Exam 12: Reporting Cash Flows

A cash equivalent is:

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported in the operating activities section reported under the direct method is:

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

Based on the information in the following income statement and balance sheet for Monterey Corporation,determine the cash flows from operating activities using the direct method. \begin{array}{c}\text {Monterey Corporation}\\\text { Income Statement }\\\text {For Year Ended December 31,20 \mathrm{X} 2 }\\\begin{array}{|l|l|l|}\hline \text { Sales } & & \$ 504,000 \\\hline \text { Cost of goods sold } & 327,600 & \\\hline \text { Depreciation } & 42,000 & \\\hline \text { Other operating expenses } & 125,500 & (495,100) \\\hline \text { Other gains (losses): } & & \\\hline \text { Gain on sale of equipment } & & 7,200 \\\hline \text { Income before taxes } & & 16,100 \\\hline \text { Income tax expense } & & (4,800) \\\hline \text { Net income } & & \$ 11,300 \\\hline\end{array}\end{array}

A company had average total assets of $3,216,000,total cash flows of $1,320,000,cash flows from operations of $554,000,and cash flows for plant assets of $850,000.The cash flow on total assets ratio equals:

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Scranton,Inc.reports net income of $230,000 for the year ended December 31.It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment.Its comparative balance sheet reveals a $35,500 decrease in accounts receivable,a $15,750 increase in accounts payable,and a $12,500 decrease in wages payable.Calculate the cash provided (used)in operating activities using the indirect method.

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts,such as receipts from customers,and subtracts the major items of operating cash disbursements,such as cash paid for merchandise,is referred to as the:

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: Retained earnings balance at the beginning of the year \ 233,000 Cash dividends declared for the year 50,000 Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 4,500 Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 30,000 Net income for the year 110,000

An example of a transaction that must be disclosed as a noncash investing and financing activity includes all but which of the following?

The following selected account balances are taken from a merchandising company's records: Dec. 31 Dec. 31, For the 202 201 Year 202 Merchandise inventory \ 15,600 \ 21,200 Accounts receivable 42,000 36,000 Accounts payable 32,400 27,400 Salaries payable 4,400 3,000 Total assets 234,000 286,000 Sales \ 312,000 Cost of goods sold 165,600 Salaries expense 48,000 (a)Calculate the cash payments made during 20X2 for merchandise.Assume all of the company's accounts payable balances result from merchandise purchases. (b)Calculate the cash receipts from customer sales during 20X2. (c)Calculate the cash payments for salaries during 20X2.

A company reported operating cash flows in Year 1 of $33,100 and $26,220 in Year 2.Its average total assets in Year 1 were $262,000 and $313,000 in Year 2.Calculate the cash flow on total assets ratio for both years.Comment on the results.

Use the information provided to calculate the missing cash received for interest for the period. Interest receivable, beginning-year \8 00 Interest revenue 12,600 Interest receivable, year-end 1,200 Cash received for interest.

Cash flows are essentially the same as net income because they are both measured using accrual accounting principles.

Explain the use of a spreadsheet in the preparation of the statement of cash flows.

When preparing the operating activities section of the statement of cash flows using the indirect method,an increase in income taxes payable is added to net income.

Accounting standards:

For each of the following items, indicate whether it would be classified as either an (O) operating activity, an (I) investing activity, a (F) financial activity, or a significant (N) noncash financing and investing activity. -Paid cash to settle an account payable.

In preparing a company's statement of cash flows for the most recent year using the indirect method,the following information is available: Net income for the year was \ 52,000 Accounts payable increased by 18,000 Accounts receivable decreased by 25,000 Inventories decreased by 5,000 Cash dividends paid were 14,000 Depreciation expense was 20,000 Net cash provided by operating activities was: