Exam 15: The Statement of Cash Flows

Issuance of notes,either long- or short-term,would be reflected in the financing activities section of the statement of cash flows.

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.Free cash flow equals

The income statement indicates a business's success or failure in earning an income from its operating activities,but it does not reflect the inflow and outflow of cash from operating activities.

The following information relates to Royale Enterprises for the year ended December 31,20x5: 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.

The payment of taxes would be included in the operating activities section of the statement of cash flows.

Noncash investing and financing transactions,such as the exchange of a long-term asset for a long-term liability,represent significant investing and financing activities and are reflected in a separate schedule as part of the statement of cash flows.

The activity in the Plant Assets and related Accumulated Depreciation accounts for 20x5 is shown below.In addition,the income statement shows a gain on sale of plant assets of $16,000. 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 plant assets were purchased for cash.

During 20x5,Oates Company had sales of $250,000,net income of $25,000,average total assets of $350,000,dividend payments of $17,500,net cash flows from operating activities of $26,000,purchases of plant assets of $37,500,and sales of plant assets of $45,000.Cash flow yield equals (Round amounts to one decimal place)

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

The calculation of free cash flow could include all of the following except

Free cash flow is measured in terms of dollars.

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 1)Sold machinery for $9,000 cash. 2)Purchased a building for $80,000 cash. 3)Issued $70,000 worth of stock to acquire an airplane. 4)Converted long-term bonds by issuing $100,000 worth of stock. 5)Declared and paid a $10,000 cash dividend. Transaction 1 would be found on the statement of cash flows in the

Lincoln Company engaged in this transaction: Purchased 60-day commercial paper. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Using the indirect method,calculate the amount of net cash flows from operating activities from the following data.Show your work

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Gain on Sale of Investment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 1)Sold machinery for $9,000 cash. 2)Purchased a building for $80,000 cash. 3)Issued $70,000 worth of stock to acquire an airplane. 4)Converted long-term bonds by issuing $100,000 worth of stock. 5)Declared and paid a $10,000 cash dividend. Transaction 4 would be found on the statement of cash flows in the

Lincoln Company engaged in this transaction: Converted loans payable to stock. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

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

Investing activities involve

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Accounts Payable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following: