Exam 16: The Statement of Cash Flows

Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record Depreciation Expense for the year of 2014 of $12,000. Panel B-Statement of Cash Flows: Cash Flows From Operating Activities: Net Income 49,000 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation Expense-Plant Assets Gain on Disposal of Plant Assets Increase/Decrease in Accounts Receivable Increase/Decrease in Inventory Increase/Decrease in Accounts Payable Increase/Decrease in Accrued Liabilities Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Cash Payment for Acquisition of Plant Assets Cash Receipt From Disposal of Plant Assets Net Cash Used for Investing Activities Cash Flows from Financing Activities: Cash Receipt From Issuance of Notes Payable Cash Payment of Notes Payable Cash Receipt from Issuance of Common Stock Cash Payment for Purchase of Treasury Stock Cash Payment of Dividends Net Cash Provided by Financing Activities Net Increase (Decrease)in Cash Total

Which of the following describes the financing activities section of the statement of cash flows?

Walker Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: How will the change in Accounts Receivable be shown on the statement of cash flows?

Johnson Company uses the indirect method to prepare the statement of cash flows. Refer to the following comparative balance sheet for Avatar Company and complete the third column for increases or decreases.

Which of the following is a cash inflow from an operating activity on the statement of cash flows (direct method)?

Which of the following sections of the statement of cash flows include activities that affect current assets and current liabilities on the balance sheet? (Assume the indirect method is used.)

Walker Inc. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: The change in Inventory will be shown as a negative cash flow in the adjustments to Net Income.

Free cash flow is the amount of cash available from operating activities before paying for planned investments in long-term assets.

Most public companies use the indirect method to prepare their statement of cash flows because the FASB prefers this method.

Thomas Inc. uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2014: Sales Revenue, $39,000 Interest Revenue, $500 Accounts Receivable, beginning balance, $13,000 Accounts Receivable, ending balance, $26,000 There were no amounts reported for Interest Receivable. In the operating activities section of the statement of cash flows, what amount will be shown for total cash receipts?

While preparing the statement of cash flows using the indirect method, a loss on the sale of plant assets must be shown as a subtraction from the investing activities section.

Which of the following is the typical order of the sections on a statement of cash flows?

Moore Sales purchased some equipment for $50,000 by issuing a 6-month Note Payable. 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 payments to suppliers for Inventory and other Operating Expenses? Assume Accrued Liabilities relate to Other Operating Expense.

Which will be included in the financing activities section of a direct method statement of cash flow?

The non-cash investing and financing activities section of the statement of cash flows appears as a separate schedule of the cash flow statement or in the notes to the financial statements.

Avatar Company is preparing its statement of cash flows using the indirect method. Refer to the following portion of the comparative balance sheet: Additional information provided by the company includes the following: 1)During 2014, the company repaid $35,000 of Long-Term Notes Payable. "2)During 2014, the company borrowed $27,000 on a new Note Payable. Based on the above information only, what amount of net cash flow would be shown in the financing section of the statement of cash flows?"

Which of the following sections of the statement of cash flows include activities that increase and decrease long-term liabilities and stockholders' equity?

Sentrino Company uses the direct method for its statement of cash flow. Assume Accrued Liabilities relate to Operating Expenses. It reports the following information regarding the year ending December 31, 2014: Assume that there were no sales of long-term assets, no Interest Revenue, and no expenses other than the expenses shown above. Also, assume that Accounts Payable is for purchases of inventory only. Prepare the operating activities section of the statement of cash flows.

Companies sometimes obtain financing and do not receive cash. Although such transactions do not directly involve cash, they still must be reported in the financing section of the cash flow statement.