Exam 13: The Statement of Cash Flows

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Gain on Sale of Investment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Bamberg Corporation received interest on an investment in a long-term note.Indicate which section,if any,this transaction would appear in,or relate to,on a statement of cash flows.

Give two explanations for why the amount of cash outflow for equipment for the year might not equal the increase in the Equipment account balance from one balance sheet date to the next.

A decrease in the balance of merchandise inventory is added to net income when calculating net cash flows from operating activities using the indirect method.

Bamberg Corporation purchased land for cash.Indicate which section,if any,this transaction would appear in,or relate to,on a statement of cash flows.

Royer Corporation engaged in this transaction: Declared and issued a stock dividend. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Cash equivalents include money market accounts,commercial paper,and U.S.Treasury bills.

Which of the following is reported as a noncash investing and financing transaction on the statement of cash flows?

Royer Corporation engaged in this transaction: Sold long-term investment. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Match each definition with the correct term below. -Cash flow yield

Use the following information to obtain the ratios below.Round amounts to one decimal place. a.Cash flow yield = _______________ times b.Cash flows to sales = _______________ % c.Cash flows to assets = _______________ % d.Free cash flow = $ ________________

Bamberg Corporation repaid a ten-year note payable.Indicate which section,if any,this transaction would appear in,or relate to,on a statement of cash flows.

Use this information to answer the following question. Oconee Corporation is preparing a statement of cash flows. The following transactions occurred during the year: 1. Sold machinery for $18,000 cash. 2. Purchased a building for $160,000 cash. 3. Issued $140,000 worth of stock to acquire an airplane. 4. Converted long-term bonds by issuing $200,000 worth of stock. 5. Declared and paid a $20,000 cash dividend. Transaction 4 would be found on the statement of cash flows in the

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Payable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Depreciation Expense-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Aiken Corporation acquired a land site with a building by issuing a 30-year mortgage payable.In Aiken's statement of cash flows,this transaction should be shown

Net cash flows from investing activities would be needed to calculate cash flow yield,cash flows to assets,and cash flows to sales.

For purposes of preparing the statement of cash flows,cash is defined as not including cash equivalents.

Match each definition with the correct term below. -Direct method

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.