Exam 14: Statement of Cash Flows

Bates Company pays cash for all inventory purchases. Bates reports that it had a beginning inventory of $2,500 and an ending inventory of $900. Its cost of goods sold equaled $5,500. Based on this information, the amount of cash paid for inventory purchases was:

Which of the following would be reported as an investing activity on the statement of cash flows?

What is the major advantage of using the indirect method of preparing the statement of cash flows?

Under the direct method, which of the following would not be included in the operating section of the cash flow statement?

The Upton Company reported a beginning balance of $1,600 and an ending balance of $2,200 in its Unearned Revenue account for Year 2. During the year, $8,000 of revenue was recognized. Based on this information, how much cash was received from customers?

The following information was drawn from Eckerd Company's balance sheets at the end of Year 2 and Year 1.New bonds in the amount of $50,000 were issued at par during Year 2. What is the amount of cash flow associated with the repayment of bond liabilities? 2014 2013 Bonds payable \ 170,000 \ 150,000

Style Monthly magazine reported $650,000 of revenue for the month. At the beginning of the month, its Unearned Revenue account had a balance of $190,000. At the end of the month, the account had a balance at $156,000. Based on this information, what is the amount of cash received from customers?

The Knott Company reported depreciation expense of $10,000 and net income of $16,000 on its income statement. During the year, the company's Accounts Receivable balance decreased by $4,000. Based on this information, what was the net cash flow from operating activities?

Cash receipts from the sale of investments would be classified as a financing activity.

Vinton Corp. had beginning Accounts Receivable of $36,000 and ending Accounts Receivable of $32,000. If total sales were $110,000, what amount of cash was collected from customers, and how would it be classified on the statement of cash flows?

The Penn Corporation provided the following for the current year: Net income for the current year was reported as $200,000.Required: Use the reconciliation approach to obtain the information required to prepare the financing activities section of the statement of cash flows. (Note that you do not actually have to prepared that section of the statement.) Beginning Ending Mortgage payable \ 200,000 \ 140,000 Common stock 152,000 280,000 Paid-in Excess - Common 170,000 380,000 Dividends payable 8,000 5,000 Retained earnings 580,000 740,000 ? Do you want to show the financing section of the statement of cash flows? Below are the calculations only.Added clarification. JMF

Winkler Company sold equipment for $25,000 cash. The equipment had cost $40,000 and had accumulated depreciation of $22,000 at the time of the sale. Based on this information alone, which of the following statements is correct?

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 investing activities?

A decrease in Retained Earnings may indicate a cash outflow occurred to pay a dividend.

The income statement of Collins Co. reported total sales revenue of $115,000 during the current year. The company's comparative balance sheets reported a balance in Accounts Receivable of $17,500 at the beginning of the year and $25,000 at the end of the year. The cash inflow from customers during the current year equals:

Shaw Associates uses the indirect method for preparing the statement of cash flows. The following accounts and balances were drawn from the company's accounting records: Net income for the period was $42,000. The net cash flows from operating activities equals: Account Title Begining Ending Accounts receivable \ 30,000 \ 40,000 Prepaid insurance \ 4,600 \ 1,000 Accounts payable \ 24,000 \ 25,800 Unearned revenue \ 6,400 \ 3,800

Which of the following statement is incorrect regarding the investing activities section of the statement of cash flows?

The following data is supplied from the comparative balance sheets and income statement information from Webber, Inc. Webber uses the indirect method to prepare its statement of cash flows.Required: a) Calculate the cash flow from operating activities (using the indirect method).b) Calculate the cash flow from investing activities.c) Calculate the cash flow from financing activities.

How is the direct method of preparing the statement of cash flows different from the indirect method?

Gates Corporation reported utilities expense of $112,800 on its income statement. The beginning balance in Utilities Payable was $8,000 and the ending balance was $4,000. The amount of cash that Gates paid for utilities during the year was $116,800.