Exam 21: The Statement of Cash Flows

For reporting operating cash flows under the indirect method, a company adds an unrealized holding loss on trading securities to net income to help adjust net income from an accrual basis to a cash basis.

Which statement best defines a company's operating cash inflows?

The adjusted trial balance is used in the preparation of the statement of cash flows because it contains the balance sheet, income statement, and retained earnings statements for the current period.

An abbreviated set of financial statements for Caraba's Company for 2015 and 2014 is shown below: Required: Prepare the cash flows from investing and financing activities sections of the 2015 statement of cash flows.

Receipts of dividends from investments in equity securities would be reported in the financing activities section of the cash flow statement.

Rhonda Company reported $70,000 of net income for 2014. During the year, machinery costing $10,000 and with accumulated depreciation of $8,000 was sold at a loss of $500. Land and machinery were purchased during the year for cash. Selected account information follows: Required: Compute the net cash from investing activities for 2014 using the visual inspection method.

Exhibit 21-2 In preparation for completing the statement of cash flows using the spreadsheet method, Williams Company provided the following information relating to patents for 2014: -Refer to Exhibit 21-2. The Cash Flows from Investing Activities section would include a net change related to patents of

A statement of cash flows contains the following sections: A list of items that appear on the statement is provided below: Required: In the space provided, using the letters (a-d), indicate in which section(s) of the statement of cash flows (or accompanying schedule) the preceding items would most likely be classified. After each item affecting cash, indicate with a plus sign (+) or a minus sign (-) whether the item would be reported as an increase (inflow) or a decrease (outflow).

Exhibit 21-3 The Travis Company uses the spreadsheet method for completing the statement of cash flows. The balance sheet accounts and other information related to those accounts are presented below for Travis Company: Additional information related to 2015 activities: 1.Net loss for 2015 was $40,000. 2.Cash dividends of $12,000 were declared and paid in 2015. 3.4,000 shares of common stock were issued to bondholders converting bonds payable into common stock. 4.A long-term investment was sold for $100,000 cash. 5.Equipment costing $100,000 and having accumulated depreciation of $30,000 was sold for $50,000 cash. -Refer to Exhibit 21-3. Net cash provided (used) in the financing activities section of Travis's 2015 statement of cash flows was

What are the four steps necessary to complete the statement of cash flows using the visual inspection method?

In a statement of cash flows prepared by the indirect method, which of the following events would be deducted from net income?

Mavis Company's statement of cash flows showed net cash provided by operating activities of $47,000 in 2014. Mavis reported an increase in accounts payable of $6,000, an increase in inventory of $2,000, depreciation expense of $3,000, and dividends paid of $8,000. Mavis's net income for 2014 was

Which statement is false? Current GAAP

Monty Corporation reported the following income statement in condensed for 2014: During 2014, the following changes occurred in the company's current assets and current liabilities: Required: By visual the inspection method prepare the net cash flows from the operating activities using the following methods (note: headings are not necessary): 1) Indirect method 2) Direct method

A spreadsheet for a statement of cash flows is presented below along with additional information. Additional information: Net income was $508. Dividends paid amounted to $16. Last year, depreciation expense was inadvertently understated by $60. The appropriate correction was made this year. The company also received a related income tax refund of $10. Six shares of $100 par common stock were issued as a small stock dividend. The current market value of the stock was $700 (in total). Bonds payable were issued for $50. One year of amortization was recorded. The treasury stock was reissued for $60. The preferred stock was converted to an equal number of common shares. The book value method was used. Property, plant, and equipment costing $200 was sold for a $120 gain. The assets were 90% depreciated. Required: Complete the spreadsheet:

Exhibit 21-1 The Raymonds Corporation reported $11,000 of net income for the current year and also uses the visual inspection method for completing the statement of cash flows. The following additional information relates to Raymonds for the year: -Refer to Exhibit 21-1. What is Raymond's net cash provided by operating activities?

When preparing a statement of cash flows using a spreadsheet, it is best to begin the spreadsheet with

The statement of cash flows, along with other financial and operating information, enables investors, creditors, and other users to assess a company's liquidity, financial flexibility, and operating capability. Distinguish between liquidity, financial flexibility, and operating capability.

What are the five operating cash outflows activities under the direct method of reporting cash flows?

On the statement of cash flows prepared using the direct method, cash from customers would be sales plus