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Exam 24: The Statement of Cash Flows

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Question 21

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For each of the following operating activities, indicate whether it is a source of cash, a use of cash, or neither under the indirect method. ________ (a) increase in Accounts Receivable ________ (b) increase in Prepaid Expense ________ (c) increase in Inventory ________ (d) increase in Accounts Payable ________ (e) decrease in Supplies ________ (f) bond discount amortization

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(a) use, (b) use, (c...

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Question 22

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In computing the cash flows from operating activities section, a loss on the sale of long-term assets must be deducted from net income.

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B) False

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Question 23

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Additional information: Plant assets that originally cost $67,200 were sold for $56,000, resulting in a gain of $8,200. Dividends of $35,815 were declared and paid. There were no dividends declared in 2013. -Using the information provided, prepare the cash flows from operating activities for The Kerfuffle Company using the indirect method.

If the income statement reflects a net loss for the year, the loss is not reported under cash flows from operating activities in the statement of cash flows.

The purpose of the statement of ____________________ is to report the cash balance at the beginning and end of the fiscal period and to show the sources and uses of cash during the period.

Additional information: Equipment costing $100,000 was sold for $70,000. Accumulated depreciation on this equipment was $20,000. Dividends of $38,000 were declared and paid. Bonds were issued at face value of $300,000. Common stock of $55,000 was issued to acquire land. Investments (stock in IBM) were purchased for $275,000. -Using the information provided, prepare the cash flows from investing activities for The Dolmen Company.

Define cash equivalents and list three examples other than coin, currency, and bank accounts.

Current assets and current liabilities are often referred to as operating assets and liabilities.

From the information provided, prepare the final three lines of Magalog Distributing's Statement of Cash Flows.

The following transactions occurred at the Lionel Corporation in 2013. Use this information to prepare Lionel's schedule of cash flows from financing activities. A) The company issued 300 shares of its $50 par value common stock. B) Cash dividends of $25,000 were paid on common stock during the year.

The retirement of bonds with cash by a company is reported under which of the following?

The purchase or resale of treasury stock is reported in which of the following categories?

In the ____________________ activities section of the statement of cash flows, net income is adjusted for the amortization of the premium on bonds payable.

A sale of used equipment for cash produces a cash inflow from investing activities.

If a firm's accounts receivable increased during the fiscal period, it is necessary to subtract the amount of the increase from the net income when computing the net cash provided by operating activities.

Chattel Company sold for $7,000 equipment that originally cost $40,000 and had depreciation in the amount of $34,000 taken. What amount is reported in the Cash Flows from Investing Activities section of the Statement of Cash Flows?

The following information is taken from the accounting records of the Gilford Corporation. Use this information to prepare Gilford's statement of cash flows for the year ended December 31, 2014. Additional information: (a) Plant construction costing $40,000 in cash was completed. (b) Equipment was purchased for $20,000 in cash. (c) Common stock was sold for $50,000 in cash. (d) Bonds were issued for $15,000 in cash. (e) Common stock dividends of $20,000 were paid in cash. (f) Net income after income taxes was $35,000.

Issuing stock for cash and paying dividends in cash would be classified as ____________________ activities on the statement of cash flows.

The method used by most corporations to prepare the statement of cash flows is the

When the net cash provided by operating activities is determined, the amortization of bond premium