Exam 15: The 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?

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: Transferred cash to money market account. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

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 4 would be found on the statement of cash flows in the

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.

Under the indirect method,gains or losses from the sale of equipment used in operations would appear as adjustments in the cash flows from operating activities section of the statement of cash flows.

When preparing a statement of cash flows using the indirect method,amortization expense is added to net income in the cash flows from operating activities section of the statement of cash flows.

Dividends declared but unpaid are reflected in the financing activities section of the statement of cash flows.

Give two explanations for why the amount of cash outflow for equipment for the year might not equal the increase in the Equipment account balance from one balance sheet date to the next.

A cash flow yield of 2.5 times is considered better than one of 3.0 times.

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.

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.Free cash flow equals

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

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

Investing activities involve

Cash flows to sales is a measure of how much operating cash flows did each dollar of sales generate.

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

Investors and creditors would find the statement of cash flows least useful in assessing

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Dividend Income (assume that cash received is 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:

Marla Co.sells equipment with a carrying value of $90,000 for $70,000.Where,and for what amounts,would this transaction appear on a statement of cash flows using the indirect method?