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Exam 12: Reporting Cash Flows

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Question 31

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The following selected account balances are taken from a merchandising company's records: (a) Calculate the cash payments made during Year 2 for merchandise. Assume all of the company's accounts payable balances result from merchandise purchases. (b) Calculate the cash receipts from customer sales during Year 2. (c) Calculate the cash payments for salaries during Year 2.

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(a) Decrease in inventory = 15,600-21,20...

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Question 32

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Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ________.

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Question 33

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Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.

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

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

If a company is using the indirect method to prepare the statement of cash flows, identify where an increase in the accounts receivable account should be reported:

Based on the information provided below for Krackle Corp., complete the following worksheet to be used to prepare the statement of cash flows using the indirect method. (a) Net income for the year was $30,000. (b) Dividends of $10,000 were declared and paid. (c) Krackle's only noncash expense was depreciation which totaled $50,000. (d) The company purchased plant assets for $70,000. (e) Notes payable in the amount of $40,000 were issued during the year for cash.

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows) and cash payments (outflows) during a period.

When preparing the operating activities section of the statement of cash flows using the indirect method, non-operating gains are added to net income.

Information about cash flows influences decisions made by both internal and external users.

The statement of cash flows is:

Green Company reports depreciation expense of $35,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Green Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

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

Using the direct method, operating cash receipts includes cash received from customers.

For each of the following separate cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

________ activities generally include those transactions and events that affect long-term assets.

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

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

The cash flow on total assets ratio is affected by income recognition and measurement.