Exam 14: Statement of Cash Flows

Use the reconciliation approach to determine cash received from customers for the Boyd Company for the year. Beginning and ending balances of Accounts Receivable were $6,500 and 5,900 respectively. Sales (all on account) amounted to $127,000.

During the year, the Abbot Company had the following changes in account balances: 1) The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000. The increase was due to depreciation expense.2) The long-term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000. The decrease was due to repayment of debt.3) The Accounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.4) The Equipment account had a beginning balance of $25,000 and an ending balance of $92,500. The increase was due to the purchase of equipment for cash.5) The long term investments account (marketable securities) had a beginning balance of $18,000 and an ending balance of $12,500. The decrease was due to the sale of investments at cost.6) The amount of cash dividends declared and paid during the year was $22,000.7) The interest payable account had a beginning balance of $2,250 and an ending balance of $1,250.If the net cash flow from operating activities was $12,000, the net cash flow from investing activities was ($24,000) and the net change in cash was $24,000, what was the net cash flow from financing activities?

Under the indirect method, an increase in Wages Payable would be added back to net income when calculating net cash flow from operating activities.

Depreciation for the year was $80,000 and net income was $323,000. Assume the rest of the company's transactions were cash transactions. How much was net cash from operating activities?

Under the indirect method, depreciation expense would be subtracted from net income when determining the net cash flow from operating activities.

During the year, the Abbot Company had the following changes in account balances: 1) The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000. The increase was due to depreciation expense.2) The long-term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000. The decrease was due to repayment of debt.3) The Accounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.4) The Equipment account had a beginning balance of $25,000 and an ending balance of $92,500. The increase was due to the purchase of equipment for cash.5) The long term investments account (marketable securities) had a beginning balance of $18,000 and an ending balance of $12,500. The decrease was due to the sale of investments at cost.6) The amount of cash dividends declared and paid during the year was $22,000.7) The interest payable account had a beginning balance of $2,250 and an ending balance of $1,250.What is the net cash flow from financing activities?

During the year, the Property, Plant and Equipment account increased by $25,000 and the Accumulated Depreciation account increased by $2,000. In addition, the company sold equipment, which originally cost $12,000 and had $9,000 of accumulated depreciation, for $4,500. What was the cash inflow from the sale of property, plant, and equipment?

Which of the following is not an adjustment when arriving at net cash flow from operating activities under the indirect method?

Which of the following would be shown as a deduction from net income when calculating net cash flow from operating activities using the indirect method?

The following beginning and ending balances were drawn from the records of Grimes Company: If Grimes Company sold equipment, which had an original cost of $600 and accumulated depreciation of $300, for $250, how much did Grimes pay for new equipment? Begining Ending Equipment \ 1,400 \ 1,100 Accumulated Depreciation \ 700 \ 400

Which section of the statement of cash flows may be prepared using either the direct method or the indirect method?

Only the principle portion of a mortgage payment is considered to be a cash outflow for financing activities.

Street Corporation reported net income of $400,000 and a net cash flow from operating activities of $550,000 during the year. Which of the following could not have been a reason why Street's net cash flows from operating activities were greater than its net income?

Arch Associates reports the following comparative balance sheets and income statement information.Which of the following cash flows would be included under the operating activities section of the cash flow statement? (Assume the direct method is used.) 12/31/2013 12/31/2014 Cash \ 12,000 \ 22,000 Accounts receivable 4,000 8,000 Prepaid insurance 10,000 8,000 Inventory 6,000 2,000 Property, plant and equipment 12,000 10,000 Total assets \ 44,000 \ 50,000 Accounts payable \ 8,000 \ 12,000 Salaries payable 10,000 4,000 Long term notes payable 8,000 6,000 Stockholders' equity 18,000 28,000 Total liabilities and equity \ 44,000 \ 50,000 NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to: 12/31/Year 1 Change 12/31/14 to: 12/31/Year 2 Income Statement Year Ended 12/31/14 Revenue \ 70,000 Cost of goods sold 40,000 Gross margin 30,000 Operating expense 20,000 Net income \ 10,000 NEED TO MAKE CHANGES TO TABLE Change 12/31/14 to: 12/31/Year 2

When using the indirect method, an increase in current liabilities is:

Dividends received from investments in marketable securities are reported as investing activities in the statement of cash flows.

The following information is available for Kent Company Year 2.Required: 1) What amount of cash was paid for the purchase of merchandise? 2) How will the above items be shown on the statement of cash flows using the indirect method? 3) How will the amount computed in 1) be shown on the statement of cash flows using the direct method? Net income, 2014 \ 280,000 Inventory, 1/1/14 300,000 Inventory, 12/31/14 260,000 Cost of goods sold, 2014 1,500,000 Accounts payable, 1/1/14 180,000 Accounts payable, 12/31/14 230,000

Under the indirect method, which of the following items would be subtracted from net income to determine the cash flow from operating activities?

Equipment with an original cost of $20,000 and accumulated depreciation of $7,500 was sold at a loss of $2,500. As a result of this transaction, cash would:

In preparing the statement of cash flows by the indirect method, which of the following is a correct statement of one of the general rules to convert net income to a cash-basis equivalent?