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Exam 12: The Statement of Cash Flows

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Question 51

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The statement of cash flows

A) along with the balance sheet and income statement is prepared on the accrual basis.
B) along with the balance sheet and statement of retained earnings is dated as of a specific year end date.
C) along with the balance sheet is used to analyze liquidity.
D) ties the balance sheet to the statement of retained earnings.

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Question 52

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Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method. -Increased the accounts receivable balance.

A) Operating activity-add to net income
B) Operating activity-deduct from net income
C) Inflow from investing activity
D) Outflow from investing activity
E) Inflow from financing activity
F) Outflow from financing activity
G) Noncash investing and financing activity
H) Not reported on statement of cash flows

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Question 53

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Depreciation is a noncash expense that is added back to net income in determining cash provided from operating activities under the indirect method.

If the balance of accounts receivable decreases during the year, then cash collections will ____________________________ sales on account for the period.

A company generated $1,830,000 from its operating activities and spent $1,200,000 on additions to its plant and equipment during the year. The total amount of debt that matures in the next five years is $900,000. Compute the company's cash flow adequacy ratio for the year.

Under the indirect method , instead of reporting cash receipts and payments, net income is reconciled with net cash from operating activities.

Net income was $ 61,000 for the year. The accumulated depreciation balance increased by $14,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. Under the indirect method, the cash flow from operations is $47,000.

In 2015, Valencia Company purchased equipment for $363,000 and also sold some special purpose machinery with a book value of $155,000 for $182,000. In its statement of cash flows for 2015, Valencia should report the following with respect to the above transactions:

When using the indirect method, the gain from selling a long-term investment is recognized in which of the following?

Which of the following is not an operating activity?

Upon review of Jerry's Canoe Gallery statement of cash flows, the following was noted: From this information, the most likely explanation is that Jerry is

When using the direct method, how is the retirement of bonds payable at their maturity date shown on the statement of cash flows?

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. -Paid interest on bonds.

Which of the following financing activities results in a cash inflow?

Cash equivalents are reported in the Operating Activities section of the statement of cash flows.

For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the Direct method a or the Indirect method b. -Increase in accounts receivable

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. -Declared cash dividends.

When using the direct method, how is the sale of long-term investments for cash reported on the statement of cash flows?

Most experts now agree that there has been a tendency to rely far too heavily on net income and its companion, earnings per share, and in many cases to ignore a company's cash flows.

Eduardo's Texas Cantina had the following results for December 31, 2015 and 2016, respectively: What was the amount of cash flows from investing activities for 2016?