Exam 16: Statement of Cash Flows: Another Look

Which of the following is/are not true?

Prepayments for Julianna Company decreased by $2,000 during Year 3, the firm expensed less cash during Year 3 for new prepayments than it expensed prepayments of earlier years.Assume that all prepayments relate to selling and administrative activities.The journal entries that Julianna Corporation made in the accounting records during the year had the following combined effect: Selling and Administrative Expenses ..............35,500 Cash ........................................... 33,500 Prepayments ......................................2,000 To explain the change in the statement of cash flows T-account work sheet for Prepayments

The product life-cycle concept from microeconomics and marketing provides useful insights into the relations among cash flows from operating, investing, and financing activities.During the _____ cash outflow exceeds cash inflow from operations because operations are not yet earning profits while the firm must invest in accounts receivable and inventories.Investing activities result in a net cash outflow to build productive capacity.Firms must rely on external financing during this phase to overcome the negative cash flow from operations and investing.

Cash flow from financing activities do not include

A firm sold an investment in securities available for sale originally costing $30,000, for $28,000.At the beginning of the year, the investment had a valuation allowance of $3,000, debit.What is the correct disclosure for these events in the statement of cash flows prepared under the direct method, assuming this is the only investment in securities available for sale?

Describe the effects of transactions involving investments on the statement of cash flows.

Notes to the Year 2 financial statements of Care Corporation indicate that income tax expense of $3,000 comprises $2,000 currently payable taxes and $1,000 deferred to future periods.Care Corporation made the following entry during Year 2 to recognize income tax expense: Income Tax Expense ..............3,000 Income Tax Payable ........................2,000 Deferred Income Taxes Payable ...............1,000 The $1,000 of deferred income taxes reduced net income but did not require a cash outflow during Year 2.To explain the change in the Deferred Income Taxes account, the T-account work sheet must.

The amortization of bond discount related to long-term debt should be presented in a statement of cash flows prepared using the indirect method as a(n)

In Year 8, Global Marketing Corporation had a net increase in inventories of $50,000.The T-account work sheet for preparing the statement of cash flows

Weakening profitability,from reduced sales or reduced profit margins on existing sales, signals the beginning of the decline phase, but ever-declining accounts receivable and inventories can produce positive cash flow from operations.

During Year 7, Frank Company had a net increase in accounts receivable of $10,000.The T-account work sheet for preparing the statement of cash flows

The statement of cash flows explains the reasons for the change in cash and cash equivalents during a period.This statement classifies the reasons as relating to

The second step of completing the T-account work sheet for generating the statement of cash flows is to prepare a T-account for each balance sheet account other than _____ and enter the beginning and the ending balances.

The accounting records of Calli Inc.indicate that the firm sold for $1,800 during Year 2 a machine originally costing $6,000, with accumulated depreciation of $4,600.The journal entry made to record this sale was as follows: Cash .........................................1,800 Accumulated Depreciation .......................4,600 Loss on Disposal of Equipment .................... 400 Equipment .......................................6,000 In preparing the statement of cash flows using the work sheet, the accountant.

Cash flow from ____ activities includes increases and decreases in short-term and long-term borrowing, increases and decreases in common and preferred stock, and dividends.

The accounting records of Dominick Inc.indicate that the firm sold for $1,800 during Year 2 a machine originally costing $6,000, with accumulated depreciation of $4,600.The journal entry made to record this sale was as follows: Cash ........................................1,800 Accumulated Depreciation.......................4,600 Equipment..........................................6,000 Gain on Disposal of Equipment...........................400 (Use the information about Dominick Inc.to answer this question.) In preparing the statement of cash flows using the T-account worksheet, the accountant

The first step in a procedure for preparing the statement of cash flows using a T-account work sheet is to explain the change in the master Cash account between the beginning and the end of the period by accounting for the changes in the other balance sheet accounts.

Choose the combination below that best reflects the appropriate classification of cash received from investing and financing activities. Cash Received from Cash Received from Investing Activities Financing Activities

In U.S.GAAP, which of the following accurately describe(s) the effects of transactions involving investments on the statement of cash flows?

The cash change equation for preparing the statement of cash flows using a T-account work sheet is: Assets = Liabilities + Shareholders' Equity