Exam 12: Reporting Cash Flows

Accounting standards require companies to include a statement of cash flows in a complete set of financial statements.

The following selected account balances are taken from a merchandising company's records: Dec. 31 Dec. 31, For the 202 201 Year 202 Merchandise inventory \ 4,600 \ 21,200 Accounts receivable 42,000 36,000 Accounts payable 32,400 27,400 Salaries payable 4,400 3,000 Total assets 234,000 286,000 Sales \ 312,000 Cost of goods sold 165,600 Salaries expense 48,000 (a) Calculate the cash payments made during 20X2 for merchandise. Assume all of the company's accounts payable balances result from merchandise purchases. (b) Calculate the cash receipts from customer sales during 20X2. (c) Calculate the cash payments for salaries during 20X2.

When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

The statement of cash flows helps analysts evaluate all but which of the following?

The cash flows from operating activities section of an indirect method of cash flows begins with net income or loss.

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities: Net income \ 182,000 Gain on the sale of equipment 12,300 Proceeds from the sale of equipment 92,300 Depreciation expense- equipment 50,000 Payment of bonds at maturity 100,000 Purchase of land 200,000 Issuance of common stock 300,000 Increase in merchandise inventory 35,400 Decrease in accountsreceivable 28,800 Increase in accounts payable 23,700 Payment of cash dividends 32,000

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Use the information provided to calculate the missing cash paid for merchandise for the period. Accounts payable, beginning-year.\ldots\ldots\ldots\ldots\ldots\ldots\ldots \6 0,000 Cost of goods sold.\ldots\ldots\ldots\ldots\ldots\ldots\ldots 244,000 Merchandise inventory, beginning-year\ldots\ldots\ldots\ldots\ldots\ldots\ldots 35,000 Merchandise inventory, year-end\ldots\ldots\ldots\ldots\ldots\ldots\ldots 40,500 Accounts payable, year-end\ldots\ldots\ldots\ldots\ldots\ldots\ldots 64,800 Cash paid for merchandise. \ldots\ldots\ldots\ldots\ldots\ldots\ldots

In preparing a company's statement of cash flows for the year just ended, the following information is available: Loss on the sale of equipment \ 14,000 Purchase of equipment 225,000 Proceeds from the sale of equipment 106,000 Repayment of outstanding bonds 87,000 Purchase of treasury stock 25,000 Issuance of common stock 96,000 Purchase of land 115,000 Increase in accounts receivable during the year 33,000 Decrease in accounts payable during the year 75,000 Payment of cash dividends 35,000 Net cash flows from financing activities for the year were:

Jamison Company reports depreciation expense of $35,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Jamison Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment \ 610,000 \ 750,000 Accumulated Depreciation-Equipment 428,000 500,000

The direct method for the preparation of the operating activities section of the statement of cash flows:

The cash flow on total assets ratio is computed by dividing ________ by ________.

Investing activities do not include the:

The accountant for Mandarin Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year \ 819,000 Net income for the year 230,000 Cash dividends declared for the year 42,000 Retained earnings balance at the end of the year 1,007,000 Cash dividends payable at the beginning of the year 10,000 Cash dividends payable at the end of the year 11,000 What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):

Financing activities include receiving cash from issuing debt and paying cash dividends to shareholders.

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. Cost of goods sold. Merchandise inventory, January 1 Merchandise inventory, December 31 Accounts payable, January 1 Accounts payable, December 31 \ 735,000 84700 82,400 54,500 60,200

A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.