Exam 13: Statement of Cash Flows

To determine cash payments for merchandise for the statement of cash flows using the direct method, a decrease in accounts payable is added to the cost of goods sold. Assume all accounts payable are owed to merchandise suppliers.

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

If accounts payable have increased during a period,

Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

If a business issued bonds payable in exchange for land, the transaction would be reported in a separate schedule on the statement of cash flows.

Connor Designs Company has cash flows for operating activities of $425,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain its current operations. ​ What is the free cash flow for Connor Designs?

Net income for the year was $29,500. Accounts receivable increased $2,500, and accounts payable increased $5,400. There were no other changes in noncash current assets and liabilities. Under the indirect method, the cash flow from operations is $32,400.

When using the spreadsheet (work sheet) method for the statement of cash flows, indirect method, entries made on the spreadsheet are

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Exchange of land for note payable

Which of the following should be shown on a statement of cash flows under the financing activities section?

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -Increase in accounts receivable balance

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Cash flows from investing activities, as part of the statement of cash flows, would include any payments for the purchase of treasury stock.

The acquisition of land in exchange for common stock is an example of noncash investing and financing activity.

A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?

Which of the following increases cash?

When using the spreadsheet (work sheet) method to analyzing noncash accounts, no order of analysis is required, but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

Rarely will the cash flows from operating activities, as reported on the statement of cash flows, be the same as the net income reported on the income statement.