Exam 5: The Statement of Cash Flows

A corporation reported the following information in its income statement: The corporation should report the following amount on its Statement of Cash Flows for net cash from operating activities:

Net income was $50,000 and cost of goods sold was $150,000.Inventories increased by $10,000,and trade accounts payable increased by $12,000. Calculate the amount of cash paid to suppliers.

Under IFRS,interest paid may be classified as operating or financing activities.

The following four events affecting property,plant and equipment,and intangible assets,occurred during the current year for a firm: (i.) Purchased equipment for $50,000. (ii)) Successfully defended a patent infringement suit costing the firm $60,000 in legal fees this year; as a result,the firm has sole rights to the patent. (iii.) Capitalized and paid $30,000 of interest on a building under construction which is to house the firm's new offices. (iv)) Received $100,000 in casualty insurance proceeds as a result of fire damage to one of the firm's factories. What is the net effect on investing cash flow of the above transactions for the current year?

Cash paid to suppliers plus an increase in inventory minus an increase in accounts payable would equal cost of goods sold.

ABC reported sales revenue of $100,000 and expenses of $106,000 for the period ended December 31,2011; accounts receivable decreased by $500; accounts payable increased by $2,500; accrued wages payable decreased by $1,500; short-term loans to banks increased by $600; and depreciation expense of $4,000 was recorded.What was the amount of net cash flow from operating activities for 2011?

Accrual based net sales plus a decrease in accounts receivable for the year would equal cash from customers.

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory decreased by $20,000 during the year,and accounts payable increased by $30,000 during the year.What would be DBB's cash paid to suppliers for 2013?

Cash equivalents are "short-term,highly liquid investments" that are both: (a) readily convertible to known amounts of cash and (b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

ABC Company has just completed the December 31,2001,financial statements except for the Statement of Cash Flows.Information on changes in accounts appears in tabular format below.Additional information for 2001: a.Net income,$16,000. b.Depreciation expense,$5,000. c.Cash dividend declared and paid,$4,000. d.Declared and issued a $10,000 stock dividend,recorded at par. e.December 30,2001,purchased a machine (a capital asset) for $10,000; paid half cash and issued a one year,18%,interest-bearing note of $5,000 for the balance. f.Sold 20 shares of unissued shares at $26 per share,collected cash in full. g.Repurchased 10 shares of their ABC shares at $25 per share (assume the single-transaction method is used for common stock),paid cash in full. h.Purchased a tract of land and paid for it in full by exchanging for it all of the investment in X Corporation shares.The shares were quoted on the market at $12,000 (any gain or loss is included in income as an "ordinary" item). i.Sold an idle plant for $6,000 cash. j.Extraordinary gain of $2,000 (net of income tax) due to an earthquake (infrequent and unusual),which caused the loss of capital assets that originally cost $12,000 when they were two-thirds,depreciated; received $6,000 cash settlement from the insurance company.

WXY reported sales revenue of $40,000 and expenses of $35,000 during the period ended December 31,2011.During the year,accounts receivable increased by $1,500; merchandise inventory increased by $1,000; accounts payable increased by $500; dividends payable decreased by $700; and depreciation expense of $2,500 was recorded.What was the amount of net cash flow from operating activities?

The sale of $3,000 worth of cash equivalents at cost has what effect on the direct method Statement of Cash Flows.

The sale of $3,000 worth of cash equivalents at cost has what effect on the indirect method Statement of Cash Flows.

A firm's accumulated depreciation account increased $30,000 for the year,and total plant assets at cost increased $200,000.During the year,the firm purchased $350,000 of new equipment for cash,and sold equipment for $50,000 cash.This equipment had been depreciated $30,000 at the time of sale.What is the complete disclosure of these events in the indirect method Statement of Cash Flows?

Choose the correct statement about preparation of the Statement of Cash Flows:

Under IFRS,interest received may be classified as:

The write-off of a bad debt (allowance method) during the current period represents an outflow of cash on the Statement of Cash Flows for the current period.