Exam 15: The Statement of Cash Flows

Cash flows to assets is computed as

During 20x5,Oates Company had sales of $500,000,net income of $50,000,average total assets of $700,000,dividend payments of $35,000,net cash flows from operating activities of $90,000,purchases of plant assets of $75,000,and sales of plant assets of $90,000.Cash flows to sales equals (Round amounts to one decimal place)

The following 20x5 information relates to Taylor,Inc.: a.Calculate the net cash flows from operating activities.Show your work. b.Calculate the net cash flows from investing activities.Show your work. c.Calculate the net cash flows from financing activities.Show your work. d.Calculate the net change in cash.Show your work.

On a statement of cash flows prepared using the indirect method,the amount representing cash paid for interest would

Management would not use the statement of cash flows to

When preparing a statement of cash flows using the indirect method,an increase in accounts receivable is added to net income.

Because noncash investing and financing transactions do not affect cash,they should not be reflected in the body of the statement of cash flows.

Analysis of the financing activities section of the statement of cash flows will disclose

The activity from the Long-Term Investments account for Fisk Corporation appears below.In addition,the income statement shows a loss on the sale of investments of $32,000. Based on the information given,compute the amounts to be shown and indicate how they would appear on the statement of cash flows.Assume that the indirect method is being used and that the investments were purchased for cash.

Which of the following statements is incorrect regarding the statement of cash flows?

If the indirect method is used,which of the following would be subtracted from net income to arrive at net cash flows from operating activities?

The financing activities section of the statement of cash flows includes certain transactions and activities from the income statement and also takes into account stockholders' equity.

Green Skies Company prepares its statement of cash flows using the indirect method.Indicate whether each of the items below would be added to (+)or deducted from (-)net income to determine net cash flows from operating activities. _____ 1.Increase in Inventory _____ 2.Increase in Accounts Payable _____ 3.Depreciation Expense _____ 4.Loss on Disposal of Truck _____ 5.Decrease in Accounts Receivable _____ 6.Decrease in Wages Payable _____ 7.Amortization Expense _____ 8.Decrease in Prepaid Rent _____ 9.Gain on Sale of Land _____ 10.Decrease in Income Taxes Payable

How is it possible for a company to show a net loss for a given year,yet produce positive net cash flows from operating activities?

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Income (assume that cash received is equal to amount reported)-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

The primary purpose of the statement of cash flows is to provide information

The purchase of treasury stock qualifies as a financing activity,but it is not a cash flow.

Which accounts are analyzed to determine cash flows from financing activities?

The purchase of trading securities with cash is considered an investing activity.

Cash equivalents include money market accounts,commercial paper,and U.S.Treasury bills.