Exam 13: The Statement of Cash Flows

Cash payments made on accounts payable or accrued liabilities are considered repayments of loans and are classified as financing activities on the statement of cash flows.

Lincoln Company engaged in this transaction: As required by the landlord,prepaid one year's rent on its leased warehouse. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

How is it possible for a company to show a net loss for a given year,yet produce positive net cash flows from operating activities?

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

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.

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

Purchases and sales of long-term investments for the period should be netted for disclosure in the investing activities section of the statement of cash flows.

The following 20x5 information relates to Taylor,Inc.: 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.

Rufina Corp.sold for $20,000 plant assets that cost $40,000 and that had an accumulated depreciation of $8,000.The journal entry to record the transaction is:

Grace Corporation purchased treasury stock for $150,000.The journal entry to record the transaction is:

Grace Corporation issued 60,000 shares of $5 par value common stock for $600,000.The journal entry to record the transaction is:

Lincoln Company engaged in this transaction: Purchased 60-day commercial paper. 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 primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

Lincoln Company engaged in this transaction: Accrued interest expense on long-term bonds payable. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Why does the acquisition of land in exchange for common stock qualify as a noncash investing and financing transaction?

Bailey Corp.sold investments for $204,000 cash that cost $180,000.The journal entry to record the transaction which correctly shows the increase in cash flow is:

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

Interest paid on bonds payable would be included in the financing activities category on 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?