Exam 16: Reporting the Statement of Cash Flows

Trenton reports net income of $230,000 for the year ended December 31, Year 2. It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment. Its comparative balance sheet reveals a $35,500 decrease in accounts receivable, a $15,750 increase in accounts payable, and a $12,500 decrease in wages payable. Calculate the new cash provided (used) in operating activities using the indirect method.

When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

When using the indirect method to calculate and report the net cash provided or used by operating activities, net income is adjusted for:

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

Accounting standards require companies to include a statement of cash flows in a complete set of financial statements.