Exam 14: The Statement of Cash Flows

Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet: 2014 2013 Increase/decrease Cash \ 33,000 \ 18,000 \ 15,000 Accounts receivable 22,000 35,000 (13,000) Inventory 170,000 115,000 55,000 Total assets \ 225,000 \ 168,000 \ 57,000 - The change in inventory will be shown as a positive cash flow in the adjustments to Net income.

Which of the following transactions would be shown in the noncash investing and financing activities section of the statement of cash flows?

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following financial statement information for the year 2014: - On Avatar's statement of cash flows, using the direct method, what amount will be shown for payments to suppliers for Inventory and Other operating expenses?

Arturo Sales purchased some equipment for $12,000 by issuing a 6-month note payable. Because this was a noncash transaction, it would not be shown in the main body of the statement of cash flows, but in a separate section for noncash investing and financing activities.

The term cash as used on the statement of cash flows includes all of the following EXCEPT:

The cash flow from investing activities appears exactly the same, whether the company uses the direct or the indirect method to prepare the statement of cash flows.

If an investor wants to know how much cash a company can free up for new opportunities, such as expanding into a new sales region, they would most likely wish to calculate the company's free cash flow figure.

The Sonesta Company sold equipment for cash. The income statement shows a loss on sale of $5,000. The net book value of the asset prior to sale was $24,000. Which of the following statements describes the cash effect of the transaction?

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014. Additional information provided: • Equipment costing $52,000 was purchased for cash. • Equipment with a net asset value of $10,000 was sold for $14,000 • Depreciation expense of $12,000 was recorded during the year. • During 2014, the company repaid $40,000 of long-term notes payable. • During 2014, the company borrowed $34,000 on a new note payable • There were no stock retirements during the year. • There were no sales of treasury stock during the year. - Please prepare a complete statement of cash flows using the following format: Avatar Company Statement of Cash Flows Year Ended December 31, 2014

Which of the following sections from the statement of cash flows includes the issuance of stock and the payment of dividends?

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following information reported for the year 2014: Sales revenue: \ 240,000 Accounts receivable beginning balance: \ 35,000 Accounts receivable ending balance: \ 31,000 In the operating activity section of the statement of cash flows, what amount would be shown for collections from customers?

The income statement and a partial balance sheet for Jefferson Company is presented below. Prepare the operating activities section of the statement of cash flows using the direct method. Jefferson Company Income Statement For the Year Ended December 31, 2013 Sales \ 500,000 Cost of goods sold 390,000 Gross profit \ 110,000 Operating expenses: Salaries \ 70,000 Depreciation expense 20,000 Miscellaneous 10,000 100,000 Net income \ 10,000 Jefferson Company Partial Balance Sheet December 31, 2013 2013 2012 Cash \ 80,000 \ 65,000 Accounts receivable (net) 57,000 50,000 Inventories 102,000 86,000 Accrued liabilities 4,500 5,000 Accounts payable (inventory) 58,000 51,000 Salaries payable 7,500 6,000

Of the following, which is NOT a cash outflow from an investing activity?

Cash received from selling merchandise would be considered a:

Qtopia Company uses the direct method to prepare its statement of cash flows. It has reported Cost of goods sold of $70,000 on its income statement for the year 2012. If the balance in accounts payable (for inventory suppliers only) has gone down by $5,000 during the year, then $5,000 will have to be added to $70,000 as part of the process to calculate payments to suppliers for inventory purchases.

Which of the following would NOT appear on a statement of cash flows prepared using the direct method?

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following information reported for the year 2014: Cost of goods sold \ 110,000 Inventory beginning balance: \ 25,000 Inventory ending balance: \ 53,000 Accounts payable beginning balance: \ 6,000 Accounts payable ending balance: \ 4,000 What amount was paid to suppliers for inventory purchases on a cash basis?

Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following financial statement information for the year 2014: - Please prepare the operating activities section of the statement of cash flows, using the direct method. Please use the following format: Operating activities: Net cash from operating activities

A company purchases land using its common stock. Where would this transaction appear when the company prepares the statement of cash flows?

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the partially completed worksheet below. Please complete the worksheet, including the data showing the net change in cash, plus all control totals.