Question 1

The statement of cash flows helps address questions such as

Accepted Answer

A) How is the increase in investments financed? 
B) What is the source of cash for new plant assets? 
C) How much cash is generated from or used in operations? 
D) Why is cash flow from operations different from income? 
E) The statement of cash flows helps to address all of the questions listed.

Question 2

When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:

Accepted Answer

A) The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method. 
B) A reconciliation of net income to net cash provided or used by operating activities. 
C) Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities. 
D) The income statement to be prepared under the cash basis of accounting. 
E) Noncash investing and financing activities be included in the statement of cash flows.

Question 3

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts,such as receipts from customers,and subtracts the major items of operating cash disbursements,such as cash paid for merchandise,is referred to as the:

Accepted Answer

A) Direct method of reporting net cash provided or used by operating activities. 
B) Cash basis of accounting. 
C) Classified statement of cash flows. 
D) Indirect method of reporting net cash provided or used by operating activities. 
E) Net method of reporting cash flows from operating activities.

Question 4

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

Accepted Answer

A) True 
 B)False

Question 5

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Accepted Answer

A) $12,700. 
B) $13,900. 
C) $20,900. 
D) $28,400. 
E) $35,900.

Question 6

For each of the following independent cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

Accepted Answer

The answer of For each of the following independent cases,use...

Question 7

Castine reports net income of $305,000 for the year ended December 31,Year 2.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,and a $100,000 decrease in notes payable.Calculate the new cash provided (used)in operating activities using the indirect method.

Accepted Answer

A) $461,800. 
B) $371,400. 
C) $381,400. 
D) $351,000. 
E) $361,000.

Question 8

Investing activities include:
 (a)the purchase and sale of long-term assets,(b)lending and collecting on notes receivable,and (c)the purchase and sale of short-term investments in the securities of other entities,other than cash equivalents and trading securities.

Accepted Answer

A) True 
 B)False

Question 9

A company reported net income of $318,000,operating cash flows of $218,000,total cash flows of $184,000,and average total assets of $898,000.Calculate its cash flow on total assets ratio.

Accepted Answer

The answer of A company reported net income of $318,000,operating...

Question 10

A spreadsheet can help organize the information needed to prepare a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 11

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

Accepted Answer

A) True 
 B)False

Question 12

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from operating activities generally affect:

Accepted Answer

A) Net income, current assets, and current liabilities. 
B) Noncurrent assets. 
C) Noncurrent liability and equity accounts. 
D) Both noncurrent assets and noncurrent liabilities. 
E) Equity accounts only.

Question 13

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Becker's statement of cash flows?

Accepted Answer

A) In operating activities as a source of funds. 
B) In investing activities as a source of funds. 
C) In investing activities as a use of funds. 
D) In financing activities as a source of funds. 
E) In financing activities as a use of funds.

Question 14

A main purpose of the statement of cash flows is to report all the major cash ________ and cash _______________.

Accepted Answer

The answer of A main purpose of the statement of...

Question 15

Preparation of the statement of cash flows involves:

Accepted Answer

A) Computing the net increase or decrease in cash. 
B) Computing and reporting net cash provided or used by operations. 
C) Computing and reporting net cash provided or used by investing activities. 
D) Computing and reporting net cash provided or used by financing activities. 
E) All of the choices are included in the preparation of the statement of cash flows.

Question 16

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.

Accepted Answer

The answer of Explain the value of separating cash flows...

Question 17

Mansell reported net income of $233.4 million,net cash provided by operating activities of $131.4 million,total cash flows of $187.7 million,and average total assets of $2,040.8 million at the end of the year.Calculate the cash flow on total assets ratio for Mansell.

Accepted Answer

The answer of Mansell reported net income of $233.4 million,net...

Question 18

Cash flows from interest received on loans are reported in the statement of cash flows as part of:

Accepted Answer

A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Noncash activities. 
E) None of these.This is not reported in the statement of cash flows.

Exam 16: Reporting the Statement of Cash Flows

The statement of cash flows helps address questions such as

When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts,such as receipts from customers,and subtracts the major items of operating cash disbursements,such as cash paid for merchandise,is referred to as the:

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

For each of the following independent cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

Investing activities include: (a)the purchase and sale of long-term assets,(b)lending and collecting on notes receivable,and (c)the purchase and sale of short-term investments in the securities of other entities,other than cash equivalents and trading securities.

A company reported net income of $318,000,operating cash flows of $218,000,total cash flows of $184,000,and average total assets of $898,000.Calculate its cash flow on total assets ratio.

A spreadsheet can help organize the information needed to prepare a statement of cash flows.

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from operating activities generally affect:

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Becker's statement of cash flows?

A main purpose of the statement of cash flows is to report all the major cash and cash _______.

Preparation of the statement of cash flows involves:

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.

Mansell reported net income of $233.4 million,net cash provided by operating activities of $131.4 million,total cash flows of $187.7 million,and average total assets of $2,040.8 million at the end of the year.Calculate the cash flow on total assets ratio for Mansell.

Cash flows from interest received on loans are reported in the statement of cash flows as part of: