Exam 4: Reporting and Analyzing Cash Flows

The information below was provided by Lion Company for 2016 and 2015: During 2016, Lion sold equipment with a cost of $100,000 and accumulated depreciation of $76,000. A loss of $4,000 was recognized on the sale of the equipment. Prepare the investing activities section of the statement of cash flows for 2016.

The direct method of presenting the net cash flow from operating activities shows the major categories of operating cash receipts and payments.

If prepaid insurance decreases during an accounting period, then the cash paid for insurance is less than the period's insurance expense.

TPG Industries, a company that manufactures athletic equipment, began business in September 2016. Below is the operating section of the company's statement of cash flows. Although management has not disclosed a sales forecast, they forecast an increase in sales next year. Because of this, management plans to add $1,600,000 to inventory. However, at the end of the year, the company has less than $80,000 in cash. You have just taken the position of financial analyst with a major investment bank. Your supervisor, John Denbear, has asked you to write a short memo about problems facing TPG. You know that losses and negative cash flow during start-up phases of businesses are common. In your memo, include discussion about the typical sources of financing that may or may not be available to support TPG's inventory expansion.

A firm's net cash flow from operating activities includes:

In which of the three activity categories of a statement of cash flows would each of the following items appear and do they represent a cash inflow or cash outflow? Use the following abbreviations: -Cash interest paid

The direct method of presenting net cash flow from operating activities:

Quechua Inc. has an accrual basis net loss of $56,000 and the following related items: How much is Quechua Inc.'s net cash flow from operating activities?

Which of the following is a required separate disclosure for firms using the direct method in the statement of cash flows?

Caritech had the following income statement for 2016: Additional information about the company follows: Calculate Caritech's cash flows provided by operating activities for 2016 using the indirect method.

In which of the three activity categories of a statement of cash flows would each of the following items appear and do they represent a cash inflow or cash outflow? Use the following abbreviations: -Cash receipts from customers

A company reported annual sales revenue of $2,580,000. During the year accounts receivable increased from a $56,000 beginning balance to a $76,000 ending balance. Accounts payable decreased from a $52,000 beginning balance to a $24,000 ending balance. How much is cash received from customers for the year?

A company reported cost of goods sold of $1,760,000 for the year. During the year, inventory increased from a $92,000 beginning balance to a $140,000 ending balance, and accounts payable increased from a $48,000 beginning balance to a $56,000 ending balance. How much is the cash paid for merchandise purchased during the year?

The following schedule of information relates to Penelope Products for the year, 2016: The cash balance was $48,000 at the beginning of 2016. In good form, prepare a 2016 statement of cash flows for Penelope Products using the indirect method.

Tara Company had the following income statement for the current year: Additional information about the company follows: Calculate Tara's net cash flow provided by operating activities for the current year using the direct method. Show a separate cash flow for each revenue and expense.

Nichole Company has an accrual basis net income of $260,000 and the following related items: How much is Nichole's net cash flow from operating activities?

Consider the following 2016 data for two manufacturing firms ($ in millions): a. Compute the operating cash flow to current liabilities ratio for each firm for 2016. b. Compute the operating cash flow to capital expenditures ratio for 2016. c. Comment on the results of your computations.

During 2016, Katie Company's long-term investments account (at cost) decreased $28,000, which was the net result of purchasing stock costing $204,000 and selling stocks costing $232,000 at a $24,000 loss. Katie's notes payable account decreased $44,000, the net result of issuing $96,000 of notes and paying $140,000 during year on notes. . What items and amounts appear in the: a. Cash flows from investing activities b. Cash flows from financing activities sections of Katie Company's 2016 statement of cash flows

A typical example of a cash equivalent is an investment in: