Exam 12: The Statement of Cash Flows

Twilight Corp.began the year with a balance in its Income Taxes Payable account of $13,000.The year-end balance in the account was $18,000.The company uses the indirect method in the Operating Activities section of the statement of cash flows.Therefore,it presents the amount of income taxes paid at the bottom of the statement as a supplemental disclosure.The amount of taxes paid during the year was $15,000. ? Required What amount of income tax expense will appear on Twilight's income statement?

Which of the following transactions is a significant noncash investing and financing activity?

Use the selected information from the statement of cash flows for three actual companies for the last three years to answer the questions that follow. Required What is meant by the term cash flow adequacy? What other financial information would be necessary in order to make a determination of the cash flow adequacy for these three companies?

Which of the following statements is true?

Significant noncash transactions are not reported on the statement of cash flows,but either in a separate schedule or in a note to the financial statements.

Which category of cash flows-operating,investing,or financing activities-do you think is most likely to have a net cash outflow over a number of years? Explain.

__________ is a measure of a company's ability to meet its future debt obligations after paying income taxes and interest costs and making capital expenditures.

An important __________ activity for many companies is acquiring property.

Springfield Company's comparative balance sheets included inventory of $89,700 at December 31,2017,and $73,300 at December 31,2018.Springfield's comparative balance sheets also included accounts payable of $54,400 at December 31,2017,and $38,100 at December 31,2018.Springfield's accounts payable balances are composed solely of amounts due to suppliers for purchases of inventory on account.Cost of goods sold,as reported by Springfield on its 2018 income statement,amounted to $750,800.What is the amount of cash payments for inventory that Springfield will report in the Operating Activities section of its 2018 statement of cash flows assuming that the direct method is used?

Use the information below for Flora Inc.for 2017 and 2018 to answer the following question: Equipment, December 31,2017 \ 65,000 Equipment, December 31,2018 72,000 Accumulated depreciation, December 31,2017 39,000 Accumulated depreciation, December 31,2018 30,000 During 2018,Flora Inc.sold equipment with a cost of $30,000 and accumulated depreciation of $25,000.A gain of $3,000 was recognized on the sale of the equipment.This was the only equipment sale during the year. What was depreciation expense for 2018?

Operating activities involve the acquiring and selling of goods and services for cash or on account.

When using the direct method,how is the sale of long-term investments for cash reported on the statement of cash flows?

When using the indirect method,how is the decrease in accounts payable shown on the statement of cash flows?

__________ activities involve long-term liabilities and stockholders' equity.

Under the indirect method,a loss from the retirement of bonds is __________ to net income in the Operating Activities section of the statement of cash flows.

At the end of the first year of operations,the balance sheet of Huntington Beach Co.Industries had the following balances: Accounts Receivable,$5,000;Accounts Payable,$6,000;Inventory,$3,000;and Unexpired Insurance,$2,000.The corporation reported net income of $79,000 for the year,including depreciation expense of $5,000,and uses the indirect method of computing net cash flow from operating activities.Based on this information,net cash flow from operating activities is

The objective of the indirect method is to reconcile net income to net cash flow from __________.

When using the indirect method,how is the issuance of stock to retire a long-term debt shown on a statement of cash flows?

Which of the following items would be considered a cash equivalent if it was held at the balance sheet date?

Singer Corp.began the year with a balance in its Income Taxes Payable account of $10,000.The year-end balance in the account was $15,000.The company uses the indirect method in the Operating Activities section of the statement of cash flows.Therefore,it presents the amount of income taxes paid at the bottom of the statement as a supplemental disclosure.The amount of taxes paid during the year was $12,000.What amount of income tax expense will appear on Singer's income statement?