Exam 5: The Statement of Cash Flows

The following four events affecting property, plant and equipment, and intangible assets, occurred during the current year for a firm: (i.) Purchased equipment for $50,000. (ii)) Successfully defended a patent infringement suit costing the firm $60,000 in legal fees this year; as a result, the firm has sole rights to the patent. (iii.) Capitalized and paid $30,000 of interest on a building under construction which is to house the firm's new offices. (iv)) Received $100,000 in casualty insurance proceeds as a result of fire damage to one of the firm's factories. What is the net effect on investing cash flow of the above transactions for the current year?

Which one of the following would not be a cash inflow from financing activities for ABC Company?

The write-off of a bad debt (allowance method) during the current period represents an outflow of cash on the Statement of Cash Flows for the current period.

The sale of $3,000 worth of cash equivalents at cost has what effect on the direct method Statement of Cash Flows.

RLN received the following cash inflows during 2012. Cash from customers \ 200,000 Sale of capital assets 50,000 Interest on loan receivable 10,000 Proceeds from sale of investments 40,000 What would be cash inflow from investing activities for 2012?

The purchase of debt securities to be held to maturity would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

In preparing the Statement of Cash Flows, which of the following transactions would be considered an investing activity?

EAE made the following cash outflows during 2012: Cash tor EAE common stock dividends \ 14 Cash tor capital as sets 100 Cash to retire EAE's bond principal 60 Cash to purchase common stock 30 Cash to pay interest on EAE's bonds 8 What would be EAE's cash outflow for financing activities for 2012 (000s)? Note: Under IFRS, dividends received may also be classified as operating cash flows.

Which of the following could be a cash equivalent for purposes of reporting in the Statement of Cash Flows?

Which of the following causes a net change in cash?

Data for XOC for 2013 were as follows: (a) On December 31, 2013, sold a capital asset with a carrying value of $5,000 for $2,000 cash. (b) Depreciation expense for 2001, $4,000. (c) Sold 500 common shares at $10 cash per share. (d) Paid $1,000 on a long-term note payable. (e) Sold a long term investment costing $400 for $500 cash. (f) Inventory increased $2,500. (g) Amortized $30 of patent costs. (h) Net income, $23,000. Required: 1. What was net cash inflow (outflow) from investing activities for 2013? Show computations. 2. What was net cash inflow (outflow) from financing activities for 2013? Show computations.

If Harris Company issues both a balance sheet and an income statement with comparative figures from last year, a statement of cash flows should be issued for each period for which an income statement is presented.

Under ASPE, dividends paid must be classified as a financing activity.

The records of WXY provided the following information for the year ended December 31, 2011: (1) Purchased a warehouse and paid for it by issuing 1,000 common shares; market value was $35 per share. (2) Inventory increased by $4,000. (3) Accounts payable decreased by $6,000. (4) Declared a cash dividend, $5,000. (5) Depreciation expense, $2,000. (6) Net income, $19,000. (7) Loss on sale of machine, $3,000. (8) On December 31, 2001, paid insurance premium on all assets, for 2002 and 2003, $800. There was no prepaid insurance on January 1, 2011. Calculate the net cash inflow from operating activities for 2011.

MNO reported net income of $42,000 for the reporting period ended December 3, 2011. MNO's records provided the following information: Decrease in accounts payable \ 5,000 Depreciation expense \ 6,000 Amortiz ation of premium on bonds payable \ 500 Declared a cash dividend \ 2,000 ncrease in inventory \ 3,000 Decrease in accounts receivable \ 8,000 increase in income tax payable \ 1,000 Decrease in long-term debt principal \ 10,000 The net cash flow from operating activities was:

Which of the following would not be a cash-paid item using the direct method for reporting operating activities?

Which of the following is a financing cash flow?

Under the direct method, cash paid to suppliers can be computed as cost of goods sold for the period:

Sale for cash of a short-term investment at its cost would cause an inflow of cash.

Generally, only investments with original maturities (to the investor) of less than three months qualify as a cash equivalent.