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Exam 12: Reporting and Analyzing Cash Flows

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Question 51

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

A) Net income.
B) Equity.
C) Cash and cash equivalents.
D) Working capital.
E) Cash,cash equivalents,and short-term investments.

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

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Question 52

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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.

A) True
B) False

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Question 53

Multiple Choice

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Cash flows from selling trading securities are usually reported in the statement of cash flows as part of:

The purchase of stock in another company is classified as an investing activity.

Use the following information about the current year's operations of a company to calculate cash provided by operations.

Use the information provided below to calculate the cash paid for interest for the period.

The indirect method separately lists each major item of operating cash receipts and cash payments.

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

The appropriate section in the statement of cash flows for reporting the cash received from the issuance of a long-term note payable is:

Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.

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

In preparing a company's statement of cash flows for the most recent year,Ransom Corp.reported the following information: Net cash flows from financing activities for the year were:

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

Use the following company information to prepare a schedule of significant noncash investing and financing activities: (a)Sold a building with a book value of $300,000 for $225,000 cash and sold land with a book value of $40,000 for $65,000 cash. (b)Issued 15,000 shares of $10 par value common stock in exchange for equipment with a market value of $175,000. (c)Retired a $100,000,8% bond by issuing another $100,000,7% bond issue. (d)Acquired land by issuing a twenty-year,5%,$73,000 note payable.

A company's Inventory balance decreased by $18,000 during the year.Its Accounts Payable balance decreased by $6,000,and its cost of goods sold for the year was $340,000.The company's total amount of cash payments for merchandise during the year equals:

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

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.

An example of a transaction that must be disclosed as a noncash investing and financing activity includes all but which of the following?

The direct method of reporting operating cash flows:

Alvez reports net income of $305,000 for the year ended December 31.It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment.Its comparative balance sheet reveals a $40,200 increase in accounts receivable,a $10,200 decrease in prepaid expenses,a $15,200 increase in accounts payable,a $12,500 decrease in wages payable,a $75,000 increase in equipment,and a $100,000 decrease in notes payable.Calculate the net increase in cash for the year.