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Exam 12: Reporting Cash Flows

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Question 61

Multiple Choice

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Common uses of the statement of cash flows include all but which of the following?

A) Management prediction of future cash flows for decision making.
B) Investor assessment of cash flows before buying and selling stock.
C) Creditor evaluation of a company's ability to generate cash to cover debt.
D) Government assessment of whether the company paid the correct amount of taxes.
E) Management determination of the specific sources and uses of cash.

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

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Question 62

Multiple Choice

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In preparing Tywin Company's statement of cash flows for the most recent year,the following information is available: Net cash flows from investing activities for the year were:

A) $438,000 of net cash used.
B) $438,000 of net cash provided.
C) $264,000 of net cash used.
D) $351,000 of net cash used.
E) $264,000 of net cash provided.

F) C) and D)
G) None of the above

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Question 63

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Noncash financing and investing activities are disclosed in a ________ or in a separate ________.

Jordan's net income for the year ended December 31,Year 2 was $185,000.Information from Jordan's comparative balance sheets is given below.Compute the cash received from the sale of its common stock during Year 2.

Use the following company information to prepare a schedule of significant noncash investing and financing activities: (a)Sold a building with a book value of $300,000 for $225,000 cash and sold land with a book value of $40,000 for $65,000 cash. (b)Issued 15,000 shares of $10 par value common stock in exchange for equipment with a market value of $175,000. (c)Retired a $100,000,8% bond by issuing another $100,000,7% bond issue. (d)Acquired land by issuing a twenty-year,5%,$73,000 note payable.

Of the following,which one affects cash during a period?

A company had net cash flows from operations of $341,000,net income of $286,000 and average total assets of $1,850,000.The cash flow on total assets ratio equals:

Use the following financial statements and additional information to (1)prepare a complete statement of cash flows for the year ended December 31,Year 2.The cash provided or used by operating activities should be reported using the direct method,and (2)compute the company's cash flow on total assets ratio for Year 2. Additional Information a.A $20,000 note payable is retired at its carrying value in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. c.New equipment is acquired for $120,000 cash. d.Received cash for the sale of equipment that had cost $85,000,yielding a gain of $4,700. e.Prepaid expenses relate to Other Expenses on the income statement. f.All purchases and sales of merchandise inventory are on credit.

The reporting of investing activities in the statement of cash flows is identical under the direct method and indirect method.

A main purpose of the statement of cash flows is to report all the major cash ________ and cash ________.

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from financing activities generally are affected by:

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable.The entire $150,000 is reported as a cash outflow in the financing section of the statement of cash flows.

The statement of cash flows cannot help address questions such as:

When using the indirect method to calculate and report net cash provided or used by operating activities,which of the following is subtracted from net income?

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

Receipts of cash dividends and interest earned on loans are classified as investing activities.

Alvarez Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: -The ending balance in retained earnings is:

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

Preparation of the statement of cash flows does not involve: