Exam 15: The Statement of Cash Flows

The activity in the Plant Assets and related Accumulated Depreciation accounts for 20x5 is shown below.In addition,the income statement shows a gain on sale of plant assets of $16,000. 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.

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 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.

The primary purpose of the statement of cash flows is to provide information

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

For purposes of preparing the statement of cash flows,cash is defined as including both cash and cash equivalents.

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

The indirect method of preparing a statement of cash flows

Determining net cash flows from operating activities using the indirect method reveals cash collected from customers.

Kingston Company settled a long-term note payable it owed to Creative Company by issuing capital stock.Kingston would report this

Lincoln Company engaged in this transaction: Received dividends on marketable securities held as a long-term investment. 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-Loss on Disposal of Equipment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Free cash flow is measured in terms of dollars.

Management would not use the statement of cash flows to

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

Since it impacts Retained Earnings,the net income for the period would appear in the cash flows from financing activities section of a statement of cash flows prepared using the indirect method.

When a statement of cash flows is prepared using the indirect method,

Northbrook Corporation issued $60,000 bonds payable to acquire Machinery.The journal entry to record the transaction is:

Because noncash investing and financing transactions do not affect cash,they should not be reflected in the body of the statement of cash flows.