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Exam 21: The Statement of Cash Flows

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Question 71

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Dooling Corporation reported balances in the following accounts for the current year: Cost of goods sold was $7,500.What was the amount of cash paid to suppliers?

A) $7,000.
B) $7,200.
C) $7,300.
D) $7,500.

E) A) and B)
F) None of the above

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Question 72

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How is the amortization of patents reported in a statement of cash flows that is prepared using the direct method?

A) Not reported.
B) An increase in cash flows from operating activities.
C) A decrease in cash flows from operating activities.
D) A decrease in cash flows from investing activities.

E) A) and C)
F) B) and C)

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Question 73

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Is depreciation a source of cash? Explain.

Following are the income statement and some additional information for Parson Corporation for 2016. All sales were on credit and accounts receivable increased by $600 in 2016 compared to 2015.Merchandise purchases were on credit with an increase in accounts payable of $400 during the year.Ending inventory was $500 larger than beginning inventory.Income taxes payable increased $300 during the year.All operating expenses were paid for in cash. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Which of the following is not required by generally accepted accounting principles?

On June 4,White Corporation issued $400 million of bonds for $386 million.During the same year,$1 million of the bond discount was amortized.In a statement of cash flows prepared by the indirect method,White Corporation should report:

Using the direct method,cash received from customers is calculated as sales:

How is the amortization of patents reported in a statement of cash flows that is prepared using the indirect method?

When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities,depreciation is added to net income because:

Use the following to answer questions In its 2016 Annual Report to Shareholders,Sisters Corporation included the following information on cash flows from operations: -Did accounts receivable increase or decrease during 2016? Explain.

Use the following to answer questions In its 2015 Annual Report to Shareholders,Henchman & Co.provided the following Statement of Cash Flows: -What method (direct or indirect)does Henchman & Co.use to present its Statement of Cash Flows? Explain how you can determine which method is used.

Hemmer Company reported net income for 2016 in the amount of $40,000.The company's financial statements also included the following: What is net cash provided by operating activities?

The sale of stock and the sale of bonds are reported as financing activities.Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activities? Explain.

Why is the statement of cash flows required as part of the set of external financial statements?

In a statement of cash flows using the indirect method,an increase in available-for-sale securities due to an increase in their fair value should be reported as:

Freeman Company's accounting records include the following information: What is the amount of net cash provided by operating activities indicated by these transactions?

Prepare the summary entries necessary to determine the amount of cash paid to suppliers for each of the four independent situations below.

Creble Company reported net income for 2016 in the amount of $40,000.The company's financial statements also included the following: In the statement of cash flows what is net cash provided by operating activities under the indirect method?

Which of the following is reported as an investing activity in the statement of cash flows?

Cost of goods sold as reported in the income statement will be less than cash paid to suppliers if: