Exam 16: Reporting the Statement of Cash Flows

A company reported net income of $112,000, operating cash flows of $57,000, total cash flows of $97,000, and average total assets of $962,000. Calculate its cash flow on total assets ratio.

Explain the use of a spreadsheet in the preparation of the statement of cash flows.

A spreadsheet can help organize the information needed to prepare a statement of cash flows.

On a spreadsheet used to prepare the operating activities section of the statement of cash flows, depreciation expense does not require an entry in the Analysis of Changes columns because it is a noncash item.

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes is a(n):

Castine reports net income of $305,000 for the year ended December 31, Year 2. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, and a $100,000 decrease in notes payable. Calculate the new cash provided (used) in operating activities using the indirect method.

When preparing the operating section of the statement of cash flows using the indirect method, noncash expenses are _____________ net income.

When using a spreadsheet to prepare the statement of cash flows, a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

The cash flow on total assets ratio:

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

Mansell reported net income of $233.4 million, net cash provided by operating activities of $131.4 million, total cash flows of $187.7 million, and average total assets of $2,040.8 million at the end of the year. Calculate the cash flow on total assets ratio for Mansell.

In preparing a company's statement of cash flows for the most recent year on the indirect method, the following information is available: Net cash provided by operating activities was:

A company had average total assets of $2,316,000, total cash flows of $1,320,000, cash flows from operations of $455,000, and cash flows for plant assets of $850,000. The cash flow on total assets ratio equals:

Castine reports net income of $305,000 for the year ended December 31, Year 2. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, a $75,000 increase in equipment, and a $100,000 decrease in notes payable. Calculate the increase in cash for Year 2.

Explain the purpose and format of the statement of cash flows. Also describe its relevance to decision makers.

An example of a transaction that must be disclosed as a noncash investing and financing activity includes:

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method.

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires: