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Exam 12: Reporting Cash Flows

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Question 41

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When preparing the operating activities section of the statement of cash flows using the indirect method,expenses and losses with no cash outflows are added back to net income.

A) True
B) False

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Question 42

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A company reported net income of $132,000,operating cash flows of $87,000,total cash flows of $112,000,and average total assets of $1,053,000.Calculate its cash flow on total assets ratio.

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Cash Flow on Total Assets = Op...

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Question 43

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All of the following are examples of noncash financing and investing except:

Use the following information to calculate cash paid for income taxes:

A method of computing and reporting that involves adjusting net income by adding and subtracting items that that do not affect cash provided (used) by operating activities.

A financial statement that reports the cash inflows and cash outflows for an accounting period,and classifies those cash flows as operating,investing,or financing activities.

Use the following information to calculate cash received from dividends:

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Sega Co.reported net cash provided by operating activities of $142.7 million and average total assets of $1,762.5 million at the end of the year.Calculate the cash flow on total assets ratio.

Managers review the statement of cash flows before making business decisions.

The following information is available for the Aarons Corporation: Additional information: (1)There was no gain or loss on the sales of the long-term investments,nor on the bonds retired. (2)Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3)New equipment was purchased for $67,550 cash. (4)Cash dividends of $33,600 were paid. (5)Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for Year 2 using the indirect method.

Define and discuss the differences between operating,investing,and financing activities.

Use the following information to calculate cash paid for income taxes:

Use the following income statement and information about changes in noncash current assets and liabilities to (1)prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method and (2)compute the company's cash flow on total assets ratio for the year assuming that average total assets are $525,250. Changes in current asset and current liability accounts for the year that relate to operations follow.

A company had average total assets of $1,660,000,total cash flows of $1,320,000,cash flows from operations of $205,000,and cash flows from financing of $750,000.The cash flow on total assets ratio equals:

The reporting of investing and financing activities is ________ under the direct and indirect methods of preparing the statement of cash flows.

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:

Cash flows from investing activities include each of the following except:

Favre Company reports depreciation expense of $40,000 for Year 2.Also,equipment costing $240,000 was sold for a $10,000 loss in Year 2.The following selected information is available for Favre Company from its comparative balance sheet.Compute the cash received from the sale of the equipment.

Salah's net income for the year ended December 31,Year 2 was $175,000.Information from Salah's comparative balance sheets is given below.Compute the cash paid for dividends during Year 2.