Exam 16: The Statement of Cash Flows

Free cash flow is calculated by adding cash payments planned for investments in long-term assets and cash dividends to the amount of net cash provided by operating activities.

The three sections of the statement of cash flows report only activities that involve cash.

Rodriguez Inc. uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Additional information provided by the company includes the following: 1)Equipment costing $65,000 was purchased for cash. "2)Equipment with a cost of $32,000 and accumulated depreciation of $7,000 was sold for $45,000. What was the amount of net cash provided by (used for)investing activities?"

While preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash flow from operating activities.

The issue of Common Stock for cash will be shown as a:

Shield Company just started in business, and it was looking for additional capital in order to purchase a property to build their headquarters. They found an investor who was willing to sell them land worth $700,000 in exchange for stock in the company. How would this transaction be shown on the statement of cash flows?

Wellington Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ended December 31, 2015: On Wellington's statement of cash flows, using the direct method, what amount will be shown for total net cash flow from operating activities? Assume Accrued Liabilities relate to Other Operating Expense.

Which of the following sections of the statement of cash flows include purchases and sales of long-term assets?

Which of the following statements is true of the direct and indirect method of preparing the statement of cash flows?

Martin Company sold equipment for cash. The income statement shows a gain on sale of $920. The net book value of the asset prior to sale was $3,510. Which of the following statements describes the cash effect of the transaction?

While preparing a statement of cash flows using the indirect method, an increase in current assets are added to net income to arrive at net cash flow from operating activities.

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

Avatar Company uses the indirect method to prepare its statement of cash flows. During 2014, plant assets with book value of $10,000(cost $10,000 and accumulated depreciation $0)were sold for $14,000. Using the worksheet shown below, enter the adjustments needed to record the sale of plant assets and gain on sale of plant assets of $4,000. Net Increase (Decrease)in Cash Total

Parmesan Company uses the direct method for its statement of cash flow. It reports the following information regarding the year 2014: From the income statement: Sales Revenues, $265,000 Cost of Goods Sold, $210,000 Operating expenses, $31,000 From the balance sheet: On the statement of cash flows, what amount will be shown for collections from customers?

Which of the following will be shown under the investing activities section of the statement of cash flows?

Although the direct method is easier to use, the Financial Accounting Standards Board (FASB)prefers the indirect method of reporting cash flows from operating activities.

A business's cash receipts and cash payments for a specific period are reported on a(n):

Avatar Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Note:1)There was no retirement of stock during the year. "2)There were no sales of treasury stock during the year. Which of the following statements would be true?"

The ________ section of the statement of cash flows includes increase and decrease in long-term assets.

A company's Inventory account increased $27,900 and its Accounts Payable account decreased $19,500 during the year. The Accounts Payable relates only to the acquisition of inventory. Sales were $795,300 and Cost of Goods Sold was $549,400. What was the payment made to the suppliers of inventory?