Exam 16: Reporting the Statement of Cash Flows

Sebring Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Sebring Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

The statement of cash flows is divided into three sections called the ___________, ___________, and _______________ sections.

Use the following calendar-year information to prepare David Company's statement of cash flows using the direct method.

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

Cash paid for merchandise is an operating activity.

___________________ activities generally include those transactions and events that affect long-term assets.

When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added to net income.

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):

A purchase of land in exchange for shares of stock is disclosed on the statement of cash flows or in a note to the statement.

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: What is the ending balance for retained earnings?

All of the following statements related to preparation of the statement of cash flows under U.S. GAAP and IFRS are true except:

The direct method for the preparation of the operating activities section of the statement of cash flows:

A cash equivalent must be readily convertible to a known amount of cash, and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Define and discuss the differences between operating, investing and financing activities.

In preparing a company's statement of cash flows for the year just ended, the following information is available: Net cash flows from financing activities for the year were:

Based on the information in the following income statement and balance sheet for Montego Bay Corporation, determine the cash flows from operating activities using the direct method.