Exam 14: Statement of Cash Flows

Dividends received from investments in marketable securities are reported as investing activities in the statement of cash flows.

Bates Company pays cash for all inventory purchases.Bates reports that it had a beginning inventory of $2,500 and an ending inventory of $900.Its cost of goods sold was cost of goods sold equaled $5,500.Based on this information,the amount of cash paid for inventory purchases was:

In preparing the statement of cash flows by the indirect method,noncash revenues and gains are added to net income.

Which of the following statements is incorrect regarding preparing a statement of cash flows using the direct method?

Cash payments for interest expense on a bond payable would be classified as a financing activity.

Use the reconciliation approach to determine cash received from customers for the Boyd Company for 2014the year.Beginning and ending balances of accounts receivableAccounts Receivable were $6,500 and 5,900 respectively.Sales (all on account)amounted to $127,000.

The cash proceeds from the sale of a building will be the book value plus any loss or minus any gain.

Under the indirect method,the increase or decrease in stockholder's equity is handled in the investing section of a cash flow statement.

Equipment with an original cost of $20,000 and accumulated depreciation of $7,500 was sold at a loss of $2,500.As a result of this transaction,cash would:

For 2014,Street Corporation reported net income of $400,000 and a net cash flows from operating activities of $550,000 during the year.Which of the following could not have been a reason why Street's net cash flows from operating activities were greater than its net income?

In 2014,Pingry Company's accounts receivableAccounts Receivable balance increased by $14,000 during the year.The company's income statement reports sales revenue of $437,500,all on account.How much cash did Pingrywas collected from customers on accounts receivable during the year?

Shaw Associates uses the indirect method for preparing the statement of cash flows.The following accounts and balances were drawn from the company's accounting records: Account Title Begining Ending Accounts receivable \ 30,000 \ 40,000 Prepaid insurance \ 4,600 \ 1,000 Accounts payable \ 24,000 \ 25,800 Unearned revenue \ 6,400 \ 3,800 Net income for the period was $42,000.The net cash flows from operating activities equals:

In preparing the statement of cash flows by the indirect method,an increase in accounts payableAccounts Payable would be subtracted from net income.

Income tax expense was $137,500 for the year.The balance of the iIncome tax payable account was $7,500 at the beginning of the year and $10,000 at the end of the year.Cash payments for income tax reported on the cash flow statement using the direct method is:equals:

Under the indirect method,depreciation expense would be subtracted from net income when determining the amount of cash flow fromnet cash flow from operating activities.

What can cause cash flow from operating activities to be greater than net income from operationsoperating activities?

What types of accounts are reconciled to determine cash flows from operating activities?

What kinds of cash flows are reported as investing activities on the statement of cash flows?

Blair Corporation reported the following for 2014Year 2: Beginning Ending Accounts receivable \ 40,000 \ 38,000 Merchandise inventory 32,000 36,000 Prepaid insurance 200 140 Interest receivable 1,800 600 Accounts payable 2,500 4,200 Salaries payable 4,000 3,600 Other information: Sales (all on account) \ 280,000 Interest revenue 10,000 Cost of goods sold 160,000 Salaries expense 24,000 Insurance expense 2,200 Required: a)Use the reconciliation approach to compute the appropriate figures for cash flows from operating activities. b)Present in good form the cash flows from operating activities section of a statement of cash flows using the direct method.

Pace Associates,a small consulting firm,charges all of its expenses on accounts payableAccounts Payable.On January 1,2014,Pace's accounts payableAccounts Payable balance was $1,500 at the beginning of the year.Duringand,during the year,an additional $13,500 of expenses were charged incurred on account in the amount of $13,500.The ending accounts payableAccounts Payable balance was $3,500.What is the amount of cash paid for expenses during the year2014?