Exam 14: Statement of Cash Flows

Gates Corporation reported utilities expense of $112,800 on its income statement for 2014.For the year,The the beginning balance in Uutilities Ppayable was $8,000 and the ending balance was $4,000.The amount of cash that Gates paid for utilities in 2014during the year was $116,800.

The following account balances are for Curran Company: Accounts receivable Prepaid rent Long-term marketable securities Dividends payable Salaries payable Notes payable 12/31/2013 \ 84,000 8,000 80,000 6,000 8,000 44,000 12/31/2014 60,000 4,000 70,000 2,000 2,000 34,000 Additional data for 2014Year 2: (1)Sales on account for the period were totaled $100,000. (2)Salary expense was $14,000. (3)Rent expense was $12,000. Based on this information,what was the net cash inflow from operating activities for Year 22014?

The indirect method of preparing the statement of cash flows is preferred recommended by the Financial Accounting Standards Board.

What are the two methods used to prepare the statement of cash flows?

Under the direct method,depreciation expense is added back to net income when computing net cash flow from operating activities.

Jennings Company issued a $250,000 note to purchase a building.Jennings would report the event as a noncash investing and financing activity.

Style Monthly magazine reported $650,000 of revenue for the month.At the beginning of the month,its unearned revenue accountUnearned Revenue account had a balance of $190,000.At the end of the month,the account had a balance at $156,000.Based on this information,what is the amount of cash received from revenuecustomers?

In preparing the statement of cash flows by the indirect method,an increase in inventory would be added to net income.

There are two methods,- direct and indirect,-for preparing and presenting the statement of cash flows.

When using the indirect method,the amount of net cash flow from operationsoperating activities will be higher than it would be if the direct method were used.

Under the indirect method,which of the following items would be subtracted from net income to determine the cash flow from operating activities?

The 2014 income statement of Collins Co.reported total sales revenue of $115,000 during the current year.The company's comparative The December 31,2013 balance sheets reported showed a balance in accounts receivableAccounts Receivable of $17,500 at the beginning of the year and ,while the 2014 balance sheet showed a balance in accounts receivable of $25,000 at the end of the year.The cash inflow from customers for 2014 during the current year equalswould be:

When using the indirect method,the amount of net cash flow from operating activities will be the same as it would be if the direct method were used.

During 2014the year,the Abbot Company had the following changes in account balances: 1)The accumulated depreciation accountAccumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000.The increase was due to depreciation expense. 2)The long-term notes payableNotes Payable account had a beginning balance of $40,000 and an ending balance of $15,000.The decrease was due to repayment of debt. 3)The accounts receivableAccounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000. 4)The equipmentEquipment account had a beginning balance of $25,000 and an ending balance of $92,500.The increase was due to the purchase of equipment for cash. 5)The long term investments account (marketable securities)had a beginning balance of $18,000 and an ending balance of $12,500.The decrease was due to the sale of investments at cost. 6)The amount of cash dividends declared and paid during the year was $22,000. 7)The interest payable account had a beginning balance of $2,250 and an ending balance of $1,250. Assume that a statement of cash flows has been prepared.The combination of the three major components (operating activities,investing activities,financing activities)equals the:

In preparing the statement of cash flows by the indirect method,a decrease in prepaid expenses would be added to net income.

During 2014the year,the Abbot Company had the following changes in account balances: 1)The accumulated depreciation accountAccumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000.The increase was due to depreciation expense. 2)The long-term notes payableNotes Payable account had a beginning balance of $40,000 and an ending balance of $15,000.The decrease was due to repayment of debt. 3)The accounts receivableAccounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000. 4)The equipmentEquipment account had a beginning balance of $25,000 and an ending balance of $92,500.The increase was due to the purchase of equipment for cash. 5)The long term investments account (marketable securities)had a beginning balance of $18,000 and an ending balance of $12,500.The decrease was due to the sale of investments at cost. 6)The amount of cash dividends declared and paid during the year was $22,000. 7)The interest payable account had a beginning balance of $2,250 and an ending balance of $1,250. What is the net cash flow from investing activities?

Which method is used by majority of U.S.companies to report cash flows from operating activities?

The Valz Corporation had a balance in its equipmentEquipment account on January 1,2014at the beginning of the year of $650,000.During the year,equipment originally costing $170,000,which had and having accumulated depreciation of $40,000,was sold for $134,000.The ending balance of the equipmentEquipment account was $550,000.How much additional equipment was purchased during 2014the year?

Under the indirect method losses are added and gains are subtracted when computing net cash flow from operating activities.

Which of the following would be reported as an investing activity on the statement of cash flows?