reported as net cash provided by financing activities is

Accrual accounting net income can differ from operating cash flows for all of the following reasons except

The cash flow statement of the United Company is in process for 2015. The United Company is reporting the following balances: 12/31/14 12/31/15 Equipment \ 100,000 \ 170,000 Loss on sale of equipment 0 10,000 Accumulated depreciation-equipment 75,000 95,000 During 2015, United sold equipment costing $30,000 for $12,000 and made several purchases of new equipment for cash. -If these were the only investing activities,the cash flow from investing activities is a net cash

Which one of the following would be reported in the cash flow from operating activities section of the cash flow statement under the direct method?

Delaying the payment of accrued expenses until a later period is a technique that management can use to manipulate the current year's cash flow from operating activities.

The direct method is easier for firms to implement because it relies exclu­sively on data already available in the accrual accounts.

Under the indirect method,the gain on sale of equipment should be

Changes in the balance sheet accounts at June 30, 2014 and 2015 for the Poker Company are presented below: $\begin{array}{lr}\text { Assets } & \begin{array}{r}\text { Increase } \\\text { (Decrease }\end{array} \\\text { Cash } & \$ 80,000 \\\text { Accounts receivable } & 200,000 \\\text { Lnventory } & 300,000 \\\text { Long-term investments } & 200,000 \\\text { Equipment } & (200,000 \\\text { Accumulated depreciation } & (60,000)\\\\\text { Liabilities and Stockholders' Equity }\\\text {Accounts payable }&\$(40,000)\\\text {Dividends payable}&400,000\\\text {Notes payable-Current }&(200,000)\\\text {Notes payable-Long-term }&400,000\\\text {Common stock, \$ 1.00 par }&300,000\\\text {Additional paid-in capital }&100,000\\\text {Retained eamings }&80,000\\\end{array}$ Additional Information for 2015: Net income was $480,000 and dividends of $400,000 were declared. Common stock was issued for cash. A Long-term investment was sold for $160,000. A new Long-term investment was acquired for $360,000. Equipment that cost $600,000 was sold for $200,000. The book value of those assets was $150,000. -The dividends actually paid during 2015 are

The Hurricane Company provided the following information for the year ended December 31,2015: January 1,2015 December 31,2015 Interest payable \ 15,500 \ 12,250 Discount on bonds payable \ 79,900 \ 77,200 Income taxes payable \ 97,300 \ 99,900 Deferred income taxes payable \ 17,400 \ 11,150 Income tax expense \ 157,250 Interest expense \ 57,770 Required: 1.Determine the cash paid for interest during 2015. 2.Determine the cash paid for income taxes during 2015.

For a firm using the indirect method,amortization of bond discount should be added back to net income to arrive at cash flow from operating activities.

The FASB's agenda lists as "inactive" a project that would require firms to use the direct method of reporting cash flows from operating activities.

For a firm using the indirect method,a loss on the sale of equipment should be added back to net income to arrive at cash flow from operations.

Madrid Incorporated's 2015 income statement reported income tax expense of $635,375.During 2015,Madrid's income taxes payable account increased $19,735 while the deferred tax asset account increased $39,365.How much cash was paid for taxes during 2015?

Cash flows arising from the purchase or sale of a company's own stock are cash flows from financing activities.

A significant increase in capital expenditures reported in the investing section of the cash flow statement that coincides with a significant decrease in operating expenses as a percentage of sales may be an indication that the firm is improperly capitalizing costs that should be expensed.

The cash flow statement of the United Company is in process for 2015. The United Company is reporting the following balances: 12/31/14 12/31/15 Equipment \ 100,000 \ 170,000 Loss on sale of equipment 0 10,000 Accumulated depreciation-equipment 75,000 95,000 During 2015, United sold equipment costing $30,000 for $12,000 and made several purchases of new equipment for cash. -Equipment purchases in 2015 were