Exam 15: 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.

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

Green Skies Company prepares its statement of cash flows using the indirect method.Indicate whether each of the items below would be added to (+)or deducted from (-)net income to determine net cash flows from operating activities. _____ 1.Increase in Inventory _____ 2.Increase in Accounts Payable _____ 3.Depreciation Expense _____ 4.Loss on Disposal of Truck _____ 5.Decrease in Accounts Receivable _____ 6.Decrease in Wages Payable _____ 7.Amortization Expense _____ 8.Decrease in Prepaid Rent _____ 9.Gain on Sale of Land _____ 10.Decrease in Income Taxes Payable

A decrease in plant assets shown in the investing activities section of the statement of cash flows would be presented based on the amount of the resulting gain or loss incurred.

If net cash flows from operating activities were $296,000,net income were $200,000,and sales were $2,000,000,cash flows to sales would equal (Round amounts to one decimal place)

Lincoln Company engaged in this transaction: Accrued employee wages earned but not yet paid at year-end. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

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?

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