Exam 14: Statement of Cash Flows

Indicate the section (operating activities, investing activities, financing activities, or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method:

If a gain of $9,000 is incurred in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Land costing $88,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Financing activities include

Cash flows from operating activities, as part of the statement of cash flows, include cash transactions that enter into the determination of net income.

Complete each of the columns on the table below, indicating in which section each item would be reported on the statement of cash flow (Operating, Investing, or Financing), the amount that would be reported, and whether the item would create an increase or decrease in cash. For item that affect more than one section of the statement, indicate all affected. Assume the indirect method of reporting cash flows operating activities. The first item has been completed as an example.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the amortization of bond discount for the period is deducted from the net income for the period.

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method.

An analysis of the general ledger accounts indicates that equipment, with an original cost of $148,000 and accumulated depreciation of $105,000 on the date of sale, was sold for $39,000 during the year. Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.

The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Sinclair Company's accumulated depreciation-equipment increased by $6,000, while patents decreased by $2,200 between balance sheet dates. There were no purchased or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $3,200 from the sale of investments. Required: Reconcile a net income of $92,000 to net cash flow from operating activities.

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

Identify which section the statement of cash flows (using the indirect method) would present information regarding the following activities: (Use O for operating, I for investing, or F for financing): a. Issued common stock b. Redeemed bonds c. Issued preferred stock d. Purchased patents e. Net income f. Paid cash dividends g. Purchased treasury stock h. Sold long-term investment. i. Sold equipment. j. Purchased buildings k. Issued bonds

On the statement of cash flows, the cash flows from operating activities section would include

Selected data for the current year ended December 31 are as follows: During the current year, the cost of merchandise sold was $620,000 and the operating expenses other than depreciation were $142,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows. Determine the amount reported on the statement of cash flows for (a) cash payments for merchandise and (b) cash payments for operating expenses.

The statement of cash flows is not useful for:

Durrand Corporation's accumulated depreciation increased by $12,000, while patents decreased by $2,200 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $2,500 from sale of land. Reconcile a net income of $45,000 to net cash flow from operating activities.