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Exam 12: Statement of Cash Flows

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Question 31

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Which of the following would not be presented in the financing activities section of the statement of cash flows?

A) Purchased a new office building by issuing a note payable
B) Purchased treasury stock
C) Repayment of long-term bonds payable
D) Issuing of preferred stock

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

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Question 32

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When the indirect method is used to prepare the operating activities section of the statement of cash flows, are increases in current liabilities added or subtracted from net income to arrive at the net cash flow?

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Increases in current liabiliti...

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Question 33

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Which of the following items appear on the statement of cash flows?

Describe how a noncash purchase of equipment would be reported in connection with the statement of cash flows.

Companies report significant noncash investing and financing activities on a schedule that accompanies the statement of cash flows.

On September 1, Year 1, Laredo Company purchased equipment making a down payment of $15,500 cash and signing a one-year note payable on the $22,500 balance. The note carried an interest rate of 6%, and all interest was to be paid on the maturity date. Which of the following correctly shows the combined effect of the purchase as well as the accrual of interest on December 31, Year 1?

When the indirect method is used to prepare the operating activities section of the statement of cash flows, what is the starting point of that section?

Which of the following transactions affects cash flows?

On August 1, Year 1, Jackson Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.What is the amount of interest expense and the total cash outflow related to the note during the year ending December 31, Year 2?

Warren Corporation's balance sheet reports equipment that originally cost $65,000. The accumulated depreciation for the equipment is $25,000. Warren sells the equipment for $37,000. What would the effect be on its income statement and statement of cash flows?

Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected. Howard Company purchased $4,000 of supplies, paying $1,500 in cash and charging the remainder on account. $1,600 of the supplies were used during the accounting period. (Show the combined effects of the events.)

Burgess Company uses the direct method to prepare the operating activities section of its statement of cash flows. The company provided the following partial list of account balances for Year 2: The company also provided the following information relating to Year 2: Required: Prepare the cash flows from operating activities section of the company's statement of cash flows.

Which method do most companies use in preparing the operating activities section of the cash flow statement?

Which section of the statement of cash flows is prepared using either the direct or indirect method?

The financial statements of Gregg Company reported wages expense of $388,000 during Year 2, wages payable of $59,200 at the beginning of Year 2, and wages payable of $81,400 at the end of Year 2. What amount of cash was paid for wages during Year 2?

Pittsburgh Company pays cash for all inventory purchases. The company had a beginning inventory of $18,500 and an ending inventory of $16,900. Their cost of goods sold amounted to $75,000. Based on this information, what was the amount of cash paid for inventory purchases?

Erie Company reports the following comparative balance sheets and income statement information for the current year. Assuming accounts payable is used for inventory purchases only, what was the amount of cash paid for inventory purchases during the year?

The final or bottom line on the statement of cash flows is the net increase or decrease in cash for the period.

Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected. Howard Company sold equipment with a book value of $20,000 for $17,000 cash.

Hilliard Company, a small consulting firm, charges all of its operating expenses on Accounts Payable. On January 1, Year 2, Hilliard's Accounts Payable balance was $26,500 and, during Year 2, an additional $137,000 of operating expenses were charged on account. On December 31, Year 2, the Accounts Payable balance was $57,300. What is the amount of cash paid for expenses during Year 2?