Exam 5: The Statement of Cash Flows

If a company issues both a balance sheet and an income statement with comparative figures from last year, Statement of Cash Flows:

The amortization of patents should be presented in a Statement of Cash Flows as a(n):

When preparing a reconciliation of net income to cash from operations, an increase in the ending inventory over the beginning inventory will result in an adjustment to reported net income because:

A corporation recorded the following entry: nvestment in common shares to be held indefinitely 2,000 Cash 2,000 How would this transaction be shown on a Statement of Cash Flows?

The following data is provided: Income Statement For the Year Ended Dec. 31, 2011 Net sales \ 375,000 Cost of goods sold (200,000) Cash operating expenses (100,000) Depreciation and amortization expense (25,000) Gain on sale of equipment 15,000 Net income \ 65,000 Additional information: 1. Increase in accounts receivable during2011 \ 10,000 2. Decrease in inventory during 2011 \ 7,500 3. Increase in accounts payable during 2011 \ 11,000 4. Sale of old equipment for cash \ 32,500 5. Dividends declared - \ 22,500 ; dividends paid \ 20,000 6. New building acquired by issuing common shares \ 21,000 7. Sold bonds for cash - proceeds of \ 37,500 Required: Prepare a Statement of Cash Flows, direct method. Include a reconciliation of earnings and net operating cash flow.

All investments meeting the definition of cash equivalent must be so classified.

VJW received the following cash inflows during 2012: Cash dividends received \ 20,000 Sale of preferred stock 30,000 Proceeds trom issuing bonds payable 100,000 Proceeds trom sale of securities available tor sale 40,000 What would be cash inflow from financing activities for 2012?

You are preparing a Statement of Cash Flows. Complete the following schedule to compute cash flow from operating activities: Statement of Cash Flows Net Income (accrual basis), \ 50,000 \ Adjustments to reconcile net income to cash from operating activities: (a) Depreciation expense, \ 8,000 (b) Inventory increase, \ 5,000 (c) Wages payable decrease, \ 6,000 (d) Accounts receivable decrease, \ 10,000 (e) Accounts payable increase, \ 7,000 (f) Cash dividends declared and paid, \ 4,000 (g) Increase in income tax payable, \ 3,000 (h) Gain on sale of capital assets, \ 1,000 ; book value, \ 7,500 (i) Payment on long-term note, \ 20,000 Cash flow from operating activities \

Only the indirect method of preparing the Statement of Cash Flows reports the reconciliation of net income and net operating cash flow.

Place a check mark in the appropriate column(s) with respect to each item listed below which indicates where the item would be reported on the Statement of Cash Flows. Investing Financing Operating Noncash None Item (a) Made periodic transfer of cash to bond sinking fund. (b) Collected accounts receivable from trade customers. (c) Paid for extraordinary repairs and debited accum. Depreciation. (d) Sold securities carried as short-term investment at book value. (e) Declared cash dividend on common stock to be paid in first month of the next fiscal year. (f) Increased allowance for doubtful accounts at the end of the fiscal period. (g) Purchased new equip. by issuing a note due in six months. (h) Sold unissued common stock at par. Used the cash for working capital purposes. (i) Bonds covered by a sinking fund matured. The fund was used to pay them in full. (j) Building acquired; paid no cash but issued a long-term mortgage note payable.

Under IFRS, interest paid may be classified as operating or financing activities.

The records of CDE provided the following information for the period ended December 31, 2012: Merchandise inventory increase \ 20 Accounts payable increase 30 Decrease in securities available tor sale 15 interest payable decrease 7 Accounts receivable decrease 10 Mages pay able increase 4 Depreciation expense 13 income as reported on the income statement) 47 Compute CDE's cash flow from Operating activities for 2012.

The change in short-term payables to suppliers would be classified into which of the following categories for purposes of disclosure in the Statement of Cash Flows?

The records of CDE provided the following information for the period ended December 31, 2011: Merchandise inventory increase \ 20 Accounts payable increase 30 Decrease in securities available for sale 15 Interest payable decrease 7 Accounts receivable decrease 10 Wages payable increase 4 Depreciation expense 13 Income (as reported on the income statement) 47 Calculate net cash inflow from operating activities for 2011.

DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory increased by $20,000 during the year and accounts payable decreased by $30,000 during the year. What would be DBB's cash paid to suppliers for 2013?

For each transaction, enter a check mark to indicate its effect on cash flow. If there is no effect, do not mark either blank.

Depreciation expense in the Statement of Cash Flows is reported under the investing section.

A non-cash exchange is a transaction that involves an exchange of resources without any cash being directly paid or received.

A firm reported the following in its 2011 financial statements: Balance sheet Dec. 31/2010 Dec. 31.2011 Unearned rent \ 10,000 \ 17,000 Income statement Rent revenue = $92,000 (a) Describe the required disclosure implied by the above information for the indirect method Statement of Cash Flows for 2001, including the reconciliation of net income and net operating cash flow. (b) Explain as completely as possible the reasoning for your response in (a). (c) Describe the required disclosure implied by the above information for the direct method Statement of Cash Flows for 2011, omitting any reference to the reconciliation of net income and net operating cash flow.

Which of the following would cause an inflow of cash?