Exam 12: Reporting and Analyzing Cash Flows

The usual first step in preparing the statement of cash flows is computing the net increase or net decrease in cash.

Under IFRS, cash outflows for interest expense are classified as

For each of the following independent cases, use the information provided to calculate the missing cash inflow or cash outflow: (a.) Interest payable, begirning-year \ 4,200 Interest expense Interest payable, year-end Cash paid for interest \- --- (b.) Prepaid insurarice, begirring of year \ 7,000 Irsurrance expense 16,800 Prepaid insurance, year-end 3,400 Cash paid for insurance \- -- (c.) Interest receivable, begirning of year \8 00 Interest reverue 12,600 Interest receivable, year-end 1,200 Cash received for interest \- -- (d.) Accourits payable, begirning of year \ 60,000 Cost of goods sold 244,000 Mercharndise irventory, begirning of year 35,000 Merchardise irventory, year-end 40,500 Accourts payable, year-end 64,800 Cash paid for merchardise \- --

A company reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year.The company's net cash flows from operations was $2,204 million.Calculate the cash flow on total assets ratio.

Which of the following items is reported on the statement of cash flows under financing activities?

A company had total assets of $1,760,000, total cash flows of $1,320,000, and cash flows from operations of $205,000.The cash flow on total assets ratio is equal to:

_____________ activities include the cash effects of transactions and events that determine net income.

Martin, Inc.'s, income statement is shown below.Based on this income statement and the other information provided, calculate the net cash provided by operations using the indirect method. MARTIN, INC Income Statement For Year Ended December 31, 2013 Sales \ 248,000 Cost of goods sold 116,000 Gross profit \ 132,000 Operating expenses: Wages and salaries expense \ 44,000 Rent expense 16,000 Depreciation expense 30,000 Other operating expenses 18,000 108,000 Income from operations \ 24,000 Gain on sale of equipment 26,000 Income before income taxes \ 50,000 Income taxes expense 17,500 Net income \ 32,500 Additional information: Increase in accounts receivable \ 4,000 Increase in accourts payable 16,000 Increase in income taxes payable Decrease in prepaid expenses 10,000 Decrease in rnerchardise irveritory 14,000 Decrease in long-temn notes payable

Information to prepare the statement of cash flows usually comes from three sources: (1)__________________________, (2)_______________________ and (3)____________________.

Noncash financing and investing activities are disclosed in the ____________ or in a separate ______________________________.

The accounting records of Miller Company provided the data below ($ in 000s). Net income \1 7,500 Depreciation expense 8,400 Increase in accounts receivable 4,400 Decrease in inventory 6,400 Decrease in prepaid insurance 1,500 Decrease in salaries payable 2,700 Increase in interest payable 900 What is the net cash provided (used)by operating activities?

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

The direct method of preparing the statement of cash flows is usually viewed as user friendly since it requires less accounting knowledge to understand it.

Spirit Company, a merchandiser, recently completed its 2013 calendar year.For the year, (1)all sales are credit sales, (2)all credits to Accounts Receivable reflect cash receipts from customers, (3)all purchases of inventory are on credit, (4)all debits to Accounts Payable reflect cash payments for inventory, and (5)Other Expenses are paid in advance and are initially debited to Prepaid Expenses.The company's balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash \ 49,200 \ 73,500 Accounts receivable 65,830 51,000 Merchandise inventory 276,000 252,500 Prepaid expenses 1,000 1,600 Equipment 159,000 106,500 Accum. depreciation-Equipment (31,000) (40,000) Total assets \ 520,030 \ 445,100 Liabilities and Equity Accounts payable \ 58,555 \ 112,000 Short-term notes payable 9,000 7,000 Long-term notes payable 65,000 48,500 Common stock, \5 par value 162,750 150,750 Paid-in capital in excess of par, common 36,000 0 tock Retained earnings 188,725 126,850 Total liabilities and equity \ 520,030 \ 445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2013 Sales \ 584,000 Cost of goods sold Gross profit 301,000 Operating expenses Depreciation expense \ 20,000 Other expenses 152,400 Other gains (losses) Loss on sale of equipment Income before taxes \ 142,725 Income taxes expense Net income Additional information on year 2013 transactions: a.The loss on the cash sale of equipment was $5,875 (details in b). b.Sold equipment costing $46,500, for a loss of $5,875. c.Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance. d.Borrowed $2,000 cash by signing a nonsales-related short-term note payable. e.Paid $47,500 cash to reduce the long-term notes payable. f.Issued 2,400 shares of common stock for $20 cash per share. g.Net income and dividends were the only items that affected retained earnings. -Required: What is the amount of dividends declared and distributed in 2013?

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:

The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers, and subtracts the major items of operating cash disbursements, such as cash paid for merchandise, is referred to as the:

A statement of cash flows should reconcile the differences between the beginning and ending balances of:

The cash flow on total assets ratio reflects the company's actual cash flows and, therefore, is affected by the accounting constraints of recognition and measurement for net income.