Exam 13: Statement of Cash Flows

In 2009, Anderson Company purchased equipment for $363,000 and also sold some special purpose machinery with a book value of $155,000 for $182,000. In its statement of cash flows for 2009, Anderson should report the following with respect to the above transactions:

Craig Corporation's reported net income for 2009 is less than its net cash flow from operating activities. One reason for this could be:

The amount of cash paid by Kenny Corporation in 2010 for the purchase of marketable securities was:

An example of a non-cash investing or financing activity that is disclosed in a supplementary schedule accompanying the statement of cash flows is:

During 2010, Gillespie Corporation made a loan of $155,000 to a major customer. By the end of 2010 the customer had paid back $60,000 of the loan plus interest of $12,000. In the statement of cash flows for 2010, Gillespie Corporation would report:

Accounting terminology Listed below are eight technical accounting terms introduced in this chapter: Cash received from customers Operating activities Financing activities Investing activities Cash equivalents Statement of cash flows Non-cash investing and Income statement financing activities Each of the following statements may (or may not) describe one of these technical terms. In the space provided beside each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. ____ (a) Cash sales and collections of accounts receivable. ____ (b) The classification of cash flows which includes issuing capital stock and paying dividends. ____ (c) The financial statement which best describes the profitability of a business. ____ (d) The section of a statement of cash flows summarizing the cash effects of most transactions entering into the determination of net income. ____ (e) An expense that reduces net cash flow but does not reduce net income. ____ (f) The classification of cash flows that includes purchases and sales of plant assets. ____ (g) Transactions shown in a supplementary schedule accompanying a statement of cash flows.

For a company to survive in the long-run it must have positive cash flows from investing activities.

Hines Cannery issued capital stock in 2009 for $700,000. During 2009 the company paid dividends of $250,000. What is the effect of these events in Hines' statement of cash flows for 2009?

Rag Dolls' cash flow from investing activities during 2010 is:

All cash receipts and cash payments not classified as investing or financing activities are classified as indirect activities.

During the current year, two transactions were recorded in the Land account of Duke Industries. One involved a debit of $320,000 to the Land account; the second was a $210,000 credit to the Land account. Duke's income statement for the year reported a loss on sale of land in the amount of $25,000. All transactions involving the Land account were cash transactions. These transactions would be shown in the statement of cash flows as:

Depreciation expense reduces net income but does not reduce the net cash flow from operating activities.

How should purchases, sales, and depreciation of plant assets be classified in Hierarchy's statement of cash flows for the current year? (Assume the direct method is used by Hierarchy.)

When equipment is sold at a loss:

Rent expense in Burr Company's income statement is $480,000. If Prepaid Rent was $120,000 on January 1 and is $95,000 on December 31, the cash paid for rent during the year is:

In a statement of cash flows, cash transactions are classified into three major categories. Which of the following is not one of these three categories?

In the 2010 statement of cash flows for Rag Dolls Corporation, the amount of cash received from customers is:

Which of the following does not decrease the cash flow from operating activities?

Which of the following indicates cash receipts?

In the long run, it is more important for a business to generate positive cash flows from investing activities than from operating activities.