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Exam 12: Reporting Cash Flows

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Question 81

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The indirect method for the preparation of the operating activities section of the statement of cash flows:

A) Separately lists each major item of operating cash receipts.
B) Separately lists each major item of operating cash payments.
C) Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
D) Is required if the company is a merchandiser.
E) Must not be used in all circumstances.

F) B) and E)
G) A) and E)

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Question 82

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The use of a spreadsheet for analysis is especially useful when preparing the statement of cash flows using the ________ method.

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Question 83

Multiple Choice

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

The payment of cash dividends to shareholders is classified as a financing activity.

When preparing the operating activities section of the statement of cash flows using the indirect method, depreciation is subtracted from net income.

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

The purchase of equity securities is classified as a financing activity.

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

In preparing a company's statement of cash flows using the indirect method, the following information is available: Net cash provided by operating activities was:

The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

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

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.

When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added back to net income.

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.

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

A purchase of land in exchange for a long-term note payable must be disclosed as a noncash investing and financing activity.

In preparing a company's statement of cash flows using the indirect method, the following information is available: Net cash provided by operating activities was:

All of the following statements related to preparation of the statement of cash flows are true except:

Use the information provided to calculate the cash paid for insurance for the period

The statement of cash flows reports and proves the net change in cash for a reporting period.