Exam 15: The Statement of Cash Flows

When preparing a statement of cash flows using the indirect method, why is depreciation added back to net income within the operating activities section?

Interest received would be included in the investing activities category on the statement of cash flows.

Cash equivalents do not include

The activity on the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.

Royer Corporation engaged in this transaction: Depreciation on equipment. Assume use of the indirect approach. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

On a statement of cash flows prepared using the indirect method, the amount representing cash paid for interest would

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year: 1) Sold machinery for $9,000 cash. 2) Purchased a building for $80,000 cash. 3) Issued $70,000 worth of stock to acquire an airplane. 4) Converted long-term bonds by issuing $100,000 worth of stock. 5) Declared and paid a $10,000 cash dividend. Transaction 2 would be found on the statement of cash flows in the

The primary purpose of the statement of cash flows is to provide information about a company's investing and financing activities during an accounting period.

The acquisition of treasury stock with cash is shown as an investing activity on the statement of cash flows.

Royer Corporation engaged in this transaction: Paid employee wages. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

For 2010, EHJ Corporation had average total assets of $260,000, sales of $225,000, net income of $25,000, net cash flows from operating activities of $37,500, dividend payments of $12,500, purchases of plant assets of $30,000, and sales of plant assets of $27,500. Using this information, compute (a) cash flow yield, (b) cash flows to sales, (c) cash flows to assets, and (d) free cash flow. Round amounts to one decimal place.

Royer Corporation engaged in this transaction: Purchased treasury stock with cash. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

Royer Corporation engaged in this transaction: Purchased inventory with cash. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

The activity in the Plant Assets and related Accumulated Depreciation accounts for 2009 is shown below. In addition, the income statement shows a gain on sale of plant assets of $16,000. Plant Assets Accumulated Depreciation Beginning balance, 2009 $234,000 Beginning balance, 2009 $124,000 Purchases 120,000 2009 Depreciation 36,000 Disposals (82,000) Disposals (26,000) Ending balance, 2009 $272,000 Ending balance, 2009 $134,000 Based on the information given, compute the amounts to be shown and indicate how they would appear on the statement of cash flows. Assume that the indirect method is being used and that the plant assets were purchased for cash.

Royer Corporation engaged in this transaction: Issued stock for equipment. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

Analysis of the financing activities section of the statement of cash flows will disclose

The following information relates to Lonborg Corporation for the year ended December 31, 2009: a. Calculate the net cash flows from operating activities. Show your work. b. Calculate the net cash flows from investing activities. Show your work. c. Calculate the net cash flows from financing activities. Show your work. d. Calculate the net change in cash. Show your work.

When preparing a statement of cash flows using the indirect method, an increase in accounts receivable is deducted from net income.

The statement of cash flows explains the difference between net income as shown on the income statement and the net cash flows generated from operations.

Royer Corporation engaged in this transaction: Declared and issued a stock dividend. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.