Exam 13: The Statement of Cash Flows

Noncash investing and financing transactions,such as the exchange of a long-term asset for a long-term liability,represent significant investing and financing activities and are reflected in a separate schedule as part of the statement of cash flows.

The financing activities section of the statement of cash flows includes certain transactions and activities from the income statement and also takes into account stockholders' equity.

Lincoln Company engaged in this transaction: Purchased 30-day U.S.Treasury bill. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Assume the indirect method is used to compute net cash flows from operating activities. -For this item extracted from the financial statements-Increase in Accounts Payable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Assume that the balance of accounts payable does not change during a period.When preparing a statement of cash flows,an increase in ending inventory over beginning inventory will result in an adjustment to net income under the indirect approach because

If the indirect method is used to prepare a statement of cash flows,which of the following would be added to net income to arrive at net cash flows from operating activities?

The activity from the Long-Term Investments account for Fisk Corporation appears below.In addition,the income statement shows a loss on the sale of investments of $32,000. 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 investments were purchased for cash.

Lincoln Company engaged in this transaction: Converted loans payable to stock. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Which of the following statements is incorrect regarding the statement of cash flows?

Since investing activities center on the long-term assets shown on the balance sheet,they do not include any short-term investments shown under current assets on the balance sheet

Assume the indirect method is used to compute net cash flows from operating activities. -For this item extracted from the financial statements-Gain on Sale of Investment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Assume the indirect method is used to compute net cash flows from operating activities. -For this item extracted from the financial statements-Interest Expense (assume that cash payments are equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

The purchase of treasury stock qualifies as a financing activity,but it is not a cash flow.

When presenting decreases in long-term investments in the investing activities section of the statement of cash flows,the amount reflected equals the amount of the gain(s)or loss(es)from the transaction(s).

Use the following information to obtain the ratios below.Round amounts to one decimal place

Which of the following is reported as a noncash investing and financing transaction on the statement of cash flows?

A positive free cash flow indicates that the company has met all its planned cash commitments and has cash available to reduce debt or to expand.

During 20x5,Oates Company had sales of $500,000,net income of $50,000,average total assets of $700,000,dividend payments of $35,000,net cash flows from operating activities of $90,000,purchases of plant assets of $75,000,and sales of plant assets of $90,000.Cash flows to sales equals (Round amounts to one decimal place)

Lincoln Company engaged in this transaction: Collected accounts receivable. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Dina Corporation purchased plant assets for $60,000 cash.The journal entry to record the transaction that correctly shows the outflow of cash is: