Exam 14: How Well Am I Doing Cash Flow Statement Online

If an entity both sells capital assets and purchases capital assets during the year, only the net cash inflow or outflow will be reported in the investing section of the cash flow statement.

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20X5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets \ 2,040 \ 1,950 Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity \ 2,040 \ 1,950 Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Cash flow from operating activities was?

When an entity uses the direct method in the operating activities section of the cash flow statement it will also have to report operating cash flows under the indirect method.

Regardless of the basis of accounting used, dividends will always be reported as a use of cash in the financing activities section of the cash flow statement.

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20\times5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Accounts receivable decreased by $100,000 and accounts payable increased by $50,000. What will be the net result in terms of cash flow?

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20\times5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Which of the following statements is true about the operating activities section

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20\times5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Which of the following statements is correct about cash flows

An increase in a noncash asset will be reported as a source of cash on the cash flow statement.

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20\times5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Cash flow from financing activities was?

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20\times5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Cash flow from investing activities was?

A cash flow statement will be divided into separate sections reporting cash flows resulting from operating activities, investing activities, financing activities and shareholder equity activities.

Reference: 14-01 Financial statements for Larned Company appear below: Larned Company Balance Sheet December 31, 20X6 and 20X5 (dollars in thousands) 20X6 20\times5 Current assets: Cash and marketable securities \ 130 \ 100 Accounts receivable, net 150 130 Inventory 100 100 Prepaid expenses 20 20 Total current assets 400 350 Noncurrent assets: Plant \& equipment, net 1,640 1,600 Total assets Current liabilities: Accounts payable \ 290 \ 280 Accrued liabilities 80 Total current liabilities 400 360 Stockholders' equity: Preferred stock, \2 0 par, 10\% 120 120 Common stock, \1 0 par 660 690 Retained earnings 860 780 Total stockholders' equity 1,640 1,590 Total liabilities \& stockholders' equity Larned Company Income Statement For the Year Ended December 31, 20X6 (dollars in thousands) Sales (all on account) \ 2,930 Cost of goods sold 2,050 Gross margin 880 Operating expenses 350 Net operating income 530 Interest expense 40 Net income before taxes 490 Income taxes (30\%) 147 Net income \ 343 Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160. Included in operating expenses was depreciation expense of $20,000. No non-current assets were sold. -Inventory decreased by $50,000 and wages payable decreased by $75,000. What will be the net result in terms of cash flow?