Exam 6: Statement of Cash Flows

Which of the following concerning the preparation of the statement of cash flows is correct?

Which of the following statements is/are not true?

Examples of nonmonetary transactions is/are:

The disposal of equipment for an amount of cash greater than the carrying value of the equipment results in a cash receipt equal to the carrying value of the equipment plus the gain on the disposal, which appears in net income.

Under U.S.GAAP, the statement of cash flows classifies cash expenditures for interest on debt as a(n) _____ activity and classifies cash expenditures for dividends to shareholders as a(n) _____ activity.

Both U.S.GAAP and IFRS permit considerable flexibility with respect to the display of information in the statement of cash flows. Within the investing and financing cash flow categories, the presentation for most items should _____.

U.S.GAAP requires the classification of

The statement of cash flows reports the effects of a firm's operating, investing, and financing activities on cash flows.Information in the statement helps in understanding which of the following concept(s)?

On the statement of cash flows, cash sale of property, plant and equipment used for the last 5 years in the company's operations is treated as an operating activity.

To prepare the statement of cash flows requires analyzing changes in balance sheet accounts during the accounting period. As an outcome of correct double-entry recording of all transactions, the net change in cash will equal the net change in all noncash accounts.

Given the following information, prepare the cash flows from operations section of the statement of cash flows using the indirect method. The Wayne Corporation Income Statement For the Year Ending December 31, Year 2 Sales \ 500,000 Expenses: Cost of goods sold \ 150,000 Depreciation expense 15,000 Salary expense Net income Additional Information: Accounts receivable \ 6,000 Decrease Merchandise inventory 12,000 Increase Accounts payable 900 Increase Salaries payable 600 Decrease

Although the guidance in U.S.GAAP and IFRS states a preference that companies present cash flows from operations using the _____, most companies present cash flows from operations as _____.

Which of the following is the method of reporting amounts of cash received from customers less cash disbursed to various suppliers, employees, lenders for interest payments, and taxing authorities, allowed by U.S.GAAP?

The statement of cash flows provides information about

Most firms prefer to prepare the statement of cash flows after they have prepared the income statement and the balance sheet.In the preparation of the T-account work sheet, an error

Given the following information, indicate the cash flow amounts in the blanks provided.(Note that the ABCCompany uses a just-in-time inventory system and there is no beginning or ending inventory). ABC Company Income Statement For the Year Ended December 31, Year 2 Sales revenue, 75 \% on credit \2 00,000 underline Accounts receivable balance December 31, Year 1, \ 50,000 December 31, Year 2, \ 60,000 Cost of good sold. 100\% on credit \6 0,000 underline Accounts payable balance December 31, Year 1,\ 15,000 December 31 , Year 2,\ 12,000 Expenses: Salaries and Wages \2 6,000 underline Accrued wages payable balance December 31, Year 1, \ 1,500 December 31, Year 2, \ 1,600 Depreciation expense \2 ,500 underline Rent expense \1 ,500 underline No accruals Income tax expense underline Taxes payable balance December 31, Year 1, \ 1,000 December 31 , Year 2,\ 2,000 Total expenses Net income Cash flow from operating activities underline

While the indirect method is prevalent in the construction of cash flow statements in the U.S., why might a firm choose to construct its cash flow statement using the direct method?

Firms using the direct approach for the statement of cash flows must also present a reconciliation of cash flow from operations to net income.

To prepare the statement of cash flows requires analyzing changes in balance sheet accounts during the accounting period. As an outcome of correct double-entry recording of all transactions, the net change in cash will be _____ the net change in all noncash accounts.

A profitable firm can never run out of cash.