Exam 12: Reporting and Interpreting the Statement of Cash Flows

A company bought $250,000 of equipment with an expected life of ten years and no residual value.After six years the company sold the equipment for $94,000.If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities,which of the following reflects how the sale of the equipment would be reported in the statement of cash flows?

Almost all U.S.companies have used the indirect method of preparing the statement of cash flows:

In calculating the net cash provided by or used in operations using the indirect method,which of the following items would be subtracted from net income?

Which of the following statements about cash flows from financing activities is correct?

Which of the following items below will be subtracted in the financing cash flow portion of the statement of cash flows?

Using the indirect method,which of the following would be added to net income?

The payment of salaries and wages would be reported as an operating activity on the statement of cash flows.

Accrual-basis accounting is superior to cash-basis accounting in that:

When the direct method is used to determine the cash flows from operating activities,which of the following adjustments must be made to income tax expense to determine total income tax payments?

Brighton,Inc.uses the indirect method to determine its net cash flows from operating activities.During the course of the year,the company's Accounts Receivable increased by $10,000 and its Accounts Payable decreased by $5,000.If these are the only two adjustments required to convert net income to net cash provided by operating activities,the combined effect will be a(n):

Which of the following would be reported on the statement of cash flows,using the direct method,as a cash flow from operating activities?

Free cash flow is a positive cash flow from operating activities:

Suppose a company generally records revenues and expenses before receiving or making cash payments.Which of the following statements is not correct?

Depreciation Expense is $20,000 and the beginning and ending Accumulated Depreciation balances are $150,000 and $155,000,respectively.What is the cash paid for depreciation?

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.When Accrued Liabilities increase,it means that the company:

A corporation prepared its statement of cash flows for the year.The following information is taken from that statement: What is the amount of net cash provided by (used in)financing activities?

The management team of Wickersham Brothers Inc.is preparing its annual financial statements.The statements are complete except for the statement of cash flows.The completed comparative balance sheets and income statements are summarized. Other information from the company's records includes the following: -Bought equipment for cash,$50,000. -Paid $10,000 on long-term note payable. -Issued new shares of common stock for $20,000 cash. -Cash dividends of $16,000 were declared and paid to stockholders. -Accounts Payable arose from inventory purchases on credit. -Income Tax Expense ($4,000)and Interest Expense ($3,000)were paid in full at the end of both years and are included in Other Expenses. Required: Prepare a schedule summarizing operating,investing,and financing cash flows using the T-account approach

Which of the following statements about calculation of cash flows from operating activities under the indirect method is correct?

When the indirect method is used to determine net cash provided by (used in)operating activities,subtracting an increase in Accounts Receivable from net income eliminates the effect of recording revenue that:

-Use the information above to answer the following question.The company would report net cash provided by (used in)investing activities of: