Question 1

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  The ending balance in retained earnings is:

Accepted Answer

A) $343,000. 
B) $213,000. 
C) $293,000. 
D) $297,500. 
E) $301,000.

Question 2

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

Accepted Answer

The answer of The FASB requires a reconciliation of net...

Question 3

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n):

Accepted Answer

A) Short-term marketable equity security. 
B) Operating activity. 
C) Common stock. 
D) Cash equivalent. 
E) Financing activity.

Question 4

IFRS permits classification of cash inflows from interest revenue and dividend revenue under either the ___________________ activities section of the statement of cash flows, provided that this classification is consistently applied.

Accepted Answer

The answer of IFRS permits classification of cash inflows from...

Question 5

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Faster Freight Co. reported net cash provided by operating activities of $142.7 million and average total assets of $1,762.5 million at the end of the year. Calculate the cash flow on total assets ratio for Faster Freight.

Accepted Answer

The answer of Faster Freight Co. reported net cash provided...

Question 8

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

Accepted Answer

A) $(168,000). 
B) $200,000. 
C) $168,000. 
D) $(191,700). 
E) $191,700.

Question 9

When preparing the operating activities section of the statement of cash flows using the indirect method, expenses with no cash outflows are added back to net income.

Accepted Answer

A) True 
 B)False

Question 10

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from investing 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 11

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,...

Question 12

Common uses of the statement of cash flows include all but which of the following?

Accepted Answer

A) Management prediction of future cash flows for decision making. 
B) Investor assessment of cash flows before buying and selling stock. 
C) Creditor evaluation of a company's ability to generate cash to cover debt. 
D) Government assessment of whether company is able to pay taxes as they become due. 
E) Management determination of the specific sources and uses of cash.

Question 13

The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:  What is the ending balance for retained earnings?

Accepted Answer

A) $218,000. 
B) $170,000. 
C) $352,000. 
D) $172,000. 
E) $179,000.

Question 14

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used (which can be reported in the notes).

Accepted Answer

A) True 
 B)False

Question 15

The purpose of the statement of cash flows is to report cash receipts (inflows) and cash payments (outflows) during a period.

Accepted Answer

A) True 
 B)False

Question 16

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.

Accepted Answer

The answer of Use the following calendar-year information to prepare...

Question 17

The cash flow on total assets ratio is computed by dividing _____________ by ____________.

Accepted Answer

The answer of The cash flow on total assets ratio...

Question 18

Alvez Company 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, and a $100,000 decrease in notes payable. Calculate the 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 19

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Accepted Answer

A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Schedule of noncash investing or financing activity. 
E) This is not reported on the statement of cash flows.

Question 20

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.

Accepted Answer

The answer of Explain how the cash flows from operating...

Exam 12: Reporting and Analyzing Cash Flows

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The ending balance in retained earnings is:

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is unaffected by interest rate changes is a(n) :

IFRS permits classification of cash inflows from interest revenue and dividend revenue under either the ___________________ activities section of the statement of cash flows, provided that this classification is consistently applied.

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

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.

Faster Freight Co. reported net cash provided by operating activities of $142.7 million and average total assets of $1,762.5 million at the end of the year. Calculate the cash flow on total assets ratio for Faster Freight.

Northington, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

When preparing the operating activities section of the statement of cash flows using the indirect method, expenses with no cash outflows are added back to net income.

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

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.

Common uses of the statement of cash flows include all but which of the following?

The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: What is the ending balance for retained earnings?

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used (which can be reported in the notes).

The purpose of the statement of cash flows is to report cash receipts (inflows) and cash payments (outflows) during a period.

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.

The cash flow on total assets ratio is computed by dividing _ by .

The appropriate section in the statement of cash flows for reporting the cash payment of wages is:

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.