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Exam 16: Statement of Cash Flows

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Question 1

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

A) depreciation expense
B) gain on sale of land
C) a loss on the sale of equipment
D) dividends declared and paid

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

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Question 2

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On the statement of cash flows,the Cash flows from investing activities section would include

A) receipts from the issuance of capital stock
B) payments for dividends
C) payments for retirement of bonds payable
D) receipts from the sale of investments

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

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Question 3

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The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.

Based on the following,what is free cash flow?​ Cash flows from operations include $2,000 for depreciation.Cash flows from investing include the purchase of a replacement asset for $100,000 and the sale of the one used in production,which is now obsolete,for $70,000.Cash flows from financing include $70,000 of borrowing.

Connor Designs Company has cash flows for operating activities of $425,000.Cash flows used for investments in property,plant,and equipment totaled $65,000,of which 70% was used to replace machinery to maintain existing capacity.​What is the free cash flow for Connor Designs?

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Decrease in inventory

Which of the following would not be found in a schedule of noncash investing and financing activities,reported at the end of a statement of cash flows?

On the statement of cash flows,the Cash flows from operating activities section would include

The net income reported on the income statement for the current year was $58,000.Depreciation recorded on fixed assets for the year was $24,000.In addition,equipment with an original cost of $130,000 and accumulated depreciation of $115,000 on the date of the sale was sold for $20,000.Balances of the current asset and current liability accounts at the end and beginning of the year are listed below.Prepare the Cash flows from operating activities section of a statement of cash flows using the indirect method.

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.

Durrand Corporation's accumulated depreciation increased by $12,000,while patents decreased by $2,200 between consecutive balance sheet dates.There were no purchases or sales of depreciable or intangible assets during the year.In addition,the income statement showed a gain of $4,300 from sale of land.The company earned a net income of $65,000.Determine net cash flow from operating activities under the indirect method.

The board of directors of Kendall Co.declared cash dividends totaling $390,000 during the current year.The comparative balance sheet indicates dividends payable of $58,000 at the beginning of the year and $73,000 at the end of the year.What was the amount of cash payments Kendall Co.made to stockholders during the year?

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

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -Purchase of equipment

State the section (s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:​ (a)Received $120,000 from the sale of land costing $70,000. (b)Purchased investments for $75,000. (c)Declared $35,000 cash dividends on stock.$5,000 dividends were payable at the beginning of the year,and $6,000 were payable at the end of the year. (d)Acquired equipment for $64,000 cash. (e)Declared and issued 100 shares of $20 par common stock as a stock dividend,when the market price of the stock was $32 a share. (f)Recognized depreciation for the year,$37,000. (g)Issued 85,000 shares of $10 par common stock for $25 a share,receiving cash. (h)Issued $500,000 of 20-year,10% bonds payable at 99. (i)Borrowed $43,000 from Regional Bank,issuing a five-year,8% note for that amount.

Net income for the year was $29,500.Accounts receivable increased $2,500,and accounts payable increased $5,400.There were no other changes in noncash current assets and liabilities.Under the indirect method,the cash flow from operations is $32,400.

The following information is available from the current period financial statements:​ The net cash flow from operating activities using the indirect method is

Identify which section of the statement of cash flows (using the indirect method)would present information regarding the following activities. (Use O for operating,I for investing,or F for financing.)​ a. Issued common stock b. Redeemed bonds c. Issued preferred stock d. Purchased patents e. Net income. Paid cash dividendsg. Purchased treasury stockh. Sold long-term investmenti. Sold equipmentj. Purchased buildingsk. Issued bonds

A business issues 20-year bonds payable in exchange for preferred stock.This transaction would be reported on the statement of cash flows in

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -Amortization of intangible assets