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Exam 16: Statement of Cash Flows

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Question 31

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Explain the purpose and format of the statement of cash flows. Also describe its relevance to decision makers.

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The purpose of the statement of cash flo...

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Question 32

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A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

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Question 33

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Define and discuss the differences between operating, investing and financing activities.

The full disclosure principle requires that noncash investing and financing activities be disclosed in the financial statements.

When preparing the operating section of the statement of cash flows using the indirect method, noncash expenses are _____________ net income.

Castine reports tax-exampt 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.

The purchase of shares in another company is classified as a financing activity.

The statement of cash flows reports and proves the net change in cash for a reporting period.

The statement of cash flows is:

Which of the following is included in the cash flows from financing activities section of the statement of cash flows?

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method. Management wishes to maximize cash flows from operating activities.

Noncash investing and financing activities may be disclosed in:

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:

Beewell's net income for the year ended December 31, Year 2 was $185,000. Information from Beewell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.

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

In preparing a company's statement of cash flows for the year just ended, the following information is available: Loss on the sale of equipment $ 14,000 Purchase of equipment $145,000 Proceeds from the sale of equipment $126,000 Repayment of outstanding bonds $ 87,000 Purchase of treasury shares $ 62,000 Issuance of ordinary shares $ 96,000 Purchase of land $115,000 Increase in accounts receivable during the year $ 43,000 Decrease in accounts payable during the year $ 75,000 Net cash flows from financing activities for the year were:

Noncash financing and investing activities are disclosed in the ____________ or in a separate ____________________________.

Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise.

Preparation of the statement of cash flows involves: