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Exam 24: The Statement of Cash Flows

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Question 61

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For each of the following operating activities, indicate whether it is a under the indirect method:

Premises

Responses

decrease in Accounts Receivable

source of cash

increase in Wages Payable

a use of cash

decrease in Taxes Payable

neither

depreciation expense

loss on early redemption of bonds

converting bonds to stock

Premises

decrease in Accounts Receivable

increase in Wages Payable

decrease in Taxes Payable

depreciation expense

loss on early redemption of bonds

converting bonds to stock

Responses

source of cash

a use of cash

neither

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Correct Answer

Premises

Responses

decrease in Accounts Receivable

increase in Wages Payable

decrease in Taxes Payable

depreciation expense

loss on early redemption of bonds

converting bonds to stock

Premises

decrease in Accounts Receivable

increase in Wages Payable

decrease in Taxes Payable

depreciation expense

loss on early redemption of bonds

converting bonds to stock

Responses

Question 62

Short Answer

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A list of sources and uses of cash are given below. Indicate on the line provided whether each is an operating, investing, or financing activity. -----(a) purchase of land -----(b) repayment of bond indebtedness -----(c) sale of merchandise -----(d) pay salaries and wages -----(e) pay interest expense -----(f) sale of office equipment -----(g) dividends paid -----(h) resale of Treasury Stock -----(i) borrowing through a note payable -----(j) dividend income

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(a) investing, (b) financing, ...

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Question 63

Multiple Choice

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A list of sources and uses of cash are given below. Select on the line provided whether each is an operating, investing, or financing activity. -sale of office equipment

Decreases in current assets must be deducted from net income to arrive at cash flows from operating activities.

Net income must be adjusted for changes in current assets and liabilities, such as accounts receivable and accounts payable, when determining the net cash provided by---------- .

The statement of cash flows is often said to complement the income statement and the balance sheet. Explain the significance of this comparison.

A corporation received $130,000 in cash from the sale of a building and paid $68,000 in cash for the purchase of some new machinery. As a result, the statement of cash flows would report:

Doff Manufacturing Co. sold equipment that cost $13,300 and accumulated depreciation of $11,000 for $3,000 cash. How is the Cash Flows from Operating Activities affected?

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -paid advertising expenses

A decrease in merchandise inventory is:

A complete set of published financial statements for a corporation must include a statement of cash flows.

Chattel Company sold equipment that originally cost $46,000 and accumulated depreciation in the amount of $38,200 for $8,000 cash. -What amount is reported in the Cash Flows from Financing Activities section of the Statement of Cash Flows for the sale of this equipment?

Which of the following is reported on the statement of cash flows as a financing activity?

An example of a financing activity is:

If a firm's accounts receivable increased during the fiscal period, it is necessary to subtract the amount of the increase from the net income when computing the net cash provided by operating activities.

An increase or decrease in accounts payable during a fiscal period has no effect on the net cash provided by operating activities.

For each of the following operating activities, indicate whether it is a source of cash, a use of cash or neither under the indirect method. -----(a) increase in Accounts Receivable -----(b) increase in Prepaid Expense -----(c) increase in Inventory -----(d) increase in Accounts Payable -----(e) decrease in Supplies -----(f) increase in Accumulated Depreciation

For each of the following operating activities, select whether it is a source of cash, a use of cash, neither under the indirect method. -increase in Wages Payable

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -purchased equipment for cash

Information from Zwatsch Company's income statement is as follows: net income $32,000, depreciation expense $5,200; loss on sale of plant assets $1,600; gain on retirement of bonds $10,000; an increase in accounts receivable of $4,200 and dividend payments of $4,400. The net cash provided by operating activities is: