Exam 16: Reporting the Statement of Cash Flows

A company reported operating cash flows in Year 1 of $33,100 and $26,220 in Year 2.Its average total assets in Year 1 were $262,000 and $313,000 in Year 2.Calculate the cash flow on total assets ratio for both years.Comment on the results.

The cash flow on total assets ratio:

Preparation of the statement of cash flows does not involve:

The statement of cash flows reports:

In preparing a company's statement of cash flows for the most recent year,the following information is available: Net cash flows from investing activities for the year were:

Use the following information to calculate the net cash provided or used by financing activities for the Streams Corporation: (a)Net income,$10,000 (b)Sold common stock for $40,000 cash (c)Paid cash dividend of $13,000 (d)Paid bond payable,$28,000 (e)Purchased equipment for $12,000 cash

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by income recognition and measurement.

An example of a transaction that must be disclosed as a noncash investing and financing activity includes all but which of the following?

Noncash financing and investing activities are disclosed in a ____________ or in a separate ______________________________. Answers can appear in any order.

Alvez reports net income of $305,000 for the year ended December 31.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,a $75,000 increase in equipment,and a $100,000 decrease in notes payable.Calculate the net increase in cash for the year.

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:

The direct method of reporting operating cash flows:

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.

The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

When using a spreadsheet to prepare the statement of cash flows,a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ______________________________.

The cash flow on total assets ratio compared to the total assets ratio can be used as an indicator of earnings quality.

Bagwell's net income for the year ended December 31,Year 2 was $185,000.Information from Bagwell's comparative balance sheets is given below.Compute the cash received from the sale of its common stock during Year 2.

Companies have the option of using either the direct or indirect method to prepare the operating section of the statement of cash flows.

The payment of cash dividends to shareholders is classified as a financing activity.