Exam 12: Statement of Cash Flows

Which of the following statements about the capital acquisitions ratio is incorrect?

KAJ Incorporated purchased a machine costing $250,000 by paying $35,000 and signing a $215,000 note payable. How would this transaction be reported within the cash flow from financing activities section of the cash flow statement?

Which of the following transactions would be reported within the investing section of the cash flow statement?

Which of the following would be added to net income when determining cash flows from operating activities under the indirect method?

The capital acquisitions ratio represents the portion of property, plant, and equipment purchases which could have been financed with cash flow from operating activities.

Lab Industries, Inc., issued $50,000 of bonds, paid cash dividends of $8,000, sold long-term investments for $12,000, received $5,000 of dividend revenue, purchased treasury stock for $15,000, and purchased new equipment for $19,000. What is the net cash flow from financing activities?

Atkins Corporation has provided the following information for the year ended December 31, 2016: • The equipment account balance increased by $200,000 from the beginning of the year to the end of the year. • The equipment accumulated depreciation account balance increased by $35,000 from the beginning of the year to the end of the year. • Equipment costing $50,000 was sold during the year resulting in a $10,000 gain. • Depreciation expense recorded on the equipment during the year was $65,000. Atkins Corporation has provided the following information for the year ended December 31, 2016: • The equipment account balance increased $200,000. • The equipment accumulated depreciation account increased $35,000. • Equipment costing $50,000 was sold during the year resulting in a $10,000 gain. • Depreciation expense recorded on the equipment during the year was $65,000. What was the amount of the investing activities cash inflow from the sale of the equipment? Assume that the equipment purchase and sale resulted in cash flows.

Cash collected from customers is a cash flow from operating activities and is calculated using the indirect method for preparing the statement of cash flows.

Which of the following statements about the quality of income ratio is correct?

Roberts Company sold equipment for $250,000, purchased a building for $6,500,000, sold short-term investments for $280,000, repaid principal on a note payable for $2,300,000 plus $230,000 of interest, and paid cash dividends of $20,000. What was the net cash flow from financing activities?

Cash flows from financing activities include those cash flows with respect to issuing and retiring long-term debt and equity.

Milliken Company paid $2.2 million to purchase stock in another company, $1.0 million to repurchase treasury shares, $.5 million to buy short-term investments, sold used equipment for $.8 million when its book value was $.6 million, and purchased new equipment for $3.4 million. What was the net cash flow from investing activities?

Which of the following would be subtracted from net income when determining cash flows from operating activities under the indirect method?

Allen Company's 2016 income statement reported total revenues, $850,000 and total expenses (including $40,000 depreciation) of $720,000. The 2015 balance sheet reported the following: accounts receivable-beginning balance, $50,000 and ending balance, $40,000; accounts payable-beginning balance, $22,000 and ending balance, $28,000. Therefore, based only on this information, how much was the 2016 net cash provided by operating activities?

Which of the following statements does not correctly describe an adjustment to net income when determining cash flows from operating activities using the indirect method?

A company reported an increase in accrued sales revenues and a decrease in unearned sales revenues during 2016. Which of the following statements is correct?

Madison Company had sales of $154,000. Additional information from the balance sheet is below: How much cash was collected from customers?

Use the following information to prepare a statement of cash flows (direct method) for Ames Corporation for the year ended December 31, 2017.

A company reported net income of $200,000 during 2016. The company reported depreciation expense of $35,000, patent amortization of $10,000 and a $5,000 loss on the sale of equipment. Using the indirect method, how much is the company's net cash flow from operating activities?

During 2017, Tommy's Toys reported the following: short-term borrowings of $419 million; long-term borrowings of $147 million; long-term debt repayments of $45 million; interest paid, $128 million; treasury shares purchased $632 million; and exercise of stock options by employees, $2 million. Required: A.Calculate the net cash flow from financing activities during 2017.Show your work and details of whether an item is added or subtracted to arrive at your answer. B.Is the net cash flow provided by, or used in, the financing activities? Briefly describe the reason for your answer.