Exam 14: Statement of Cash Flows

In preparing the statement of cash flows by the indirect method,a decrease in a long-term investment account would be added to net income.

Cash from the sale of treasury stock would be classified as an investing cash flow.

Cash flows from investing activities are related to the acquisition and disposition of assets,other than inventory and supplies.

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

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

Noncash investing and financing activities are not reported on the statement of cash flows.

Which of the following is not an adjustment when arriving at net cash provided byflow from operating activities under the indirect method?

When using the indirect method,an increase in current liabilities is:

The Duke Company rents out a portion of its office space to another company.At the beginning of 2014the year,the balance in the unearned rent revenueUnearned Rent Revenue account was $1,200.During 2014 the year,Duke recognized $6,800 of rent revenueRent Revenue.If the ending balance of unearned rent revenueUnearned Rent Revenue is $700,how much cash was received from the tenant for rent during the year2014?

The following beginning and ending balances were drawn from the records of Grimes Company: Beginning Ending Equipment \ 1,400 \ 1,100 Accumulated Depreciation \ 700 \ 400 If Grimes Company sold equipment,which that had an original cost of $600 and accumulated depreciation of $300,for $250,how much did Grimes pay for new equipment?

Bowman Corporation's sales for 2014 were $300,000,and the balance in its accounts receivableAccounts Receivable increased by $8,000 during the year.In 2014,Bowman collected $308,000 in cash from its customers.

Cash receipts from the sale of investments would be classified as a financing activity.

When using the indirect method to complete the cash flows from operating activities section,what is the proper treatment for an increase in the inventory account?

The Knott Company reported depreciation expense of $10,000 and net income of $16,000 on its 2014 income statement.During the year,2014 the company's accounts receivableAccounts Receivable balance decreased by $4,000.Based on this information,what was the amount of cash flow fromnet cash flow from operating activities?

For During the year ended December 31,2014,Burton Company had cash collections from customers of $100,000,cash paid to employees of $16,000,cash paid to suppliers of $50,000,cash used to retire long-term bonds of $16,000,and cash payments for dividends of $10,000.The net cash flow from Cash provided by operating activities for 2014during the year was is:

Under the indirect method,the amount of cash flow fromnet cash flow from financing activities would be the same as if the direct method had been used.

The following information was drawn from the year-end balance sheets of White,Inc. Bonds payable Common stock Treasury stock Retained earnings 2014 \ 200,000 112,500 17,500 35,000 2013 \ 275,000 87,500 12,500 27,500 The amount of net income shown on the 2014 Year 2 income statement was $17,500.There was no beginning or ending balance in the Dividends Payable account.What is the amount of cash outflows for dividends?

The Ling Corporation reported a beginning balance of $1,200 in its prepaid insurancePrepaid Insurance account for 2014.During the year,a total of $16,000 was recognized as insurance expense and the prepaid insurancePrepaid Insurance account had an ending balance of $1,600.How much cash did Ling pay for insurance during 2014the year?

The only difference between the cash flow statement prepared under the indirect method as opposed to the direct method is the manner in which the:

When using the indirect method,a decrease in a current asset (other than cash or cash equivalents)is: