Exam 5: Financial Position and Cash Flows

Statement of cash flows purpose What simple but important questions does the statement of cash flows help answer?

A statement of cash flows prepared under the INDIRECT method adds and subtracts certain items to the base number. Decreases in unearned revenues would be shown as

On a statement of cash flows, the enterprise's main revenue-producing activities are disclosed in the

One of the benefits of the statement of cash flows is that it helps users evaluate financial flexibility. Which of the following explanations is a description of financial flexibility?

A measure of a company's financial flexibility is the

In a statement of cash flows, receipts from sales of property, plant, and equipment and other productive assets should be classified as cash inflows from

Which of the following is a contra account?

In a statement of cash flows, payments to acquire debt instruments of other entities (other than cash equivalents) should be classified as cash outflows for

Use the following information for questions. Polis Corp.'s trial balance at December 31, 2020 is properly adjusted except for the income tax expense adjustment. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Polis Corp. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Trial Balance $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2020 Cash \3 37,500 Accounts receivable (net) 1,447,500 Inventory 1,192,500 Property, plant, and equipment (net) 4,183,000 Accounts payable and accrued liabilities \9 90,500 Income taxes payable 342,000 Future income tax liability 37,500 Common shares 1,675,000 Contributed surplus 1,340,000 Retained earnings, Jan 1,2020 2,325,000 Net sales and other revenues 6,180,00 Costs and expenses 5,040,000 Income tax expenses Other financial data for the year ended December 31, 2020: • Included in accounts receivable is $360,000 due from a customer and payable in quarterly instalments of $45,000. The last payment is due December 29, 2022. • The balance in the future income tax liability account relates to a temporary difference that arose in a prior year, of which $15,000 is classified as a current liability. • During the year, estimated tax payments of $330,000 were charged to income tax expense. The current and future tax rate on all types of income is 35 percent. -In Polis' December 31, 2020 statement of financial position, the current liabilities total is

In the space provided at the right, write the word or phrase that is defined or indicated. 1. A company's ability to take effective ______ actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities 2. Claims to future cash flows that are ______ fixed or determinable in amount and timing 3. Short-term, highly liquid investments ______ that are readily convertible into known amounts of cash 4. Assets that are held for sale in the ______ ordinary course of business 5. Expenditures already made for benefits ______ that will be received within one year or the operating cycle 6. Assets of physical substance that are ______ used in ongoing business operations 7. Assets that have no physical substance ______ 8. The excess of total current assets over ______ total current liabilities 9. Unrealized gains and losses included ______ as part of equity

When assessing earnings quality, financial analysts are concerned that management may attempt to manipulate information to make earnings appear better or worse than they really are. Which of the following would NOT suggest poor earnings quality?

Receivables are valued based on their ______.

Non-monetary assets include

The operating cycle is the time between

An enterprise's ability to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities is called

Statement of financial position presentation The following statement of financial position was prepared by the bookkeeper for Badger Corp. at December 31, 2020. The following additional information is provided: 1. "Cash" includes prepaid insurance of $9,400; as well, a bank overdraft of $1,500 has been deducted. 2. The net accounts receivable balance includes: $\quad$$\quad$ (a) accounts receivable—debit balances $62,000; $\quad$$\quad$ (b) accounts receivable—credit balances $5,000; $\quad$$\quad$ (c) allowance for doubtful accounts $4,800. 3. Inventories do not include goods costing $5,000 shipped out on consignment. Receivables of $5,000 were recorded on these goods. 4. Investments include investments in common shares, trading $24,000 and long-term $43,300, and franchises $9,000. 5. Equipment costing $8,000 with accumulated depreciation $6,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000. Instructions Prepare a statement of financial position in good form (shareholders' equity details can be omitted.)

When current debt is refinanced by the issue date of financial statements, it may generally be presented as non-current

Scooby Corp.'s trial balance included the following account balances at December 31, 2020: Accounts receivable (net)...................................................... \8 2,000 Trading securities.................................................................... 14,000 Accumulated depreciation on equipment and furniture........... 30,000 Cash......................................................................................... 20,000 Inventory.................................................................................. 54,000 Equipment............................................................................... 50,000 Patent.................................................................................... 8,000 Prepaid expenses...................................................................... 3,000 Land held for future business site............................................ 36,000 In Scooby's December 31, 2020 statement of financial position, the current assets total is

Which of the following balance sheet classifications would normally require the greatest amount of supplemental disclosure?

Which of the following is a current asset?