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Exam 12: Statement of Cash Flows

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Question 21

True/False

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In preparing the statement of cash flows by the indirect method,increases in noncash current assets are subtracted from net income.

A) True
B) False

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Question 22

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Cash receipts from interest on a note receivable would be classified on the statement of cash flows in the:

A) operating activity section.
B) investing activity section.
C) financing activity section.
D) noncash financing and investing section.

E) All of the above
F) None of the above

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Question 23

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The direct method of preparing the operating activities section of the statement of cash flows is preferred by the Financial Accounting Standards Board.

The final or bottom line on the statement of cash flows is the net increase or decrease in cash for the period.

The statement of cash flows would not disclose the effects of:

Which of the following cash flows would be included in the operating activities section of the statement of cash flows? Assume use of the direct method.

Which of the following items would be used to compute "Net Cash Flow from Investing Activities" on a Statement of Cash Flows? 1) issue common stock 2) payment on principal of note payable 3) depreciation expense 4) sale of equipment for cash

On January 1,2016,the Colgate Corporation decided to switch from the direct method to the indirect method of preparing the statement of cash flows.Assuming a positive net income figure but a decrease in the cash balance,what can be said about the change in method of preparing the statement?

Howard Co.issued 20,000 shares of common stock for $300,000 cash.

On January 1,2017,Howard Co.paid $10,000 to the Citizens Bank for accrued interest expense that had been accrued in an adjusting entry at the end of 2016.

Why are financial analysts interested in the statement of cash flows?

FASB requires that companies report cash flow per share in their audited financial statements.

Use the following to answer questions The following data is supplied from the comparative balance sheets and income statement information from Moreno,Inc.Moreno uses the indirect method to prepare the statement of cash flows.Net income for 2016 was $40,000.No long term assets were sold during the year.During 2016,Moreno paid dividends of $24,000. Use the following to answer questions 128 ― 130: -Prepare the financing activities section of Moreno's statement of cash flows.

Which method of preparing the operating activities section of a cash flow statement is recommended by the Financial Accounting Standards Board?

A cash purchase of land would appear in which of the following sections of the statement of cash flows?

The 2016 income statement of Phillips Co.reported total sales revenue of $460,000;the 2015 balance sheet showed a balance in accounts receivable of $70,000 while the 2016 balance sheet showed a balance in accounts receivable of $100,000.The amount of cash collected from customers was:

Hilliard Company,a small consulting firm,charges all of its operating expenses on Accounts Payable.On January 1,2016,Hilliard's Accounts Payable balance was $24,000 and,during the year,an additional $216,000 of operating expenses was charged on account.The ending Accounts Payable balance was $72,000.What is the amount of cash paid for expenses during 2016?

Howard Co.sold equipment with a book value of $20,000 for $17,000 cash.

What is the major advantage of using the indirect method of preparing the operating activities section of the statement of cash flows?

Which of the following is an incorrect statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?