Exam 14: The Statement of Cash Flows

Cash borrowed on a mortgage note would be a(n) ________ activity.

Free cash flow is the same thing as cash flow from operating activities.

Buying property, plant and equipment would be considered a cash outflow from financing.

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 accounts receivable will be shown as a positive cash flow in the adjustments to Net income.

Which of the following items would be included as an operating activity on the statement of cash flows?

Parmesan Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2013: From the income statement: Revenues: \ 240,000 Cost of goods sold: \ 190,000 Operating expenses: \ 25,000 From the balance sheet: Beginning balance Ending balance Accounts receivable: \ 12,000 \ 15,000 Inventory: \ 22,000 \ 18,000 Accounts payable: \ 7,000 \ 12,000 Accrued liabilities: \ 3,000 \ 1,200 - On the statement of cash flows, what amount will be shown for payments to suppliers for inventory purchases? (Please assume that accounts payable are for purchases of inventory only.)

Investing activities include activities that affect the long-term asset section of the balance sheet.

Qtopia Company uses the direct method to prepare its statement of cash flows. It has reported sales revenues of $100,000 on its income statement for the year 2012. If the balance in accounts receivable has gone up by $4,000 during the year, then $4,000 will have to be added to $100,000 to calculate collections from customers.

Investors and management use the statement of cash flows to evaluate a firm's profitability.

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: 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 direct method, in the following format: Operating activities: Receipts Collections from customers Interest received Total cash receipts Tayments To employees For interest For income tax Total cash payments Net cash from operating activities Investing activities: Proceeds from sale of assets Acquisition of assets Net cash from investing activities Financing activities: Issuance of stock Purchase of treasury stock Borrowing on notes payable Repayments of notes payable Payment of dividends Net cash from financing activities Net change in cash Cash balance, December 31, 2013 Cash balance, December 31, 2014

Avatar Company uses the indirect method to prepare its statement of cash flows. The treasury stock account had a debit balance of $5,000 at the beginning of the year, and a debit balance of $8,000 at the end of the year. No treasury stock was sold during the year. The financing section of the statement of cash flows will show a negative cash flow of $3,000 for purchases of treasury stock.

In creating a statement of cash flows using the indirect method, we consider that a decrease in current liabilities causes an increase in cash.

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014. - Net cash flows from operating activities: \ 32,000 positive - Net cash flows from operating activities: \ 38,000 negative - Net cash flows from financing activities: \ 9,000 positive - Which of the following statements is TRUE?

A statement of cash flows is generated to show:

In creating a statement of cash flows using the indirect method, we consider that an increase in current assets causes a decrease in cash.

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 total cash receipts?

Qtopia Company uses the direct method to prepare its statement of cash flows. It has reported operating expenses of $21,000 on its income statement for the year 2012. If the balance in accrued liabilities has gone up by $1,000 during the year, then $1,000 will have to be added to $21,000 as part of the process to calculate payments to suppliers for operating expenses.