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Exam 16: Reporting the Statement of Cash Flows

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Question 91

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Castine reports net income of $305,000 for the year ended December 31,Year 2.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,and a $100,000 decrease in notes payable.Calculate the new cash provided (used) in operating activities using the indirect method.

A) $461,800.
B) $371,400.
C) $381,400.
D) $351,000.
E) $361,000.

F) None of the above
G) All of the above

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Question 92

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Preparation of the statement of cash flows involves:

A) Computing the net increase or decrease in cash.
B) Computing and reporting net cash provided or used by operations.
C) Computing and reporting net cash provided or used by investing activities.
D) Computing and reporting net cash provided or used by financing activities.
E) All of the choices are included in the preparation of the statement of cash flows.

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

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Question 93

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

Mansell reported net income of $233.4 million,net cash provided by operating activities of $131.4 million,total cash flows of $187.7 million,and average total assets of $2,040.8 million at the end of the year.Calculate the cash flow on total assets ratio for Mansell.

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the direct method.

The statement of cash flows helps address questions such as

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

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.

Investing activities include: (a)the purchase and sale of long-term assets,(b)lending and collecting on notes receivable,and (c)the purchase and sale of short-term investments in the securities of other entities,other than cash equivalents and trading securities.

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:

A main purpose of the statement of cash flows is to report all the major cash ________ and cash _______________.

Cash flows from interest received on loans are reported in the statement of cash flows as part of:

Explain the value of separating cash flows into operating activities,investing activities,and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

A company reported net income of $318,000,operating cash flows of $218,000,total cash flows of $184,000,and average total assets of $898,000.Calculate its cash flow on total assets ratio.

Becker Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Becker's statement of cash flows?

A spreadsheet can help organize the information needed to prepare a statement of cash flows.

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts,such as receipts from customers,and subtracts the major items of operating cash disbursements,such as cash paid for merchandise,is referred to as the: