Exam 8: Reporting and Analyzing Cash Flows

A machine with a cost of $190,000 and accumulated depreciation of $95,000 was sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is

The appropriate statement of cash flow activity category for the purchase of equipment for cash is

The accounting principle which requires that noncash financing and investing activities are reported on the statement of cash flows is the principle of

Financing activities include (a)the purchase and sale of non-current assets,(b)the purchase and sale of trading investments,and (c)lending and collecting on loans.

Bank overdrafts repayable on demand may be included in the cash and cash equivalent balance.

When using the direct method,which of the following should be reported as a source of cash from operating activities?

Under the indirect method,noncash operating expenses are added back to profit when preparing the investing section of the statement of cash flows.

Financing activities include receiving cash from issuing debt and receiving dividends from investments in other corporations.

A change in retained earnings can be due to payment of cash dividends

Selected balances from Amplec Company's records are as follows: $\text { December } 31$ Year 1 Year 2 Merchandise inventory 6,500 4,990 Accounts payable 17,200 12,560 Wages payable 2,200 1,400 Accounts receivable 22,000 Total assets \ 47,900 \ 33,950 Sales 153,000 Cost of goods sold 54,000 Salaries expense 42,000 Other expense 6,000 Profit \ 51,000 Calculate the following for Year 2 (a)Cash payments made for merchandise. (b)Cash receipts from customers. (c)Cash payments for wages.

Decisions on whether a company can pay its existing debts as they mature can be evaluated by looking at the company's statement of cash flows.

A calculation of the net cash provided or used by operating activities that lists the major classes of operating cash receipts,such as receipts from customers,and subtracts the major classes of operating cash disbursements,such as cash paid for merchandise,is the

Use Amulis Corp's income statement and balance sheet information to calculate the net cash provided by operating activities,using the:(a)Direct Method (b)Indirect Method Amulis Corp. Income Statement For the Year Ended December 31, 2021 Sales (all on credit) \ 227,000 Cost of goods sold 70,000 Gross profit from sales 157,000 Depreciation expense 6,000 Other operating expenses 108,000 Income tax expense 22,200 136,200 Operating income \ 20,800 Gain on sale of equipment 8,100 Profit \ 28,900 Cash 25,000 23,400 Accounts receivable 62,000 67,000 Merchandise inventory 193,000 181,000 Long-term investments 25,000 4,000 Equipment 452,000 412,00 Accumulated depreciation, equipment 233,000 189,000 524,000 498,400 Accounts payable 27,200 22,000 Income taxes payable 1,800 7,800 Bonds Payable 8,000 11,000 Common shares 221,000 252,000 Retained earnings 266,000 205,600 524,000 498,400 Calculate net cash provided by operating activities under the indirect and direct methods

The appropriate statement of cash flow activity category for the issuance of common shares for cash is

Many business decisions are based on cash flow evaluations.

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

A cash equivalent is an investment that

The direct method for the preparation of the operating activities section of the statement of cash flows

The statement of cash flows reports

An investment that must be readily convertible to known amounts of cash,that is subject to insignificant risk of changes in value,and normally qualifies only when it has a short maturity of three months or less from the date of acquisition is called a(n)