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Exam 15: Statement of Cash Flows

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Question 1

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All SEC-registered firms must issue a statement of cash flows, in addition to the income statement and balance sheet.

A) True
B) False

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Question 2

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On the statement of cash flows, the indirect method adjusts net income to determine the net cash flows from operating activities.

A) True
B) False

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Question 3

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The indirect method of reporting the cash flows from operating activities on the statement of cash flows is the method most widely used in practice.

In preparing the statement of cash flows, determining the net increase or decrease to cash requires the use of

An advantage to using a worksheet to organize the information of preparation of the statement of cash flows is that it uses a spreadsheet format allowing the preparer to use a PC and spreadsheet software.

MATCHING Use the following major cash flow activities to classify the activities listed below: a. Operating Activity, Source of Cash b. Operating Activity, Use of Cash c. Investing Activity, Source of Cash d. Investing Activity, Use of Cash e. Financing Activity, Source of Cash f. Financing Activity, Use of Cash g. Non-cash Investing & Financing Activity -Reported profitable operations (Net Income)

Financing activities involve

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)

MATCHING Use the following major cash flow activities to classify the activities listed below: a. Operating Activity, Source of Cash b. Operating Activity, Use of Cash c. Investing Activity, Source of Cash d. Investing Activity, Use of Cash e. Financing Activity, Source of Cash f. Financing Activity, Use of Cash g. Non-cash Investing & Financing Activity -Payment of Operating Expenses

Daniels Company's comparative balance sheet and income statement for last year appear below: The company declared and paid $36,000 in cash dividends during the year. Required: Using the indirect method, prepare each of the following activities sections of the company's statement of cash flows for the year:

Black Company's net income last year was $84,000. Changes in the company's balance sheet accounts for the year appear below: The company declared and paid cash dividends of $59,000 last year. Required:

If a gain of $25,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from the investing activities section of the statement of cash flows is

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

MATCHING Use the following major cash flow activities to classify the activities listed below: a. Operating Activity, Source of Cash b. Operating Activity, Use of Cash c. Investing Activity, Source of Cash d. Investing Activity, Use of Cash e. Financing Activity, Source of Cash f. Financing Activity, Use of Cash g. Non-cash Investing & Financing Activity -Collection of Sales Revenue

A comparative balance sheet for the Bright Corporation is presented below: Additional information: Required: Prepare a statement of cash flows for the year ended 2014 using the indirect method.

The __________________ computes operating cash flows by adjusting each line on the income statement to reflect cash flows.

For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method. a. Added to net income b. Deducted from net income c. Cash outflow--investing activity d. Cash inflow--investing activity e. Cash outflow--financing activity f. Cash inflow--financing activity -Decrease in accounts payable during a period.

The following items were reported on the balance sheets and income statement for Collin Inc.: How would the change in accounts receivable be reported in the operating activities section of the statement of cash flows using the indirect method?

Dance Unlimited Company reported net income of $80,000 for the year. During the year, accounts receivable decreased by $3,000, accounts payable increased by $4,500 and depreciation expense of $9,000 was recorded and there was a gain on the sale of long-term investments of $2,000. Using the indirect method, net cash flows from operating activities for the year are

The following events occurred last year at Taylor Company: Based on the above information, the net cash flows from investing activities for the year on the statement of cash flows would be