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Exam 16: Reporting the Statement of Cash Flows

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Question 21

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A dividend payment to shareholders during the year should be reported on the statement of cash flows as:

A) An increase in cash flows from financing activities
B) An increase in cash flows from investing activities
C) A decrease in cash flows from operating activities
D) A decrease in cash flows from investing activities
E) An decrease in cash flows from financing activities

F) A) and B)
G) A) and C)

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Question 22

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The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

A) Cash.
B) Cash received from customers.
C) Increase (decrease) in accounts receivable.
D) Net income.
E) Adjustments to net income.

F) A) and D)
G) None of the above

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Question 23

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A company had net cash flows from operations of $120,000,cash flows from financing of $330,000,total cash flows of $500,000,and average total assets of $2,500,000.The cash flow on total assets ratio equals:

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

Jamison Company reports depreciation expense of $35,000 for Year 2.Also,equipment costing $140,000 was sold for a $5,000 gain in Year 2.The following selected information is available for Jamison Company from its comparative balance sheet.Compute the cash received from the sale of the equipment.

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

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

A cash coverage of growth ratio of less than 1 indicates cash inadequacy to meet asset growth.

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

The following transactions and events occurred during the year.Assuming that this company uses the indirect method to report cash provided by operating activities,indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column.

Information to prepare the statement of cash flows usually comes from three sources: (1)_______________, (2)_______________________,and (3)____________________. Answers can appear in any order.

All cash transactions eventually affect noncash ___________ accounts.

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).

A decrease in the inventory account during the year should be reported on the statement of cash flows as:

Conversion of preferred stock to common stock is disclosed in the financing section of the statement of cash flows.

The statement of cash flows is divided into three sections called the _____________,_____________,and _______________ sections. Answers can appear in any order.

Use the following information about the calendar-year cash flows of Park Company to prepare a statement of cash flows (direct method)and a schedule of noncash investing and financing activities.

The usual first step in preparing the statement of cash flows is computing the net increase or net decrease in cash.

Use the following company information to calculate net cash provided or used by investing activities: (a)Equipment with a book value of $175,000 and an original cost of $300,000 was sold at a loss of $17,000. (b)Paid $62,000 cash for a new truck. (c)Sold land costing $32,000 for $36,000 cash,realizing a $4,000 gain. (d)Purchased treasury stock for $61,000 cash. (e)Long-term investments in stock are sold for $41,000 cash,realizing a gain of $3,500.

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