Exam 9: Preparing and Analyzing the Statement of Cash Flows

The statement of cash flows is one of the four financial statements a company must prepare as part of International Financial Reporting Standards (IFRS).

issuance of bonds

Why do investors use free cash flow to analyze a company?

Clean Dirt,Inc.had $8,000 of salaries payable at December 31,2010.During 2011,Clean Dirt's salary expense was $60,000.At December 31,2011,Clean Dirt's balance sheet showed $5,000 of salaries payable.How much did Clean Dirt pay in cash for salaries during 2011?

Each cash flow reported in the statement of cash flows relates to operating,investing,or financing activities.

Team Shirts,Inc.had net cash from operating activities of $50,000.It paid $40,000 to buy a new computer system by signing a $30,000 note and paying the balance.Net cash from (or used for)financing activities for the period was ________.

Team Shirts,Inc.recognized $8,144 of supplies expense for the year.At the beginning of the year,the balance in Supplies was $1,625.At the end of the year,the balance was $2,035.All supplies have been paid for in cash.How is the accounting information for these items reported on the statement of cash flows using the direct method?

Team Shirts,Inc.had net cash from operating activities of $40,000.It paid $25,000 to buy a new screen-printing system,and repaid a $10,000 loan.Net cash for the period was ________.

On January 1,2011,Company Z had accounts receivable of $4,000.During the year,Company Z sold $100,000 of merchandise to credit customers.At December 31,2011,Company Z had accounts receivable of $5,000.How much cash did the company collect from credit customers during the year?

The statement of cash flows reports ________.

The following information is available for two different retailers,both of whom began business this year:

The following information is available for two different retailers,both of whom began business this year: Which company would you expect to have future financial troubles?

Negative cash flow from operating activities is usually good.

Team Shirts,Inc.issued 100 shares of stock for $15 per share.This is an ________ activities.

Explain what investors look for in a statement of cash flows.

A long-term asset purchased by issuing a note is reported on the statement of cash flows as a decrease to cash from investing activities.

The indirect method is ________.

Team Shirts,Inc.collected $20,000 from customers,recorded depreciation expense of $5,000,received interest of $100,paid $15,000 of its operating expenses,and paid $500 in dividends.The amount of net cash from (or used)for OPERATING activities is ________.

The statement of cash flows does NOT report cash flows from ________.

The following information is available for two different retailers,both of whom began business this year: Which company would you expect to have high depreciation and/or amortization expense?