Exam 11: The Statement of Cash Flows

Match these terms with their correct definition. a.Cash flow adequacy ratio b.Cash flows from financing activities c.Cash flows from investing activities d.Cash flow from operating activities e.Direct method f.Free cash flow g.Income statement h.Indirect method i.Noncash investing & financing activities j.Statement of cash flows -Provides information that can be used to judge a company's ability to meet its obligations and pay dividends.

When using the indirect method to determine operating cash flows, where is the gain from selling a long-term investment recognized? (The proceeds from selling the investment are considered separately.)

A company reported the following information: How much cash was paid for salaries during 2014?

Which balance sheet accounts are most affected by financing activities?

MATCHING Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) a.Inflow from operating activity b.Outflow from operating activity c.Inflow from investing activity d.Outflow from investing activity e.Inflow from financing activity f.Outflow from financing activity g.Noncash investing and financing activity h.Not reported on statement of cash flows -Sold office building for cash.

____________________ activities involve long-term liabilities and stockholders' equity.

Selected data from the financial statements for the years ended December 31, 2014 and 2013, are presented below: The following additional information was obtained from the company's records: -Refer to Maritime Marine Services. Assuming that the book value of the property, plant and equipment disposed of during 2014 was $90, what were the cash proceeds from the disposal?

When using the direct method to determine operating cash flows, how is the collection of cash from customers shown on the Statement of Cash Flows?

Cash flows from purchases, sales, and maturities of investments are classified as financing activities.

To be classified as a cash equivalent, an item must be readily convertible to a known amount of cash and have an original maturity to the investor of 3 months or more.

Upon review of a statement of cash flows, the following was noted: From this information, it is likely that the company is

A company reported the following information: How much cash was collected from customers during 2014?

"You Decide" Essay You are financial news reporter for the Wall Street Journal. During a recent press conference with the Chief Financial Officer of Lackluster Video, Inc. the executive stated that the company's financial health was excellent and that she expected their recent history of successful and strategic growth to continue to generate significant profits in the future as they expanded their video stores into several new major geographical markets. To corroborate the CFO's statements, you examined the statement of cash flows and found that the company has reported negative operating cash flows, positive investing cash flows, and positive financing cash flows for each of the last 5 years. Does the statement of cash flows support the CFO's statements?

A company acquired land by issuing its common stock. How should this transaction be disclosed when a statement of cash flows is prepared?

If Accounts Receivable decreased during the year, then cash collections must have been ____________________ than sales on account for the period.

MATCHING Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) a.Inflow from operating activity b.Outflow from operating activity c.Inflow from investing activity d.Outflow from investing activity e.Inflow from financing activity f.Outflow from financing activity g.Noncash investing and financing activity h.Not reported on statement of cash flows -Purchased truck for cash.

Midtown Diner, Inc., purchased $10,000 of paper napkins for its restaurants. At the end of the period, three-fourths of the bill for the napkins is unpaid while an inventory revealed that 40% of the napkins were still on hand. What combination of amounts would affect the income statement and statement of cash flows? Statement of Cash Flow Income Statement

Many companies use software such as Microsoft PowerPoint to construct their cash flow statements.

MATCHING Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) a.Inflow from operating activity b.Outflow from operating activity c.Inflow from investing activity d.Outflow from investing activity e.Inflow from financing activity f.Outflow from financing activity g.Noncash investing and financing activity h.Not reported on statement of cash flows -Declared stock dividends.

MATCHING Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) a.Inflow from operating activity b.Outflow from operating activity c.Inflow from investing activity d.Outflow from investing activity e.Inflow from financing activity f.Outflow from financing activity g.Noncash investing and financing activity h.Not reported on statement of cash flows -Paid interest on a capital lease.