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Exam 21: The Statement of Cash Flows Revisited

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Question 41

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Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction.

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Question 42

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Cash paid to suppliers under the direct method is computed as:

A) Cost of goods sold plus a decrease in inventory and minus an increase in accounts payable.
B) Cost of goods sold plus an increase in inventory and minus an increase in accounts payable.
C) Cost of goods sold minus a decrease in inventory and plus an increase in accounts payable.
D) Cost of goods sold minus an increase in inventory and plus an increase in accounts payable.

E) A) and B)
F) B) and C)

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Question 43

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A decrease in cash dividends payable means that dividends declared were less than dividends paid.

All of the following may qualify as cash equivalents except:

Which of the following would be an example of an investing activity on a statement of cash flows?

Do the statement of cash flows and its related disclosure note report only transactions that cause an increase or decrease in cash? Explain.

Interest payments on debt are classified as cash outflows from financing activities.

Partial balance sheets and additional information are listed below for Ensign Company. Additional information for 2013: Net income was $170,000. Depreciation expense was $30,000. Sales totaled $400,000. Cost of goods sold totaled $145,000. Required: Calculate the amount of cash paid to merchandise suppliers during 2013.

The accounting records of Unlucky Company provided the data below. Required: Prepare a reconciliation of net income to net cash flows from operating activities.

Using the direct method, cash received from customers is calculated as sales:

Cost of goods sold as reported in the income statement will be less than cash paid to suppliers if:

Assuming the decrease in accrued expenses during fiscal year 2012 included a $14,000 reduction due to interest on debt, compute the interest expense (net) for Kinney in that year.

On June 4, White Corporation issued $400 million of bonds for $386 million. During the same year, $1 million of the bond discount was amortized. In a statement of cash flows prepared by the indirect method, White Corporation should report:

In its 2013 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2013. In its reconciliation schedule, WME should:

During 2013, T Company engaged in the following activities: In T's statement of cash flows, what were net cash outflows from financing activities for 2013?

Which of the following financial statements is prepared as of a particular point in time rather than for a period of time?

Which of the following is reported as an operating activity in the statement of cash flows?

In using a spreadsheet to prepare the statement of cash flows, the summary entries duplicate the actual journal entries used to record the transactions during the year.

The sale of stock and the sale of bonds are reported as financing activities. Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activities? Explain.

Which of the following is not an inflow of cash?