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Exam 16: Statement of Cash Flows

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Question 21

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The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:​ What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

A) $198,000
B) $324,000
C) $352,000
D) $296,000

E) None of the above
F) B) and C)

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Question 22

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The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: (a)If sales for the current year were $695,000 and accounts receivable decreased by $43,500 during the year, what was the amount of cash received from customers? (b)If income tax expense for the current year was $56,000 and income tax payable decreased by $5,200 during the year, what was the amount of cash payments for income tax?

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Question 23

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Which of the following would not be classified as an operating activity?

Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity.

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

Financing activities include

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000, and depreciation expense of $8,000 was recorded. Net cash provided by operating activities under the indirect method for the year is

When using the spreadsheet (work sheet) method to analyzing noncash accounts, no order of analysis is required, but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

Dickinson Company reported net income of $155,000 for the current year. Depreciation recorded on buildings and equipment amounted to $65,000 for the year. In addition, a building with an original cost of $250,000 and accumulated depreciation of $190,000 on the date of the sale was sold for $75,000. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:​Prepare the Cash flows from operating activities section of the statement of cash flows using the indirect method.

If 800 shares of $40 par common stock are sold for $43,000, the $43,000 would be reported in the Cash flows from financing activities section of the statement of cash flows.

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

An analysis of the general ledger accounts indicates that equipment, with an original cost of $200,000 and accumulated depreciation of $170,000 on the date of sale, was sold for $20,000 during the year. Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Payment of dividends to stockholders

To determine cash payments for income taxes for the statement of cash flows using the direct method, an increase in income taxes payable is added to the income tax expense.

The acquisition of land in exchange for common stock is an example of a noncash investing and financing activity.

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.

Cash dividends paid on capital stock would be reported in the statement of cash flows in

On the basis of the following data for Branch Co. for the current and preceding years ended December 31, prepare a statement of cash flows using the indirect method. Assume that equipment costing $125,000 was purchased for cash and the land was sold for $15,000. The stock was issued for cash and the only entries in the retained earnings account were for net income of $56,000 and cash dividends declared and paid of $18,000.​

For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. Purchased treasury stock b. Sold equipment at book value c. Net income d. Sold long-term investments e. Issued common stock f. Depreciation expense