Exam 12: Reporting Cash Flows

Bagrov Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was provided (used) in operating activities?

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

A statement of cash flows explains the differences between the beginning and ending balances of:

Netflix Co. reported net income of $213.4 million, net cash provided by operating activities of $151.3 million, total cash flows of $187.7 million, and average total assets of $2,314.8 million at the end of the year. Calculate the cash flow on total assets ratio.

Explain the value of separating cash flows into operating activities, investing activities, and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

The direct method of reporting operating cash flows:

A company had average total assets of $3,216,000, total cash flows of $1,320,000, cash flows from operations of $554,000, and cash flows for plant assets of $850,000. The cash flow on total assets ratio equals:

A company's Inventory balance at the end of the year was $188,000 and $200,000 at the beginning of the year. Its Accounts Payable balance at the end of the year was $84,000 and $80,000 at the beginning of the year, and its cost of goods sold for the year was $720,000. The company's total amount of cash payments for merchandise during the year equals:

A cash-based measure to help business decision makers estimate the amount and timing of cash flows from operating activities is the cash flow on total assets ratio.

A cash equivalent is:

Investing activities include (a) the purchase and sale of long-term assets, (b) the purchase and sale of short-term investments, and (c) loaning money.

Salah's net income for the year ended December 31, Year 2 was $175,000. Information from Salah's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.

Information to prepare the statement of cash flows usually comes from (a) comparative balance sheets, (b) current income statement, and (c) additional information.

Mayweather reports net income of $305,000 for the year ended December 31. 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 net increase in cash for the year.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Alfredo Inc. reports net income of $230,000 for the year ended December 31. 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 cash provided (used) in operating activities using the indirect method.

Because the direct method of preparing the statement of cash flows starts with net income, it is the method most frequently used.

Favre Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Favre Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

Financing activities include (a) the purchase and sale of long-term assets, (b) the purchase and sale of short-term investments, and (c) lending and collecting on loans.

In preparing Tywin Company's statement of cash flows for the most recent year, the following information is available: Net cash flows from investing activities for the year were: