Exam 16: The Statement of Cash Flows

Skyler's Wine Company uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ending December 31,2017: Additional information provided by the company includes the following: Equipment costing $60,000 was purchased for cash. Equipment with a net asset value of $10,000 was sold for $16,000. During 2017,the company repaid $43,000 of long-term notes payable. During 2017,the company borrowed $34,000 on a new note payable. There were no stock retirements during the year. There were no sales of Treasury Stock during the year. Prepare a complete statement of cash flows using the direct method. Accrued Liabilities relate to other operating expenses.

The three sections of the statement of cash flows report only activities that involve cash.

Milford Lighting Supply expects the following for 2016: Milford expects to spend $160,000 to modernize its showroom. How much free cash flow does Milford expect for 2016?

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

Merchandise Inventory increased $28,300 and Accounts Payable decreased $19,600 during the year.Accounts Payable relates only to the acquisition of merchandise inventory.Sales were $795,900 and Cost of Goods Sold was $549,700.Compute the payment made to the suppliers.

Elmore Company uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2017: Use the direct method,to compute the total net cash flow from operating activities.(Accrued Liabilities relate to other operating expense. )

The three major categories included on the statement of cash flows are ________.

The financing section of the statement of cash flows involves transactions relating to the equity accounts and the long-term liability accounts.

Buying property,plant,and equipment for cash is considered a cash outflow for the financing activities section of the statement of cash flows.

The payment of interest on a loan is considered a ________ on a statement of cash flows prepared using the direct method.

List and discuss three ways in which the statement of cash flows helps financial statement users.

Which of the following sections from the statement of cash flows includes borrowing cash and paying off loans?

Shield Company needs to purchase a property to build their headquarters.An investor is willing to exchange land worth $700,000 for shares of common stock.On the statement of cash flows,this transaction would be shown as ________.

Which of the following sections of the statement of cash flows includes activities that affect current assets and current liabilities on the balance sheet? (Assume the indirect method is used. )

Brown,Inc.owed one of its creditors $350,000,but it did not have enough cash to repay the debt.Following lengthy negotiations,the parties agreed that Brown,Inc.would issue 50,000 shares of common stock to settle the debt.On the statement of cash flows,this transaction is shown in the ________.

Accountants can prepare the statement of cash flows directly from the lower part of the spreadsheet.

Transnational Company plans to purchase a property to build its corporate headquarters.An investor is willing to exchange land worth $500,000 for common stock.This transaction would be shown in the financing activities section of the statement of cash flows.

Mei Company uses the direct method to prepare its statement of cash flows.Refer to the following information reported for 2017: Cost of Goods Sold,$153,000 Merchandise Inventory,beginning balance,$28,000 Merchandise Inventory,ending balance,$60,000 Accounts Payable,beginning balance,$8,100 Accounts Payable,ending balance,$5,100 Operating expenses,$27,000 Accrued Liabilities,beginning balance,$2,900 Accrued Liabilities,ending balance,$6,000 Use the direct method to compute the cash paid to suppliers.(Accrued Liabilities relate to operating expenses. )

A company purchased machinery by issuing a long-term note payable.This is an example of a non-cash investing and financing activity for the statement of cash flows.

Regarding the use of a spreadsheet for the preparation of the statement pf cash flows,which of the following statements is true?