Exam 4: Structure of the Balance Sheet and Statement of Cash Flows

The Common Stock account is reported on the balance sheet at the current market price of the stock.

Selected data for Kris Corporation's comparative balance sheets for Year 1 and Year 2 are as follows: Assets Year 1 Year 2 Cash \ 100,000 (\ 50,000) Accounts receivable (net) 50,000 100,000 Inventory 100,000 250,000 Equipment (net) \ 300,000 Total assets \ 550,000 \ 650,000 Liabilities and Equity Accounts payable \ 150,000 \ 100,000 Income taxes payable 80,000 30,000 Bonds payable 100,000 80,000 Common stock 100,000 200,000 Retained earnings 120,000 240,000 Total liabilities and Equity \ 550,000 \ 650,000 A brief income statement for Year 2 shows the following: Sales \9 00,000 Cost of goods sold \ 500,000 Operating expenses 100,000 Depreciation 50,000 Income tax expense 100,000 750,000 Net Income \1 50,000 -What are Kris' cash flows from financing activities for Year 2?

Depreciation is subtracted from net income in arriving at a firm's cash flow from operations under the indirect method to cash flow statement preparation.

Companies that are considered to be in stronger financial health and better credit risks are able to satisfy most of their cash needs from

Changes in a firm's cash position between successive balance sheet dates result only from the firm's operating activities.

Under U.S.GAAP,current assets are generally listed on the balance sheet in descending order of liquidity.

The Barden Company provides the following information from its Year 3 and Year 4 balance sheets: Year 3 Year 4 Accounts receivable \ 115,000 \ 97,500 Inventory 120,000 130,000 Prepaid insurance 7,500 1,500 Prepaid rent 40,000 15,000 Accounts payable 55,000 65,000 The following information is available from the Year 4 income statement: Sales \ 425,000 Cost of goods sold 225,000 Insurance expense 12,000 Rent expense 25,000 -How much cash did Barden pay for inventory during Year 4? Assume all purchases are on credit.

For companies whose transactions were all in dollars,cash is carried on the balance sheet at its current market value instead of its historical cost.

When adjusting accrual earnings to obtain cash flows from operations,an increase in Prepaid Rent Expense is subtracted to arrive at cash flow from operations.

Below are the condensed balance sheets and income statement for the Beltway Company,Inc.Assume all purchases and sales are on credit.Assuming there were no disposals of fixed assets during 2014,provide the following items for the year ended December 31,2014: a.Collections from customers b.Payments to suppliers c.Insurance premium payment d.Interest payment e.Utility payments f.Wages payment g.Capital expenditures Condensed balance sheet December 31,2014

The U.K.Equity account "Hedging reserve" is reported on a U.S.GAAP balance sheet as

IFRS requires companies to use the direct method of reporting cash flow from operating activities because the direct method provides information not available under the indirect method.

Investment analysts often compare cash flows from operations across two or more companies.

Balance sheets prepared in compliance with U.S.GAAP reflect a mixture of

Selected data for Kris Corporation's comparative balance sheets for Year 1 and Year 2 are as follows: Assets Year 1 Year 2 Cash \ 100,000 (\ 50,000) Accounts receivable (net) 50,000 100,000 Inventory 100,000 250,000 Equipment (net) \ 300,000 Total assets \ 550,000 \ 650,000 Liabilities and Equity Accounts payable \ 150,000 \ 100,000 Income taxes payable 80,000 30,000 Bonds payable 100,000 80,000 Common stock 100,000 200,000 Retained earnings 120,000 240,000 Total liabilities and Equity \ 550,000 \ 650,000 A brief income statement for Year 2 shows the following: Sales \9 00,000 Cost of goods sold \ 500,000 Operating expenses 100,000 Depreciation 50,000 Income tax expense 100,000 750,000 Net Income \1 50,000 -What are Kris' cash flows from operating activities for Year 2?

Firms that use International Financial Reporting Standards (IFRS)are required to order assets and liabilities from least liquid to most liquid on the statement of financial position.

The Summary of Significant Accounting Policies explains the important accounting choices that the reporting entity uses to account for selected transactions and accounts.

When adjusting accrual earnings to obtain cash flows from operations,an increase in Accounts Payable is added to arrive at cash flow from operations.

The Barden Company provides the following information from its Year 3 and Year 4 balance sheets: Year 3 Year 4 Accounts receivable \ 115,000 \ 97,500 Inventory 120,000 130,000 Prepaid insurance 7,500 1,500 Prepaid rent 40,000 15,000 Accounts payable 55,000 65,000 The following information is available from the Year 4 income statement: Sales \ 425,000 Cost of goods sold 225,000 Insurance expense 12,000 Rent expense 25,000 -How much cash did Barden pay for insurance during Year 4?

How much of a company's assets are financed from debt versus equity sources refers to the company's