Exam 21: The Statement of Cash Flows

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 investing activities section of Travis's 2015 statement of cash flows was

In a statement of cash flows, the payment of a cash dividend on common stock outstanding should be classified as cash outflows for

In a statement of cash flows, which of the following events would be classified as a financing activity?

In a statement of cash flows, which of the following events would not be classified as an operating activity?

Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method?

The visual inspection method is used when a company has simple financial statements and when the relationships between the changes in account balances can be easily analyzed.

GAAP allows the use of either the direct or indirect methods but prefers the direct method, but companies who use the indirect method must also include a separate schedule reconciling its net income to net cash flow provided by operating activities.