Exam 21: Statement of Cash Flows

Big Toy Corporation's records show profit of $30,000; depreciation expense of $10,000; and cash dividends declared and paid of $5,000. The amount of cash used in operating activities using the indirect method is:

Operating expenses other than depreciation for the year were $400,000. Accrued expenses payable increased by $35,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:

If 2,000 shares of stock were sold for $10 per share, cash flow from financing activities would decrease $20,000.

When using the direct method to determine the net cash flows from operating activities, major categories would not include:

The purpose of a cash flow statement is to show the inflows and outflows of cash.

Cash generated from operating activities may be computed by using:

Which of the following adjustments would be in error if made to net income when computing cash from operations using the indirect method?

If a gain of $70,000 is incurred in selling equipment having a book value of $225,000, cash flow will increase:

A statement of cash flows would not disclose the effect of which of the following transactions?

The difference between the direct and indirect method of computing the cash flow statement occurs in the:

Selling stocks of other companies for cash would result in:

Many accountants prefer which method of computing cash flow from operating activities?

Transactions involving the purchase and sale of fixed assets would be considered:

A cash outflow from a financing activity would be:

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If accrued expenses showed $50,000 on the income statement and payables increased from $15,000 to $18,500 on the balance sheet, what was the amount of cash paid? b. If insurance expense showed $10,000 on the income statement and Prepaid Insurance increased from $10,000 to $12,000 on the balance sheet, what was the amount of cash paid for insurance?

The direct method must be used to report cash flows from operating activities in the statement of cash flows.

For each of the following items, indicate (by placing an X)whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+)or decreasing (-)the cash flows. -

Under the direct method, each line of the income statement is converted to cash paid or received.

Discuss the purpose of a statement of cash flows, and describe its components.

For each of the following items, indicate (by placing an X)whether the item would be found on the statement of cash flows in column 1, the direct approach for determining the cash flows from operating activities, column 2, the indirect approach for determining the cash flows from operating activities, column 3, cash flows from investing activities, column 4, cash flows from financing activities. If you identify that an item affects the cash flows from operation, indirect method, also indicate whether it will be increasing (+)or decreasing (-)the cash flows. -