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Exam 16: Reporting the Statement of Cash Flows

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Question 81

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The statement of cash flows reports:

A) Assets, liabilities, and equity.
B) Revenues, gains, expenses, and losses.
C) Cash inflows and cash outflows for an accounting period.
D) Equity, net income, and dividends.
E) Changes in equity.

F) All of the above
G) A) and C)

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Question 82

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A company reported average total assets of $496,000 in Year 1 and $604,000 in Year 2.Its net operating cash flow in Year 1 was $41,150 and $55,500 in Year 2.Calculate its cash flow on total assets ratio for both years.Comment on the results.

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Question 83

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Managers only use the cash flow statement to evaluate the net cash increase or decrease,and do not pay much attention to the details of cash flows from operating activities,cash flows from investing activities,and cash flows from financing activities.

Sebring Company reports depreciation expense of $40,000 for Year 2.Also,equipment costing $140,000 was sold for its book value in Year 2.The following selected information is available for Sebring Company from its comparative balance sheet.Compute the cash received from the sale of the equipment.

For each of the following items,indicate whether it would be classified as an (O)operating activity,an (I)investing activity,a (F)financing activity,or a significant (N)noncash financing and investing activity. __________ (1)Received cash dividends from investments in trading securities. __________ (2)Collected accounts receivable from customers. __________ (3)Issued bonds payable for cash. __________ (4)Paid wages to employees. __________ (5)Issued stock for cash. __________ (6)Sold equipment for cash. __________ (7)Purchased land in exchange for a note payable. __________ (8)Paid cash dividends. __________ (9)Received interest from investments in trading securities. _________ (10)Purchases of land for cash.

Cash paid for merchandise is an operating activity.

The purchase of stock in another company is classified as a financing activity.

Match each of the following items with the appropriate definitions.

An example of a transaction that must be disclosed as a noncash investing and financing activity includes:

All of the following statements related to reporting cash flows from operating activities under U.S.GAAP and IFRS are true except:

Noncash financing and investing activities are disclosed in the ____________ or in a separate ______________________________.

A statement of cash flows should reconcile the differences between the beginning and ending balances of:

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

Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000.This implies that $40,000 cash was received from the sale.

Accounting standards:

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

The cash flow on total assets ratio is computed by dividing cash flows from operations by average total assets.

In preparing a 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:

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: What is the ending balance for retained earnings?