Exam 14: Statement of Cash Flows

What is the major advantage of using the indirect method of preparing the statement of cash flows?

When using the indirect method to complete the cash flows from operating activities section,what is the proper treatment of depreciation expense?

Only the principle portion of a mortgage payment is considered to be a cash outflow for financing activities.

On January 1,2014,,Steigel Company had a balance of $720,000 in its land accountLand account.During the year2014,Steigel sold land,which that had cost $240,000,for $440,000 cash.The balance in the land accountLand account on December 31,2014,was $980,000 on December 31.What Based on this information what is the net cash outflow from investing activities?

The following information was drawn from Empire's 2012 and 2011Year 2 and Year 1 year-end balance sheets. 2014 2013 Investment securities \ 105,000 \ 112,500 Empire incurred a $1,500 loss on the sale of investment securities during 2014Year 2.No investment securities were purchased during Year 2.Based on this information alone,what is the amount of cash that was collected from the sale of securities?

Which of the following is incorrect regarding the financing activities section of a statement of cash flows?

Where is theThe gain resulting from the sale of equipment shown when using the indirect method to prepare the statement of cash flows is reported in the statement?:

The investing section of the statement of cash flows is the same regardless of whether the direct or indirect method is used.

The following is a partial list of accounts and balances for the Spencer Corporation.Prepare the operating activities section of the statement of cash flows for 2014 using the indirect method. Beginning Ending Land \ 48,000 \ 131,800 Accounts receivable 20,800 20,000 Prepaid rent 4,200 2,800 Prepaid insurance 1,800 5,600 Equipment 24,000 29,000 Accounts payable 3,600 2,800 Dividends payable 2,000 2,400 Utilities payable 1,000 1,600 Cash 16,000 14,400 Buildings 188,000 224,000 Salaries payable 5,800 4,400 Unearned revenue 1,600 1,800 Additional Information: y

Dennis Corporation prepared the following data (in dollars)for the current year: Increase in accounts receivable \ 6,000 Decrease in inventory 2,400 Increase in prepaid expenses 1,600 Depreciation expense, equipment 7,000 Loss on sale of equipment 1,500 Net income 130,000 Using the indirect method,what is the net cash flow from operating activities?

Diaz Company had the following comparative balance sheet information for 2014 and 2013at the end of Year 2 and Year 1: Diaz Company Comparative Balance Sheets Cash Accounts receivable Inventory Prepaid insurance Property, plant and equipment Accumulated depreciation Total Accounts payable Bonds payable Common stock Retained earnings Total 2014 30,000 48,000 158,000 10,000 70,000 (14,000) 302,000 14,000 90,000 140,000 58,000 302,000 2013 28,000 50,000 156,000 8,000 60,000 (10,000) 292,000 18,000 120,000 120,000 34,000 292,000 Diaz reported net income for 2014 Year 2 of $40,000.No property,plant,& equipment was disposed of during the year.Diaz uses the indirect method to prepare the statement of cash flows.

Under the indirect method,an increase in wages payableWages Payable would be added back to net income when calculating net cash flow from operating activities.

When using the indirect method to complete the cash flows from operating activities section,what is the proper treatment for an increase in the accounts receivableAccounts Receivable balance?

Arch Associates reports the following comparative balance sheets and income statement information. Arch Associates Comparative Balance Sheets Cash Accounts receivable Prepaid insurance Inventory Property, plant and equipment Total assets Accounts payable Salaries payable Long term notes payable Stockholders' equity Total liabilities and equity 12/31/2013 \ 12,000 4,000 10,000 6,000 12,000 \ 44,000 \ 8,000 10,000 8,000 18,000 44,000 12/31/2014 22,000 8,000 8,000 2,000 10,000 50,000 12,000 4,000 6,000 28,000 50,000 $\quad$$\quad$$\quad$$\quad$$\text { Income Statement }$ $\quad$$\quad$$\quad$$\text { Year Ended 12/31/14 }$ Revenue \ 70,000 Cost of goods sold 40,000 Gross margin 30,000 Operating expense Net income \ The amount of cash revenue collected received from customers during 2014 Year 2 was:

Phibbs Company prepared the following data for the year. Outflow to purchase treasury stock \ 30,000 Inflow from sale of machinery 7,500 Inflow from sale of marketable securities 3,750 Outflow to purchase building 87,500 Outflow to purchase land 12,500 Outflow to pay dividends 7,500 Outflow to pay interest 37,500 What is the net cash flow from investing activities?

Baltimore Company reported revenue of $124,000 on its 2014 income statement.The balance in its Uunearned Rrevenue account was $6,000 at the beginning of the year start of 2014 and $2,000 at the end of the year.Based on this information alone,the amount of cash that Baltimore collected from customers for 2014 was $120,000 during the year.

In preparing the statement of cash flows by the indirect method,which of the following is an incorrect statement of one of the general rules to convert net income to a cash-basis equivalent?

Which of the following would be reported as a financing activity on the statement of cash flows?

Which of the following would not be reported as a financing activity on the statement of cash flows?

The 2014 income statement for Year 2 of Winter Co.reported wages expense of $160,000.The At December 31,2013,Year 1,the balance sheet showed a balance in wages payableWages Payable of $16,000.At while the December 31,2014,Year 2,the balance sheet showed a balance in wages payableWages Payable of $22,000.What amount of cash was paid for wages in 2014during the year?